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Kendall Bill on Mergers Still in Interagency Process

March 17, 2016 (Photo Credit: Tom Pennington/Getty Images)

WASHINGTON — Pentagon acquisition head Frank Kendall has yet to put forth legislation to prevent further mergers of top defense firms, and may not do so until later in the year.

Sources on the Hill told Defense News they have not seen legislation and believe they are unlikely to in the near future. A Pentagon official confirmed that Kendall has proposed legislation going through the interagency process, but said there is "no ETA" for when it will arrive. 

Robert Rangel, Lockheed’s senior vice president for Washington Operations, told Defense News that it is his understanding that legislation is still a ways off.

“We understand the department is still working through this issue in the interagency process, but the expectation is there will be as specific proposal that comes out of that and goes to Congress later this year,” Rangel said.

If that timeline is accurate, it makes it highly unlikely Kendall’s bill will get much traction given the combination of a charged election season and the lame-duck period of the Obama administration.

Rangel called the issue something he was “fairly focused” on, saying the company is concerned that the Department is seeking an “expansion of authority beyond what is currently the law and frankly has been in place for decades, and in our judgment works fairly well.”

In September, Kendall responded to Lockheed’s purchase of Sikorsky Aircraft from United Technologies by pledging to  work with Congress to “explore additional legal tools and policy to preserve the diversity and spirit of innovation that have been central to the health and strength of our unique, strategic defense industrial base, particularly at the prime contractor level.”

The reasoning, Kendall argued, is that if the largest contractors continue to grow at the expense of other competitors, it limits the possibility of competition — bad news for both taxpayers and the Pentagon, which wants to avoid relying on a limited industrial base.

“With size comes power, and the department's experience with large defense contractors is that they are not hesitant to use this power for corporate advantage,” Kendall said Sept 30.

In January, Kendall told Defense News that he has viewed a draft version of the legislation and that it has “worked its way through the approval process.”

“My concerns about the merger and acquisition trends are very general and they’re very structural. They’re not about one specific company or another,” Kendall said. “They’re about the continuous monotonic movement towards smaller and smaller numbers of weapons systems contractors.”

Joe Gould in Washington contributed to this report. 

Email: amehta@defensenews.com

Twitter: @AaronMehta

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