U.S. Defense Secretary Pete Hegseth warned major defense contractors on Friday, including Lockheed Martin Corp. (NYSE:LMT), RTX Corp. (NYSE:RTX), Northrop Grumman Corp. (NYSE:NOC), Boeing Co. (NYSE:BA) and General Dynamics Corp. (NYSE:GD), that they must speed up weapons development and production or risk becoming obsolete.
New ‘Deal Team’ To Reshape Pentagon Procurement
Speaking at the National War College in Washington, Hegseth announced the creation of a specialized “deal team” within the new Wartime Production Unit. According to a tweet from the Department of War, the initiative is designed to transform production capacity through innovative business agreements.
“These large defence [groups] need to change the focus on speed and volume and invest their own capital to get there… if they do not, those big ones will fade away,” the Pentagon chief told industry executives.
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Slashing Regulations To Boost Competition
The Pentagon plans to ease contract requirements, reporting standards, testing rules, and oversight regulations.
Hegseth described the department’s bureaucracy as an “adversary,” echoing former Defense Secretary Donald Rumsfeld.
Jerry McGinn, director at the Center for Strategic and International Studies (CSIS), told FT Hegseth was “right to focus on changing incentives,” noting current regulations have gone too far.
Foreign Military Sales Accelerated
Hegseth called it a “top priority” to assist President Donald Trump in securing American hardware deals, and he pledged to expedite U.S. arms sales to allies. Foreign military sales, according to the secretary, are “critical to our strategic vision on the global landscape.”
Hegseth, a former Army National Guard officer, pledged U.S. technological support to help Southeast Asian nations counter Chinese threats during multilateral defense talks in Kuala Lumpur last week.
There are now only five major contractors in the U.S., down from 51 in 1990, due to post-Cold War budget cuts, the FT reported.
The reforms will also seek to attract private capital investment and new competitors to challenge legacy aerospace firms.
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