Championing Responsible National Security Policy

Ashton Carter Takes Revolving Door to Higher Level

Countless officials in Washington have traveled a familiar path through the revolving door, moving from the private sector to the government and back again. Ashton Carter, President Obama’s nominee for Secretary of Defense, is part of an elite crowd that has managed to keep a foot in both worlds at the same time.

Several reports have mentioned Carter’s work as a consultant to the defense industry between stints as a full-time official at the Department of Defense (DoD). But the Project On Government Oversight has found that Carter’s role, like that of many other members of Washington’s defense policy establishment, went deeper. While working in the private sector, he has held plum positions on government advisory boards that called for reforms with potential ramifications for his defense industry clients and other companies that receive DoD dollars.

Carter is hardly alone. Federal ethics laws allow scores of advisers at the Pentagon and other agencies to serve in these influential positions while keeping close ties to big businesses overseen by the government. Carter’s nomination serves to illustrate how the government allows members of the policy establishment to straddle both sides, and how it’s become a fixture of the military-industrial-congressional complex.

Carter’s dual roles as government and private adviser have overlapped the most in missile defense and U.S. space policy. These are programs with significant taxpayer dollars at stake: the federal government spends about $8 billion a year on missile defense alone. By virtue of his service on advisory panels, Carter has been in a position to influence government policies and gain an inside perspective on future programs while carrying on his outside roles related to missile defense.

As a member of the State Department’s International Security Advisory Board, he served on a task force that produced a 2007 report arguing that numerous U.S. allies measure the “strength of U.S. security assurances” in part by dollars spent on missile defense and theater missile defense programs. Another 2007 board report on U.S. space policy warned that “U.S. policy makers should resist efforts to prohibit space-based missile defenses as ‘weaponization of space,’” and said the State Department “should support the right of the United States to explore the potential of space-based defenses without international restrictions.”

As he was one of several board members, it’s unclear how much Carter himself shaped the contents of these advisory reports. He did not respond to POGO’s request for comment.

Like other advisers who serve as Special Government Employees, Carter was generally prohibited from taking action on particular matters affecting his financial interests (although it’s often unclear how well the government enforces this prohibition, which largely relies on employees to disclose and manage their own conflicts). Nonetheless, government actions and private interests occasionally intersected with Carter’s advisory work.

In 2008, while still serving on the board that advised the State Department on missile defense, Carter received $10,000 for providing technical advice to Raytheon, a giant defense contractor that has received substantial taxpayer funding to work on missile defense systems. He disclosed his work for Raytheon in 2009 when he became the Under Secretary of Defense for Acquisition, Technology, and Logistics. In a 2009 ethics letter, Carter agreed to wait one year before participating in DoD matters involving the company.

Over the past ten years, Raytheon has received more than $11 billion in contract obligations from the MDA alone. The Obama Administration has canceled some missile defense systems in recent years, but the program is still big business for Raytheon. In a 2010 Wall Street Journal op-ed, then-Under Secretary Carter wrote that an “essential element” of the program is the Standard Missile 3 (SM-3) interceptor, which is manufactured by Raytheon. The company also makes the Patriot missile defense system and the Exoatmospheric Kill Vehicle, a key component of intercontinental ballistic missile defense. In 2013, the MDA presented Carter with the Ronald Reagan Missile Defense Award. “Dr. Carter has been instrumental in defining the relationship between the Missile Defense Agency, the developer, and the Services,” according to a DoD press release.

Earlier in his career, Carter served on powerful panels that advised the Pentagon while he also consulted with clients investing in the defense industry.

From 1991 to 1993, and then again from 1997 to 2001, Carter was a member of the Defense Science Board, which advises the Pentagon on the acquisition process and other “matters of special interest,” according to its charter. POGO has reviewed a board report, issued in December 1999, which proposed watering down certain procurement rules that were put in place to protect taxpayers from wasteful contract spending. Carter served on a task force that drafted the advisory board report, alongside ex-government officials and representatives of defense contractors such as United Technologies Corporation (UTC), Raytheon, and General Dynamics. The report said that the “sheer volume, complexity and fluidity” of government contracting rules “serve to discourage commercial firms, U.S. and foreign alike, from doing business with DoD.” It also expressed concern about “insufficient clarity in DoD policy on cross-border defense industrial mergers and acquisitions.” The board’s recommendations comported with a series of so-called “acquisition reforms” that had been spearheaded by the Clinton Administration under the banner of “Reinventing Government,” as detailed by POGO at the time.

