WASHINGTON – The Pentagon’s top acquisition official is remaining neutral following a trio of major defense merger and acquisition announcements.
Ellen Lord, the undersecretary of defense for acquisition, technology and logistics, told reporters at the 2017 AUSA Conference that her office is reviewing the proposed changes but indicated she had not made up her mind on whether to support or oppose the M&A activity.
“We’re working on those. We’ve gotten a lot of good inputs and we’re looking at” the facts, said Lord, who served as CEO of Textron Systems prior to her nomination. “I’m looking at where we are today and what we need as a country and going from there.”
The defense industry has seen a series of major M&A moves since the start of September, starting with the announcement that United Technologies, the 12th largest defense company on the annual Defense News Top 100 list, plans to purchase Rockwell Collins (40th) for $30 billion.
Shortly after, Northrop Grumman (5th largest) announced it will acquire Orbital ATK (31st) for just under $9.2 billion. And in October, Boeing (2nd) agreed to purchase Aurora Flight Sciences, which is not on the Top 100 but will help boost Boeing’s unmanned systems sector.
Lord said there was no real time table for when she would issue a recommendation on whether the Pentagon backs such moves.
Frank Kendall, the previous AT&L chief, famously opposed Lockheed Martin’s 2015 acquisition of Sikorsky Helicopters, and at one time pursued legislation on the Hill that would give his office more oversight power on potential mergers.
Kendall’s concerns then were about the health of the supply chain, telling reporters this in 2015: “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.”
Asked about the health of the industrial base, Lord pointed out that there is an executive order from the White House to study just that issue.
“It’s great because we’re leveraging a lot of great data [the Department of Commerce] has and we’re bringing a lot of other government agencies and entities,” she said. “So that will provide a platform for what we have now, and then we have to juxtapose that with where we’re trying to go.”
But, “I think with these mergers and acquisitions, you can’t really make a blanket statement. You have to take them one at a time because they each stand on their own merits,” she added.