Carter on Mergers: We’re Watching
Ashton Carter, the Pentagon’s top weapons buyer today emphasized that the DoD will not condone defense industry mergers done for the sake of short term profit over the long term health of the defense industrial base; warning that the Pentagon will keep a close watch on future mergers and acquisitions to ensure they result in long-term good.
Free “market forces will undoubtedly lead to an uptick in the volume of [mergers and acquisitions] and this is normal,” said Carter during a speech at an Aviation Week-sponsored conference in Washington. “For our part, the Defense Department welcomes these adjustments and the need to create overall efficiency. But we require transparency when it comes to all contemplated transactions; we will examine these transactions to ensure the department’s long term interests in a robust and competitive industrial base are not dominated in the near term for one time proposed savings. The potential for organizational conflicts of interests should be avoided and that we have full visibility of the restructuring costs.”
Carter was expanding on comments he made during a speech in New York last week.
He also reiterated a point he made last week; that while small to mid-sized companies will likely be the subject of most mergers, acquisitions and spinoffs, the Pentagon does not want to see any more consolidation of the big time defense firms such as Boeing, Lockheed Martin or Northrop Grumman.
Carter then said that once the dust has cleared and the U.S. defense industry has “right sized” to function in an age of flattened defense spending, the Pentagon will work to keep the industry at that size and ensure its long term health and competitiveness.
The acquisition czar then went on to say that the Pentagon will also have to buy its weapons on the international market, not just from domestic sources due to the fact that when the best weapons can be found abroad, “we owe it to the warfighter” to buy them. Hmm, Does this make anyone else think KC-X?
He also called on foreign nations to open their doors to purchasing U.S. weapons in a similar manner.