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.”
NO ORDINARY ACCOUNTANT
Carter, a native of Philadelphia, brings an unusual background to his position as the Pentagon’s top weapons buyer. He was fired from his first job, at a car wash, when he was 11 for talking back to the owner. He later pumped gas, worked as an orderly at a neighborhood hospital, crewed on a fishing boat, and helped counsel callers to a suicide-prevention hotline. He majored in physics and medieval history at Yale, where he wrote his senior thesis on the use of Latin in 12th-century Flanders and commuted to Chicago to help one of his professors do research at Fermilab, home of the world’s largest particle accelerator. Carter won a Rhodes scholarship to Oxford, where he completed a doctorate in physics.
In 1979, during the height of the Cold War, Carter was recruited to the congressional Office of Technology Assessment and charged with finding the best way to protect the nation’s long-range nuclear missiles from a Soviet first strike. After short stints at the Pentagon and the Massachusetts Institute of Technology, Carter moved to Harvard’s John F. Kennedy School of Govenment, where he soon won tenure. Drawing on his background in physics, he wrote an influential report in the 1980s arguing that President Reagan’s “Star Wars” missile-defense initiative—which envisioned using lasers to shoot down incoming Soviet nuclear missiles—was technologically unworkable.
The report helped establish Carter in Washington. When the Cold War ended, he helped Sens. Sam Nunn, D-Ga., and Richard Lugar, R-Ind., draft legislation that provided direct U.S. financial assistance to former Soviet states willing to decommission their nuclear stockpiles. And when Les Aspin took over the Pentagon in January 1993, Carter was one of his first hires. It was a tense time in Washington. President Clinton had just taken office, and congressional Republicans were trying to hamstring the administration by holding up scores of political appointments. Carter, who was nominated to be the assistant secretary of Defense for international security policy, was caught in the partisan cross fire and spent months waiting for a hearing.
With no sign of when the gridlock would clear, Aspin told Carter to come to work anyway as an unpaid adviser. That led furious GOP lawmakers to accuse them of sidestepping the confirmation process. They put a formal hold on Carter’s nomination, delaying it for several more months; the Senate finally formally confirmed Carter on July 1. “I lived in a hotel room near the Pentagon, commuting home on weekends,” Carter recalled in an autobiographical sketch he wrote for Harvard in 2007. “Here I was, a young man with no money whatsoever and a family to feed, working 16 hours a day, and not getting a paycheck.”
Carter returned to Harvard after leaving the administration, but he kept a foot in Washington, where he served on the Pentagon’s Defense Policy Board and Defense Science Board. From 1998 to 2000, he helped coordinate U.S. policy toward North Korea; he made a trip to Pyongyang, which he remembers as “bizarre.” By 2007, he was teaching, informally advising powerful lawmakers such as then-Sen. Joe Biden, D-Del., and publishing a steady stream of articles and scholarly books. “My family and I have no desire to return to Washington any time soon,” Carter concluded in his Harvard autobiographical sketch. The Obama administration—staffed by old friends—tapped him for his current post less than two years later.
Now Carter’s job is harder than ever. The White House wants even more cuts, but he no longer has Gates’s backing to mollify Congress. The blowback has begun.
From the start, Carter’s lack of experience in acquisitions alarmed many key senators. During his confirmation hearings in early 2009, for instance, Republican Sen. John McCain of Arizona praised Carter but said he feared that the nominee lacked knowledge of the fields he was nominated to oversee. “I do have concerns about your lack of in-depth experience in acquisition-related matters,” McCain told him.
The White House had asked Michael Bayer, a business executive and former chairman of the Defense Business Board, to help Carter though the confirmation process. Bayer says that skepticism about Carter vanished when lawmakers realized that he had something even more important than a business background: firsthand experience working in an era of defense austerity. “It’s very hard to find a current serving flag officer who was a general or admiral during a down Pentagon budget, and most people in the building just have no understanding of what that’s like,” Bayer says. The Senate confirmed Carter that April.
In 1993, Aspin had summoned the chief executive officers of the nation’s 15 biggest defense contractors to the Pentagon and bluntly told them that they needed to start consolidating, because Pentagon budgets were about to start falling. Carter was at the dinner, which came to be known as the “Last Supper.” Within a few years, the industry had shrunk from 15 companies to barely a half-dozen large players, reducing competition and giving the remaining mega-contractors more leverage than ever.
