>Some form of downsizing is inevitable especially if we want to reap the peace dividend but it's clear that we had gone too far in the way we downsized.
Not true. We downsized and consolidated immensely after WW2 and it was mostly good. We had tens of aircraft manufacturers and only a couple survived the war. They went on to build some of the best aircraft ever made, in both the public and private sectors.
Government contracting sucks because it is made to suck. Conservative opinion for 50 years was that the government shouldn't be allowed to do anything, and they've had broad political support in that opinion. When the government isn't allowed to do anything on it's own or have any competencies at all, they are a captive market and have no choice than to deal with a flopping company like Boeing.
America spends a shitload of money on the military because we have a goddamned giant military. We own 4 out of the top 5 air forces. We have more transport planes converted to "Spooky" style gunships than most air forces have transport planes period. We have a legally mandated requirement of 11 megaship aircraft carriers, each one costing the full defense budget of a small nation. We are aiming for 1000 F35s, which is a magic machine sure but that's a lot of really really top tier planes. We have 450k active duty soldiers, all getting reasonable benefits and slightly low pay.
Every country has procurement boondoggles. The Navy for example needs to be slapped so they stop burning cash on outright bad ideas, and maybe take some ideas from the European navies who have good ships that aren't anything magical sure, but being acceptable for a while is better than having to rely on ships built in the 70s because you literally have not built a functioning warship since. At the same time, the carriers, megaprojects that they are, have done fine.
The army meanwhile is incapable at procurement, but it's always been that way. The US has built basically 2.5 good tanks in it's entire existence, and the army inexplicably refuses to build a modern self propelled howitzer despite ample evidence to the contrary that future wars include large scale bombardment. Despite that, the Bradley has absolutely proved itself, the Striker even manages to be almost useful though not cost effective, and the MRAPs are a success. The US army has booted up new projects and cancelled most of them for its entire existence, but they're just exploring options thoroughly. US army has done terribly for cheap guided munitions though. The $186k Excalibur artillery shell? Significantly blunted by GPS jamming. Meanwhile Russia's Krasnopol laser guided artillery shell is much cheaper, harder to jam, and would work great for America's "always have ten drones looking at each target" Air Force doctrine. We should steal it. Everything from Switchblade is ineffective and ridiculously overpriced compared to the $600 FPV drones that replace it and carry a much better warhead. We should make our own shahed as well (South korea is). I expect if we ever get in a meaningful war though, cheap options will very quickly get to market.
The Air Force built the F35 which, despite (literally RT influenced) detractors, has mostly been a success. The giant sticker price always thrown about covers 50 years of operations, not just the purchase and development. Boeing is leaving failures on the table but that's because Boeing itself is failing the same way most American companies fail: Managers with little internal experience who treat every company as that can be managed the same way as they learned in econ 101. Line go up. Investment in knowledge and technology? No thanks, that doesn't make line go up! Meanwhile, the B-21 raider is under budget (because of inflation lol) and absolutely a stunning machine in terms of capability. We have maintained stealth leadership despite massive amounts of espionage.
US military R&D is probably more conglomerated than is healthy in any market, but so far the main bad actor has been Boeing (the stupid ships were built acceptably, the Navy's designs were just bad ideas and overpriced tech demonstrators) and you can't blame Boeing's bad behavior on Consolidation, rather you should blame it on what is essentially a market monopoly. The US abstained from protecting competitive markets for 50 years, under outright stupid policy, and we are seeing the obvious result.