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Industry Braces for Change

The insider world of defense contracting is bracing for major upheaval with the recent nomination of an outsider, Ashton Carter, a Harvard University arms-control expert, to the Pentagon post that oversees hundreds of billions of dollars in weapons spending.

Defense lobbyists and military contractors fear they do not have an ally in the academic Carter, who has never worked for a weapons builder or managed a Pentagon weapons program.

Moreover, they fret that his industry-outsider status makes him more likely to support those in Congress who want to cut weapons spending.

“He’s not going to be an easy mark for industry. He’s going to be a tough grader,— said former Defense Secretary William Perry, who recommended Carter for the job as undersecretary of Defense for acquisition, technology and logistics.

Carter did not respond to requests seeking comment for this article.

Unease over Carter only increased last week after President Barack Obama called for an overhaul of federal contracting rules that will target Pentagon suppliers.

“The days of giving defense contractors a blank check are over. We need more competition for contracts and more oversight as they are carried out,— Obama said during a White House announcement.

According to his online biography, Carter, who holds a doctorate in theoretical physics, has spent nearly all of his career in academia working on arms-control issues, save for a stint as assistant secretary of Defense for international security policy from 1993 to 1996 under Perry.

In that post, Carter was responsible for all nuclear proliferation issues, which then focused on loose nuclear weapons in the former Soviet Union and North Korean nuclear threats.

“All this was quite heady and quite comical as I had previously only worked in the bowels of the Pentagon,— Carter writes in his online bio. “Suddenly, a huge and eager staff and a simply overwhelming set of responsibilities surrounded me. It was a steep learning curve.—

But one that he mastered, Perry said.

Carter did “spectacularly good— work at the Pentagon, and it was expected he would be tapped for another national security job under the next Democratic administration.

But the pick of Carter for the acquisition post caught many in the defense industry by surprise. They had hoped the job would go to one of their own, which would also have been consistent with acquisition chiefs over the past two decades.

Current acquisition chief John Young does not have any recent industry experience, but he spent years on Capitol Hill as a top analyst on Defense aircraft, missile defense and science and technology spending for the Senate Appropriations Subcommittee on Defense.

In that post, he regularly dealt with industry lobbyists and contractors.

Young’s two immediate predecessors, Michael Wynne and Ken Krieg, were close to the defense industry and had extensive experience overseeing and evaluating weapons programs.

Among the industry insiders who had been rumored for the job were retired Navy Adm. David Oliver, a former top Pentagon acquisition official who now works for contractor European Aeronautic Defence and Space Co., and retired Air Force Lt. Gen. George Muellner, a former top Boeing Co. executive who also held senior military acquisition posts.

Lobbying and contractor sources believe the Obama administration was reluctant to pick anyone with industry ties because of recent controversies surrounding Defense contract awards.

Moreover, they note that Obama’s tight ethics rules on hiring former lobbyists nearly derailed the nomination of Deputy Defense Secretary Bill Lynn, who lobbied for Raytheon Co., and the new administration was not eager to do battle on the ethics front again.

Still defense industry lobbyists and executives were reluctant to offer on-the-record criticism of the man who, if confirmed, will oversee more than $150 billion in annual weapons spending.

One weapons contractor summed up the feeling among many saying, “Industry guys will help him. He’s our guy; he’s now the customer.—

Dov Zakheim, who served as Pentagon comptroller during President George W. Bush’s first term, said it could be viewed as a positive that Carter is not close to the industry.

“How good were so many of the predecessors with industry experience?— Zakheim said. “The acquisition system is a mess. He could surprise a lot of people.—

Jeff Green, a former House Armed Services staffer who now runs his own defense lobbying shop, said lobbyists view Carter as a “blank slate— and do not expect him to be “influenced or colored— by the industry.

Green, though, echoed the worries of several lobbyists, saying, “It’s feasible to think he could be set up as a hatchet man because he does not have the deep ties to industry.—

Others were critical of Carter’s work in the previous Democratic administration.

Thomas Christie, the respected former Pentagon director of testing and evaluation of weapon systems, said he was less concerned about Carter’s lack of experience than his ties to the Clinton administration, when contracting rules were relaxed and thousands of civilian contracting positions were eliminated.

“We are bringing back a bunch of retreads that set back acquisition [by] years,— he said.

Christie also questioned whether Carter has the right temperament to tame the often-inflexible Pentagon bureaucracy. “When he was at the Pentagon people called him a– Carter’ because they thought he was so arrogant,— he added.

But Fred Downey, vice president for national security at the Aerospace Industries Association, who considers Carter both a professional and personal friend, said Carter has the smarts to make changes in acquisition policy that would help get weapons costs under control.

Asked about Carter’s reputation for arrogance, Downey laughed and said, “He’s not intimidated. He has a forceful intellect and moves very rapidly. You have to be tough at those levels.—

Carter should have significant support, at least on Capitol Hill. Senate Armed Services Chairman Carl Levin (D-Mich.) and ranking member John McCain (R-Ariz.) have recently introduced legislation to crack down on overruns in weapons buying.

Levin often cites the statistic that on average the 95 largest Defense weapons program are two years behind schedule and $300 million over budget per project, McCain warns of a coming “train wreck— for Pentagon acquisition without reforms.

Their legislation would create a powerful Pentagon position that would provide independent cost estimates for weapons programs rather than relying on those offered by the military services and contractors.

Levin and McCain have signaled there support for Carter and, Capitol Hill aides and lobbyists say, they believe Carter will help them shake up Pentagon weapons buying.

The Senate Armed Services Committee has yet to schedule a confirmation hearing for Carter, but sources said he’s not expected to face any serious opposition.

Jim McAleese, a defense industry consultant, said that once confirmed, Carter will immediately face major decisions on holding a new Air Force tanker refueling competition, deciding whether the Navy needs two shipyards to build the Littoral Combat Ship and determining the the fate of the Army’s pricey Future Combat System.

“He’s not going to have a huge honeymoon,— McAleese said

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