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L3Harris ( LHX ) calls for Pentagon procurement reform to counter

China,

Iran threats

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Musk's panel aims to cut bureaucracy, boost efficiency in

defense contracting

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Defense firms seek more expertise, fewer contract protests

at

Pentagon

By Mike Stone

WASHINGTON, Jan 15 (Reuters) - The CEO of one of the

world's biggest defense contractors, L3Harris Technologies ( LHX ), told

President-elect Donald Trump's government efficiency panel in a

letter on Wednesday that the Pentagon's huge contracting system

is too slow and bureaucratic to meet threats posed by China and

Iran and needs to be reformed.

The letter, which was seen by Reuters, makes Melbourne,

Florida-based L3Harris ( LHX ) one of the first big U.S.

corporations to directly lobby Trump's Department of Government

Efficiency, calling for reforms that could boost corporate

profits and speed Pentagon action. Companies normally pay

lobbyists millions of dollars to advocate on their behalf.

L3Harris ( LHX ) ranks as the 10th largest global defense firm by

revenue, with more than $15 billion in annual defense sales.

Trump created the efficiency panel, dubbed DOGE, following

his November election, naming billionaire entrepreneur and Tesla

CEO Elon Musk and former Republican presidential candidate Vivek

Ramaswamy as its co-heads, with the aim to dismantle

bureaucracy, cut regulations and restructure agencies.

In his letter to the panel, L3Harris ( LHX ) CEO Chris Kubasik said:

"America's current defense acquisition system is slow and

bureaucratic and does not provide our warfighters with new

capabilities at the speed of relevance to the threats they are

facing."

The Aerospace Industries Association, which is currently

chaired by Kubasik, is expected to send a similar letter to the

Musk panel in the coming days.

The U.S. defense industrial base is straining to meet the

surge of demand that has mushroomed as a result of Russia's

invasion of Ukraine. Global ministries of defense have been

lining up to submit orders to boost their inventories, and the

U.S. is seeking to replenish stockpiles of weaponry and

munitions sent to Kyiv.

While Musk's efficiency panel is expected to recommend

widespread job cuts across the federal government, defense firms

want more expertise at the Defense Department, which already

employs more than 160,000 people working on contracting.

"The contracting community is decimated. We've tried for

almost two decades to rebuild the contracting community. You

can't hire enough and you can't retain enough," said Keith

Webster, president of the U.S. Chamber of Commerce's Defense and

Aerospace Council and Federal Acquisition Council.

Musk and Ramaswamy have made several suggestions on defense

spending, with Musk criticizing the trillion-plus-dollar F-35

program and Ramaswamy lobbying for the Pentagon to consider more

quickly delivered and less expensive emerging

technologies.

Kubasik's letter outlined four key recommendations to

overhaul the defense procurement system, including easing

accounting and reporting standards for defense contractors,

increasing contracting expertise among top officials at the

Pentagon and limits on the number of protests to contract awards

from losing bidders.

Specific contracting expertise for procurement shared by

multiple branches of the military is needed at the highest

level, the Office of the Secretary of Defense, Kubasik wrote,

suggesting a new procurement group be formed at that high

level.

Kubasik also wants the number of contract award protests a

company can file annually to be limited to three, with financial

penalties for unsuccessful challenges.

His letter stressed that these changes would accelerate the

delivery of critical capabilities to U.S. armed forces while

reducing costs to taxpayers.