Kendall Says Industry “Over-Consolidated”

There was “too much” consolidation at the top of the defense industry in the 1990s, outgoing Pentagon acquisition, technology, and logistics chief Frank Kendall said in his last speech Tuesday. Speaking at the Center for Strategic and International Studies in Washington, D.C., Kendall said that since Defense Secretary Ash Carter held the same job Kendall is now stepping down from, Pentagon policy has been “very clear” that “we are not disposed toward mergers at the top.” The result has been to make competition more difficult and reduce the number of new ideas and innovations pitched toward the Defense Department. “We over-consolidated, in my mind,” Kendall said. The situation has also created an uncomfortable closeness between program managers and some of the companies, leading Kendall, along with the Department of Justice, to put out rules explaining that “relationships with industry should be cordial, friendly, but not too intimate,” he said. Some get “closer to the contractors than their own chain of command,” and if they find themselves becoming “advocates” for the program instead of hard-nosed overseers, that’s a serious problem.

Kendall said he has emphasized ethics and integrity during his time in the job, insisting that they are foundational to producing good products. Kendall was at CSIS to unveil a book collecting his observations, experience, and data from managing Pentagon buying for six years. Published by the Defense Acquisition University, Kendall mused that it might become the “textbook” for a new course, encompassing his evolving “Better Buying Power” rules and guidelines, as well as anecdotes, program data, and letters to service Chiefs explaining how they can help the acquisition system. It encompasses the “things that have worked,” such as “should cost,” better incentives for industry, and achievements such as introducing competition on “systems that have been sole-source for 10 years.”