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Carter to talk with industry, program leaders at acquisition summit

Jun. 28, 2010 - 06:00AM   |  
By JOHN T. BENNETT and VAGO MURADIAN   |   Comments
Pentagon acquisition chief Ashton Carter is expected to brief industry on specifics about how the Pentagon can generate savings by buying things smarter and more effectively. (ROB CURTIS / STAFF)

Pentagon acquisition chief Ashton Carter has summoned leading U.S. industry executives and military acquisition officials to Washington for two unprecedented sessions June 28 to discuss policy, process and work force changes meant to reduce the cost of acquiring goods and services.

Spurred by Defense Secretary Robert Gates' drive to trim $101.9 billion from Pentagon spending budget over five years, Carter is expected to brief attendees "on the substance of what they are thinking," one industry source said.

Carter's session with industrialists will be held at the Center for Strategic and International Studies, a think tank in downtown Washington. Carter will then head to the 500-seat Baruch Auditorium on the campus of National Defense University at Washington's Fort McNair, where he will address hundreds of military acquisition executives and program managers.

Another source described the sessions as discussions "on how to better deliver acquisition value to the taxpayer and the war fighter."

Efforts to improve the Pentagon's acquisition work force also will be on the agenda, according to sources.

Several sources said the kinds of things the department will propose are rather dry "not the kind of stuff the average person would immediately get," as one source said but could have major consequences.

The Pentagon declined comment.

Ron Epstein, an aerospace and defense analyst with Banc of America Securities, applauded the effort.

"It is a very good thing that DoD is acknowledging things are going to get harder," with defense budgets expected to cease the meteoric rise of the past decade, he said.

Epstein said Carter faced a tough task: "trying to incentivize a noncommercial entity like the Pentagon and the defense industry to act like a commercial entity." And he noted, "In the end, it's all just procurement reform and how has that turned out?"

‘A First Breakfast'?

Pentagon industrial policy chief Brett Lambert has long quipped it is high time for a "first breakfast," a reference to the 1993 "last supper," a Pentagon meeting where then-Defense Secretary William Perry urged U.S. arms makers to consolidate.

It is unclear whether Carter will outline the Pentagon's view on mergers and acquisitions on June 28, but it's clear that the Clinton-era meeting shaped the acquisition executive's views on industrial strategy.

"I was at the ‘Last Supper' with Bill Perry and John Deutch [undersecretary of defense for acquisition at the time] who had the foresight to realize that as times changed, the structure of the defense industry would change, and the department had some responsibility to play some part in that change," Carter said. "I feel they were absolutely right, and I feel that same responsibility today. So I'm going to be looking toward my industrial policy staff to help me and the secretary and the deputy to get on top of that question."

But Gordon Adams, who oversaw defense budgeting for the Clinton administration, doubts the June 28 meetings will produce similarly major changes.

"I just don't think we're at that same kind of come-to-Jesus moment," said Adams, now a professor at American University here.

Industry officials slated to attend the early morning session said they are not exactly sure what to expect.

Details Scarce

"This was planned very quickly, and we really don't know what he is going to say to us," the first source said.

Several sources said the Pentagon has asked that the scant details it has released about the meeting be held closely.

On May 8 in Kansas, Gates announced he plans to shift billions of dollars from unnecessary and redundant support programs to protect force structure and modernization efforts.

Citing a Defense Business Board finding that overhead consumes nearly 40 percent of the defense budget, Gates had alerted the military services, the Joint Staff, all major and functional commands, and Pentagon civilians to take a "hard, unsparing look at how they operate, in substance and style alike."

Deputy Defense Secretary William Lynn said the Office of the Secretary of Defense will order all military services, components, combatant commands and agencies to find one-third of the cuts "within force structure and modernization."

Adams said savings from acquisition efficiency are unlikely, and larger cuts are coming.

"Deficit reduction and [Iraq and Afghanistan] withdrawals will likely drop defense budgets far deeper than Gates is currently projecting," he said. "The industry will not hear that from Carter, but they need to be ready for it."

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