By Marina Malenic

The Defense Department opposes consolidation of large defense firms because such mergers would dampen the department’s drive to increase competition for military contracts, a top official said yesterday.

Ashton Carter, the undersecretary of defense for acquisition, technology and logistics, warned against top-tier defense industry consolidation during a speech at an investor conference sponsored by Cowen and Company in New York.

“The department will not likely support further consolidation of principal weapon system prime contractors,” Carter said, according to a transcript of his speech released by the Pentagon.

Boeing [BA], General Dynamics [GD], Lockheed Martin [LMT], Northrop Grumman [NOC] and Raytheon [RTN] are considered the Pentagon’s prime contractors.

Still, Carter said he expects–and supports–an “uptick” in mergers and acquisitions among smaller defense companies, as well as “other industry adjustments in the coming period.”

“While companies may be lower tier…they are not of lower importance,” he said.

He added that the department’s position is aimed at promoting competition among contractors, which is in turn expected to yield cost savings for the government.

The Pentagon earlier this month announced that it has commissioned a survey of defense firms of all sizes as it pursues an “efficiencies initiative” intended to wring savings out of the department during the federal fiscal crunch. The survey is being led by Carter and other top DoD officials (Defense Daily, Feb. 8).