Panetta looks to be hands-on manager

Leon Panetta, on pace to become the next Defense secretary, is making clear he will focus on weapons program management and performance during his tenure.

In written and spoken testimony last week, Panetta used phrases like “hands on” and “closely monitor” when discussing how he will scrutinize major acquisition initiatives.

Such rhetoric suggests an intention to follow the model of Robert Gates — the outgoing Pentagon chief who will leave his fingerprints on the Pentagon’s weapons portfolio — and not that of the hands-off Donald Rumsfeld.

“If you look at his background, he has been a manager and not a philosopher,” said Cord Sterling, vice president for legislative affairs at the Aerospace Industries Association. “At the Office of Management and Budget, and as White House chief of staff” during the Clinton administration, “he was heavily involved in the details.”

Industry officials have been busy examining Panetta’s words since his confirmation hearing last Thursday, looking for signs of his stance on major programs and promised Pentagon funding cuts.

During that hearing, Panetta got the attention of industry and the military services, sources said, by promising to bring “focused, hands-on management” to the Pentagon.

In written answers to advanced policy questions, the nominee promised to “closely monitor and oversee the Army modernization efforts.”

That kind of management approach “is the only way I know how to do business,” Panetta told the Senate panel.

The willingness by Gates to terminate poorly performing hardware programs and conduct budget-cutting drills are “reforms I intend to carry on,” the current CIA director said, saying he will bring “discipline” to Pentagon budgeting.

Sen. Lindsey Graham (R-S.C.) noted that “the longer it takes to develop a weapon and the more it costs, the more the contractor makes.” The senator then asked Panetta: “Isn’t that kind of stupid?”

“Not for the contractor, but for the government it is,” the nominee replied.

Senior Pentagon officials have for months been floating the idea of shifting more of the costs of major programs to industry — particularly when programs underperform or are delayed. 

“It’s a concept that doesn’t work … if government keeps changing the playing field,” Sterling said.

Industry officials and representatives say defense firms often begin working toward one set of weapon system designs and performance standards, only to have a military service decide to change things.

This triggers costly design changes, lengthy delays and massive cost spikes.

Industry officials are still waiting to hear from Pentagon officials about how — and by how much — they intend to shift more costs to private firms, sources said Monday.

“We’ve got to see how they are going to implement,” Sterling said.

But on the issue of changing weapon designs and performance standards, Panetta and industry seem to be on the same wavelength.

“The acquisition process must be operated in close coordination with the requirements process and the budget process,” Panetta wrote, “and this requires active participation by DOD’s senior leadership to ensure all three processes are properly coordinated and held accountable.”