EDITOR'S NOTE: President Obama announced August 2 his intent to nominate Ashton Carter to become Deputy Secretary of Defense.
COLUMBUS, OHIO—“It’s very hard to find logistics humor,” Ashton Carter told a conference of contractors and Pentagon supply experts here last month. “I said to my assistant, ‘Can you find me some logistics humor? Go Google ‘logistics’ and ‘humor.’ She came back a little later and said that nothing came up.” Carter waited for the laughter to subside, and then launched into a variant of a doom-laden speech that he is giving often these days.
Carter badly needs humor. The man leading the Pentagon’s most important fight isn’t a battle-hardened general with years of front-line combat experience in Iraq or Afghanistan. Instead, he’s a mild-mannered physicist and former Harvard professor tasked with trimming hundreds of billions of dollars from the Defense budget. After a decade of runway spending, Carter has begun telling major defense firms like Boeing and their allies on Capitol Hill that the party is over. It’s a hard message to deliver, which explains Carter’s search for levity.
The core of Carter’s message is that the Pentagon, and the contractors that service it, must adjust to doing more with less. “We’re not going to have the ever-increasing budgets of the post-September 11 decade,” Carter told the contractors and logistics personnel. “This is going to feel very different to a group of government and industry managers, and congressional overseers, who have grown accustomed to a circumstance where they could always reach for money when they encountered a managerial or technical problem or a difficult choice. Those days are gone, for all of us.”
Carter’s appointment two years ago as the undersecretary of Defense for acquisitions, technology, and logistics—essentially, the Pentagon’s top weapons buyer—surprised many lawmakers, who questioned how a person with no background in acquisitions or in managing large organizations could oversee the department’s sprawling purchasing arm, which spends roughly $400 billion a year on goods and services. But Carter quickly forged a close relationship with then-Defense Secretary Robert Gates to scrap underperforming systems and free up money for the wars in Iraq and Afghanistan. The two men canceled dozens of programs worth a total of more than $300 billion.
Gates, a Bush administration holdover with strong ties to GOP lawmakers, gave Carter the political cover to protect cuts from being overturned by Capitol Hill, where defense contractors wield enormous power. The cost-cutting measures have boosted Carter’s standing with the Obama administration so significantly that he is the leading candidate to succeed William Lynn as the next deputy secretary of Defense, according to senior department officials.
But now, Carter’s job is harder than ever. Earlier this year, Gates and Carter outlined a plan to cut $78 billion in defense spending by 2016. The White House has since said that it wants the Pentagon to find $400 billion in new cuts over the next 12 years and recently hinted that it may pursue even deeper reductions in defense spending. Carter, more than any other single official, will be responsible for finding those cuts and then selling them to Congress—without Gates’s backing to protect him. Already, he says he wants to reduce the $200 billion that the Defense Department spends annually on logistics and maintenance by about 5 percent, which could save $100 billion over the next decade. Carter’s moves are sparking fierce resistance on the Hill, where many Republicans want to shield the Pentagon from cost-cutting measures and even force Carter to reverse the cancellation of a second engine for the next-generation Joint Strike Fighter.
Defense contractors are anxious, too. In a letter to House Speaker John Boehner last month, Marion Blakey, the president and CEO of the Aerospace Industries Association, a leading trade group, warned that major defense cutbacks would weaken national security and “make our nation’s fiscal and broader economic situation even worse.” Privately, some defense contractors and Pentagon officials say that Carter can occasionally come across as overbearing and condescending. “He’s always seen himself, probably rightly, as the smartest guy in the class, and that comes through in many of his discussions,” said a senior Defense official who frequently works with Carter. “Telling someone you’re scrapping their program will always be a hard conversation, but Ash sometimes, without realizing it, makes that conversation even harder.”
Carter is trying to soften the blows by giving defense contractors some long-sought carrots, including “share-line” agreements that let them keep part of any savings they generate. But he says that major defense companies will have to find ways of delivering their products for less money, for the simple reason that there is now much less money to go around. “The alternative to adaptation is just canceling programs,” Carter said in an interview with National Journal during the flight to Columbus. “The programs that survive will survive in part because they are being economically managed. And if you’re a poorly run program and you’re not performing, that, ipso facto, puts you on the potential cut list.”
This article appears in the July 30, 2011 edition of National Journal Magazine.