Don’t Flee Defense

The Pentagon is not out to slash defense contractor profits, Pentagon acquisition czar Ashton Carter said last week. He told attendees at a New York investor’s conference that a profitable defense industry “is in the national interest and we recognize that,” reported Reuters. Rather than cutting costs by reducing contractor profits, Carter said the Pentagon wants to “incentivize productivity” by offering greater profits to companies that are efficient. The department is creating a “superior supplier” program aimed at rewarding companies that lower their costs and, in turn, lower DOD’s expenses. “That’s the way we’re thinking about it,” Carter said. His Dec. 1 comments were meant to counter analyst statements that defense contractors are facing a likely extended downturn in programs and profits, potentially pushing investors out of the sector.