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Carter Fleshes Out DoD Stance Toward Industry M&A

Undersecretary of Defense for Acquisition, Technology and Logistics Ashton Carter, Photo: defense.gov

When the Defense Department’s top acquisition chief Ashton Carter dropped hints at a Wall Street speech last week that the Pentagon would frown on mergers and acquisitions between industry giants (although not necessarily between those of smaller companies) the D.C. area’s stable of government contractors were hungry for more information.

And now, Carter, the department’s undersecretary for acquisition, technology and logistics, is fleshing out the Pentagon’s regulatory stance toward the  M&A likely to flow through the industry.

“Market forces will undoubtedly lead to an uptick in the volume of [mergers and acquisitions] and this is normal,” said Carter in a speech at an Aviation Week conference, according to DoDBuzz. “For our part, the Defense Department welcomes these adjustments and the need to create overall efficiency.”

But, DoD’s relaxed stance toward defense-industry M&A comes with certain caveats. No. 1 is transparency, Carter said.

“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.”

Overall, the Pentagon is interested in seeing a healthy defense industry in the long run not in seeing some companies turn a profit in the short term, he added, which means DoD is not interested in seeing the big players in contracting merging.

“We do not want to see the defense industrial base experience what has happened in other sectors of economy — poor risk management and excessively short-term behavior at the expense of long-term” vitality, he said, according to a Nextgov report.

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