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DoD’s Ash Carter on Doing More without More and ‘Creative Competition’

DoD Undersecretary of Defense for Acquisition, Technology and Logistics Ashton Carter

Forget about “doing more with less.”

The Defense Department prefers to think of it as “doing more without more.”

But, there’s more to the policy than just changing the way defense planners — including procurement chief Ashton Carter — think.

In a world where managing the department’s bottom line is a DoD priority, the department can’t achieve its goal simply by thinking of the glass as half full without also substantive policy prescriptions.

Undersecretary of Defense for Acquisition, Technology and Logistics Ashton Carter, in numerous public speeches recently, has said doing more without more hinges on the Pentagon exercising “better buying power.”

“It takes the form of guidance from me to our acquisition work force — 147,000 acquisition professionals — on how they can get, as I put it, more without more, because we’re not going to have more,” he said in a Center for a New American Security speech last week.

The 23-point Better Buying Power initiative was first launched in September by Carter and Defense Secretary Robert M. Gates.

The plan notably incorporated suggestions from the department’s acquisition workforce along with industry partners. The strategies include controlling costs, providing incentives for innovation and productivity, and improving competition.

Beyond the hard numbers and bottom lines of the buying provision, Carter has also begun to open up about what the department sees on the acquisition horizon.

One thing is clear. Contracting isn’t going anywhere.

“A strong, technologically vibrant and financially successful defense industry is … in the national interest,” he has said.

Carter’s reassurances to industry have made it clear this is no “Last Supper speech” moment. In the early ‘90s, then-Defense Secretary Les Aspin delivered a grim message to government contractors who ushered in an M&A boom, but left a meager number of major plays in the GovCon game.

But, while Carter said the defense industry remains vital to the interest of the nation (after all, DoD is not in the business of building airline tankers or any of the other state-of-the-art equipment deployed in battle, the undersecretary noted), he also emphasized that interest is tailored to the long-term, not the short.

“Normal market forces” will continue to guide the defense industrial base and DoD expects such forces to lead to an “uptick in the volume of M&A,” he said.

DoD “welcomes” what Carter called “needed adjustments that lead to overall efficiency.” In other words, because of the current budget squeeze, DoD expects defense contractors to merge and acquire as needed.

But, in exchange, contractors must provide transparency.

“The interests of the taxpayer and the warfighter will be forefront in our minds as we review proposals that may result in the creation of weaker stand-alone firms less likely to thrive without the necessary capital structure that their larger parent company is able to provide,” Carter explained.

The name of the game, though, is “creative competition.”

So, don’t expect the Pentagon to smile kindly on mergers among the big five contracting companies: Lockheed Martin, General Dynamics, Raytheon, Northrop Grumman and Boeing.

Unlike in the early 1990s, Carter’s public pronouncements, which are designed to assuage the fears of government contractors, are actually doing so.

In fact, The New York Times reported that following Carter’s recent speeches, defense industry stocks have risen and have continued to do so.

So, what what bodes for the future of DoD’s stance toward the industry?

Making sure the defense industry is keyed in to the department’s new way of thinking is an essential, if underrated, part of DoD’s better buying strategies. And, even as the department has adopted the mantra of  doing more without more, Carter appears to have taken the approach of keeping the lines of communication open to heart.

So, what does

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