Warren urges Pentagon to review planned L3Harris-Aerojet deal

WASHINGTON ― Sen. Elizabeth Warren, D-Mass., and three other Democrats are urging the Pentagon to “fully review” L3Harris Technologies’ pending acquisition of Aerojet Rocketdyne, arguing the latest instance of industry consolidation would harm the defense-industrial base.

Warren and three House Democrats on Sunday sent a letter to Defense Secretary Lloyd Austin and Under Secretary of Defense for Acquisition and Sustainment Bill LaPlante seeking more information about the $4.7 billion deal. They wrote that the Pentagon’s “merger review process is a powerful tool to prevent dangerous defense industry consolidation” that could sway antitrust agencies.

Reps. Chris Deluzio, D-Pa., John Garamendi, D-Calif., and Mark Pocan, D-Wisc., also signed onto the letter. All signatories other than Pocan sit on the Armed Services Committee.

“This transaction would threaten competition and national security, increase prices, reduce innovation and reduce product quality and create production delays for the defense-industrial base,” the lawmakers wrote. “We urge the [Defense Department] to carefully review this deal and disclose any identified concerns to the [Federal Trade Commission] and the Department of Justice.”

The two companies announced in December L3Harris would acquire Aerojet, which manufactures solid rocket motors for the Defense Department.

The lawmakers noted that “after years of mergers in the solid rocket motor sector, the number of domestic suppliers has declined from eight to just two: Aerojet and Orbital-ATK.”

The Federal Trade Commission in March asked L3Harris and Aerojet for additional information about the deal.

L3Harris spokeswoman Sara Banda said in a statement the acquisition “will strengthen U.S. national security by affording the [Defense Department] and the warfighter the benefits of a more efficient, flexible and innovative supplier.”

She noted “L3Harris has committed to the [department] to ensure that Aerojet Rocketdyne continues its role as a merchant supplier.”

In a late April earnings call, L3Harris CEO Chris Kubasik said the contractor was gathering data to comply with the Federal Trade Commission’s request for additional information and reiterated that he expects the deal to close this year.

“We do not compete with Aerojet Rocketdyne,” he said on the call. “Plain and simple, they make rocket motors and we do not. … We are not a customer of theirs. They are not a customer of ours.”

The lawmakers, in the new letter, said that should the transaction proceed “L3Harris would be in a position to leverage its control over solid rocket motors and other Aerojet products to force other companies and the United States to purchase its other products, regardless of the impact this would have on price or quality.”

They also asked Austin and LaPlante to respond to a series of questions about the deal by July 21, including what impacts it would have on major defense programs, future costs and supply chains. The lawmakers requested the Pentagon make public any recommendations regarding the acquisition it has made to the Federal Trade Commission or Justice Department.

Lockheed Martin ended its efforts to acquire Aerojet last year. Raytheon Technologies had argued that proposed merger would have forced it to negotiate with Lockheed, a major competitor, over solid rocket motors. Warren also opposed the failed Lockheed-Aerojet merger.

Lockheed Martin has raised concerns about the L3Harris-Aerojet deal to the Defense Department and Federal Trade Commission, Reuters reported last month.