Like Carter today, Aspin faced unrelenting White House pressure to make deep cuts to the Defense Department budget. Aspin, a former chairman of the House Armed Services Committee, responded with a plan to shrink the size of the armed forces by 375,000 troops and halve the number of forces stationed in Europe. The proposal infuriated Joint Chiefs of Staff Chairman Colin Powell and other senior officers (who were already uneasy about Aspin’s support for allowing openly gay troops to serve). The ensuing rebellion sank Aspin’s standing in Washington, and Clinton forced him out in early 1994, after barely a year on the job—one of the shortest tenures ever for a Defense chief.
Carter sees the story as instructive. It shows that without political cover and standing in Congress, it’s almost impossible to cut major programs. “It is very hard when you have a secretary who is not respected on the Hill,” Carter said in the NJ interview. “I had that experience with Les Aspin, sadly.” Carter said he also believed that the defense industry should not be allowed to consolidate any further, and that he would be willing to block mergers among major contractors such as Raytheon and Boeing “if we thought it was excessively short-term focused and [if they] had done a poor long-term risk analysis.”
Carter’s ascent in Washington was been fueled, in part, by close relationships with older, more-experienced mentors. At Harvard, he did a joint research project with former Defense Secretary William Perry and then went into business with him; Perry later stood in for Carter’s deceased father at the younger man’s wedding. The undersecretary is also close to John Deutch, the former deputy Defense secretary and CIA director. Deutch praises Carter for “being a straight talker, which is particularly important when you’re delivering bad news.”
When he began his current job in 2009, Carter quickly forged a similar relationship with Gates. The secretary had grown frustrated by the Pentagon’s preference for purchasing high-tech weapons for future wars against countries like Russia or China instead of the low-tech matériel needed for the grinding guerrilla wars in Iraq and Afghanistan. The Defense chief had almost single-handedly forced the military to purchase bomb-resistant trucks for Iraq, a wearying process that he was desperate to avoid repeating. In picking Carter to be his acquisitions supremo, Gates made clear that he expected Carter to take over the unpleasant role of pushing a change-resistant bureaucracy to purchase weapons needed for today’s wars. “When I took this job, Gates said, ‘Ash, nothing happens unless I push on it personally. And now I want to push on you,’ ” Carter recalled.
The pair worked to scrap futuristic programs that were over budget and behind schedule, in part to free up more money for drones, surveillance blimps, and equipment earmarked for Iraq and Afghanistan. In June 2009, Carter canceled the Army’s $200 billion Future Combat System initiative, which envisioned building a new generation of armored vehicles linked by advanced communications equipment. He also helped Gates halt new purchases of Lockheed Martin’s costly F-22 Raptor fighter and wind down the troubled effort to build a new fleet of presidential helicopters.
At the same time, they began to receive disturbing reports from Afghanistan. Earlier in his tenure, Gates had overridden the Pentagon’s normal acquisitions process—which can take more than a decade to field a new weapons system—to rush tens of thousands of massive bomb-resistant trucks to Iraq to defend against the roadside bombs that were the biggest killer of American forces there.
But the huge vehicles were a poor fit for Afghanistan, which has few paved roads. Roadside bombs were emerging as an ever-bigger threat to U.S. forces in that country, and the military didn’t have a way to keep the troops safe. So Carter and Gates pushed to develop the MRAP-ATV, an off-road variant of the so-called mine resistant, ambush protected trucks. “The contractor was telling us they could build 1,000 of them per month, but the bureaucracy was saying they could only field 500,” Carter says. “My feeling was that we needed to get these things as quickly as possible. It was better to have an MRAP without a soldier than a soldier without an MRAP. I told my people, ‘Park them somewhere if you have to, but get to work buying the damn vehicles.’ The normal acquisitions system moves slowly and creates roadblock after roadblock, and in wartime you just need to run them over.”
That belief has led Carter to create an informal acquisitions system called the “fast lane,” which he and his staff use to purchase equipment for Afghanistan and Iraq more quickly than the process normally allows. Under the initiative, Carter spent $245 million on 5,100 kits of add-on armor for the all-terrain MRAPs. He also used his fast-lane authority to buy ballistic underwear (designed to protect troops from bombs that detonate while they’re on foot patrol) and advanced gunshot-detection systems (that locate the source of a sniper attack).