Starting in 1998, while still advising the Pentagon, Carter also began working as a senior partner at Global Technology Partners. In a 1999 press release, the firm is described as a “specialized group of investment professionals” working to “acquire and invest in technology, defense, aerospace and related businesses worldwide.” At the time, Carter and his investment partners were acquiring a stake in Condor Systems, Inc., a “privately held defense electronics firm” that specialized in “signals intelligence, electronic support measures, and specialized electronic countermeasures systems for the electronic warfare industry.”

“[W]e believe that our association with Global Technology Partners…will assist us in identifying attractive acquisition candidates,” Condor wrote in a 2000 disclosure to investors. Condor’s business at the time included sole-source contracts on the Air Force’s B-52H bomber and the Navy’s Aegis class ships. The company also supplied prime contractors such as Lockheed Martin, Raytheon, and Boeing. Condor received nearly $50 million in obligated DoD contract dollars in fiscal years 2000 and 2001, during Carter’s tenure on the Defense Science Board.

In 2000, Global Technology Partners formed a “strategic alliance” with Rothschild, the global investment bank. “We believe the combination of Rothschild’s global relationships and Global Technology Partner’s access to and knowledge of the international defense and aerospace industry will create high level strategic advisory and investment opportunities,” a Rothschild executive stated in a press release.

“These opportunities will arise from the continued consolidation of second and third tier defense companies, the anticipated relationships that are forming among aerospace and defense companies on a cross border basis and GTP’s insight into defense markets and technologies,” the Rothschild executive said. These are some of the same issues that Carter and other members of the Defense Science Board tackled in their 1999 report on procurement.

Carter’s investment colleagues at Global Technology Partners included other former senior officials—such as former Secretary of Defense William Perry and former CIA Director John Deutch— who were serving simultaneously as advisers to DoD. Perry and Deutch also had close ties to giant defense contractors: Perry served on the boards of UTC and Boeing, while Deutch served on the board of Raytheon.

From 1997 to 2001, Carter also served as a member of the Defense Policy Board, another influential Pentagon committee that advises on “issues central to strategic Department of Defense (DoD) planning,” according to its charter. Unlike the Defense Science Board, the Defense Policy Board “does not publish separate reports,” according to a database of federal advisory committees, and it’s unclear what role Carter played in the panel’s work. Nonetheless, Carter’s industry clients stood to benefit from his role as a Pentagon advisor on both panels. (Another former member of the Defense Policy Board, Richard Perle, ended up resigning after a controversy erupted over his ties to companies that had business pending before the government.)

When President Obama nominated Carter last month, he praised Carter’s record as a “reformer who’s never been afraid to cancel old or inefficient weapons programs.” When Carter was the Pentagon’s top procurement official, he introduced a sweeping initiative, known as “Better Buying Power,” aimed at “delivering better value to the taxpayer and improving the way the Department does business.” He proposed several measures—such as leveraging competition, using proper contract types, strengthening the acquisition workforce, and mandating affordability—to help the Pentagon “do more without more.”

When it comes to holding contractors accountable, however, Carter’s views as a public official have aligned at times with the views espoused by the contracting industry. As POGO reported during Carter’s stint as the Pentagon’s chief weapons buyer, he warned the Commission on Wartime Contracting in 2011 that mandatory suspension of indicted contractors could have a “chilling effect on contractor cooperation in identifying and fixing real problems.”

Will Ashton Carter be able to stand up to defense contractors as Secretary of Defense? Or will he be more concerned with ensuring their cooperation? Given his tangled history as a public and private advisor, taxpayers may have good reason to be concerned.