Undersecretary of Defense for Acquisition and Sustainment Ellen M. Lord holds a press briefing on Aug. 26. Petty Officer 2nd Class James K. Lee
Pentagon Sees ‘No Major Concerns’ With Raytheon-United Technologies Merger
The Defense Department’s top weapons buyer, Ellen Lord, gives stamp of approval to what would be the second-largest defense and aerospace company ever.
The Pentagon appears unlikely to object to the blockbuster merger of Raytheon and United Technologies, a top U.S. defense official said Monday.
“There are no major concerns that I know of right now,” Ellen Lord, the undersecretary for acquisition and sustainment, said Monday during a press briefing at the Pentagon.
Lord, a Trump administration political appointee who serves as the Pentagon’s top acquisition official, said she has put in place new processes to evaluate mergers and acquisitions.
“It’s actually a process that I thought was a little murky on our side when I first came in,” Lord said.
When a merger or acquisition is proposed, Lord’s division reaches out to the military services to get a better idea of “what business they have with each of the two companies and whether they see any problems with limiting competition where they’re just two of them.”
“Then we partner with either the Department of Justice or the Federal Trade Commission to step through and see if there are any issues. We’re working through that process right now,” she said, for the proposed Raytheon-UTC merger.
President Donald Trump in June appeared less than supportive of the merger, causing some speculation of its fate before Pentagon regulators.
The Pentagon could object to the merger or acquisition if officials believe the deal would give a firm a corner on the market. For example, the Justice Department required Harris Corp. to divest its night vision business before approving the firm’s merger with L3 Technologies. That’s because the merger “would eliminate competition between the only two suppliers of U.S. military-grade image intensifier tubes,” an essential component in military-grade night vision goggles and weapons sights. L3Harris Technologies, the merged company’s new name, is selling its night vision business to Elbiit Systems of America.
Wall Street analysts see few areas of overlap between Raytheon’s defense-heavy portfolio and United Technologies, which has more commercial business. Combined, the new firm Raytheon Technologies would become the second largest U.S. defense and aerospace firm behind Boeing.
Last year, the Trump administration did not object to Northrop Grumman acquiring Orbital ATK. The effects of that merger are being felt now as Orbital ATK is one of only two makers of solid rocket motors, the kind used by long-range intercontinental ballistic missiles.
Northrop had been competing against Boeing to build new ICBMs that would replace the Minuteman III. But now, Boeing says it might drop out of the $85 billion contest because the competition favors Northrop. Before the acquisition, Orbital ATK was part of the Boeing team vying for the contract.
Lord said the Pentagon continues “to have dialogues with Boeing.” Asked if the Pentagon would not comment about the project until the bidding window for the new ICBM closes, she said, “the [request for proposals] is out, the proposals are not in,” she said. “I’m not going to comment on that until we see what we get from proposals.”