Are defense contractors earning too much money in an era of budget austerity? That question is being asked at the Pentagon after earnings results showed the industry managed to maintain and in many cases bolster profit margins in 2011, even as growth evaporated. General Dynamics's Combat Systems unit raised its operating margin to 14.5% on a 1% sales decline. Raytheon's Integrated Defense Systems—which generates fat profits from foreign military sales—turned in a 16.9% margin for the ...

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