Friday, October 2, 2015

Kendall Seeks Congressional Action Against Prime Mergers

Kendall Seeks Congressional Action Against Prime Mergers: In what appears to be the first shot in a potentially groundbreaking change to defense mergers and acquisitions, Frank Kendall, the Pentagon’s top acquisition official, said the Department of Defense plans to ask Congress to create rules that could hinder mergers between prime contractors.

The drive behind the move, Kendall told reporters, is concern that such mergers limit the number of defense firms and give too much power to individual companies — power that will end up hurting both the department and the American taxpayer.

“If the trend to smaller and smaller numbers of weapon system prime contractors continues, one can foresee a future in which the department has at most two or three very large suppliers for all the major weapon systems that we acquire,” Kendall said. “The department would not consider this to be a positive development and the American public should not either.”

“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.”