ON THE BLOCK
Still, Carter spends most of his time finding programs to cut, not new ones to fund. Many contractors expect him to reduce the military’s planned purchase of 2,500 F-35 Joint Strike Fighters, the most expensive weapons program in history. The cost-per-plane has soared by more than 90 percent, from $69 million to $133 million, even as technical problems have marred the program. Carter has also signaled that he may limit spending on the Army’s next-generation ground combat vehicle (an armored truck meant to replace the iconic Bradley fighting vehicle) or the Marines’ V-22 Osprey (a tilt-wing aircraft mean to take off like a helicopter and fly like a plane). “We’re moving into an era where defense budgets are flat and even declining,” says Dennis Muilenburg, Boeing’s president and CEO.
Carter is trying to find ways to soften the sting of the coming cutbacks, which will be the most severe since the end of the Cold War. He wants to limit how often his department “moves the goalposts” by demanding that defense firms add new technical capabilities to their weapons systems—a process that slows programs down and significantly increases their costs. In the aftermath of the September 11 terrorist attacks, for instance, the Pentagon contracted for a new fleet of 28 presidential helicopters. Then it spent years bombarding Lockheed Martin, which won the contract, with demands to upgrade this radar device or that protective system. By 2008, the projected cost of each helicopter had doubled to $400 million, more than the cost, in the 1990s, of the Boeing 747 jets that serve as Air Force One. Gates and Carter canceled the program in June 2009, but not until after billions of dollars had been wasted.
In March, a Government Accountability Office report found that 80 percent of weapons programs exceeded their initial costs, in large part because of modifications imposed by the Pentagon after the contracts were signed. The GAO audit found that programs with “changes to performance requirements experienced roughly four times more growth in research and development costs and three to five times greater schedule delays compared to programs with unchanged requirements.”
The new share-line agreements, meanwhile, mean that if an aerospace firm delivers a next-generation drone for $200 million less than projected, it could keep $100 million of the savings. The government would keep the rest. “Businesses all over the country are constantly, ruthlessly rooting out unnecessary costs,” Carter said. “We have to provide incentives for [defense contractors] to do that.
Muilenburg, the Boeing CEO, praised Carter for “trying to lessen the pain” with initiatives like share-line and the move to cut down on last-minute government changes. “He has a tough message to deliver, but we appreciate that he does it openly and honestly and treats us as partners,” Muilenberg says.
Carter has his industry critics, although few will speak on the record because of his enormous power over their contracts. No one who has dealt with the 46-year-old undersecretary doubts his prodigious intellect and attention to detail, but the acquisition chief’s offbeat sense of humor and relative youth have raised some complaints that he lacks the proper gravitas for his job. Industry executives know that the nation’s budget woes make further defense cuts inevitable, but some quietly complain that Carter’s quips and jokes seem off-key in discussions about eliminating major programs and the jobs that flow from them.
Loren Thompson, a defense analyst who consults for large defense firms like Lockheed Martin and BAE Systems, says that Carter’s background as a “policy wonk” leaves him with a steep learning curve when it comes to the complexities of the nation’s defense industrial base. But his speaking style may be his biggest weakness, Thompson says. “Carter’s public demeanor has tended to diminish his credibility, because he tries to be clever rather than precise, which frequently results in him being misunderstood,” Thompson says, citing a mid-July speech in which Carter said cost overruns in an expensive Air Force tanker program were “not our problem,” sparking several days of confusion about the size and terms of the Pentagon’s tanker contract with Boeing. “Behind the scenes, there is a good deal of ambivalence in the industry about Ash Carter.”
Carter—who is usually in his office by 6 a.m. and returns home 12 hours later—follows a grueling pace. But he is visibly impatient with the speed of the bureaucracy he is charged with overseeing. “Those precious months where we’re waiting for the money to start flowing are stolen from the war fighter,” Carter says. He works hard to find cuts that won’t threaten national security or spark a revolt in Congress, but with budgets certain to fall even further, his job—already one of the hardest in Washington—is only going to get worse.
Clarification: An earlier version of this article misspelled the last name of Boeing CEO Dennis Muilenburg.
This article appears in the July 30, 2011 edition of National Journal Magazine.