Sens. Elizabeth Warren, D-Mass., and Mike Rounds, R-S.D., members of the Senate Armed Services Committee, have called on the Department of Defense to reform its approach to addressing risks from mergers and acquisitions in the defense sector.
In a letter to Secretary of Defense Lloyd Austin, the lawmakers cited a report from the Government Accountability Office that found inadequacies in DOD’s processes in tracking, monitoring and assessing the risks that arise from M&A in the defense industry.
While the lawmakers acknowledged the important role the Pentagon plays in reviewing proposed transactions that may potentially impact competition in the defense industry, they raised concerns that DOD’s processes are “not proactive” and do not assess the full range of risks posed by M&A activities in the defense industrial base.
“These inadequacies can increase supply chain fragility and costs to the Department for products and services provided by an increasingly consolidated defense supply chain,” the lawmakers said.
To address these inadequacies, the lawmakers recommended that DOD update its M&A policy to specify which transactions require review; shift existing resources to increase M&A review staffing levels; be proactive in tracking and monitoring transactions; and consistently engage in post-merger analysis.
