Pentagon No. 2 to step down after four years in top defence jobs

WASHINGTON - Deputy Defence Secretary Ashton Carter, known for his deep knowledge of US defence spending and the defence industry, said on Thursday he was stepping down in December after four years in top Pentagon jobs.

Defence Secretary Chuck Hagel said he "reluctantly accepted" Carter's decision to leave the post.

Carter brought fresh analytical rigour to the job, but also helped reopen lines of communication with the defence industry, said Brett Lambert, who worked closely with Carter before retiring in August as the Pentagon's head of industrial policy.

But Carter's main legacy was his "unwavering, untiring and overwhelming" commitment to making sure that US troops had the equipment to do their jobs, Lambert told Reuters.

Over the years, that meant researching and sending in an array of unusual equipment - from explosive-sniffing dogs to surveillance blimps and mine-resistant trucks that could climb the mountainous roads in Afghanistan.

"I truly believe he saved lives over there," Lambert said.

It was unclear who might replace Carter, although several names surfaced late Thursday as possible successors: Navy Secretary Ray Mabus, former Air Force Secretary Michael Donley and the Pentagon's former policy chief, Michele Flournoy.

Another possible contender might be Linda Hudson, a veteran defence industry executive who has announced plans to retire early next year as chief executive of BAE Systems Inc, the US unit of Britain's BAE Plc.

As deputy defence secretary over the past two years, Carter helped ensure a smooth hand-off from then Defence Secretary Leon Panetta to Hagel.

"He possesses an unparalleled knowledge of every facet of America's defence enterprise, having worked directly and indirectly for eleven secretaries of defence over the course of his storied career," Hagel said in a statement.

Some had speculated that Carter, who has a doctorate in theoretical physics from Oxford University, would be tapped to head the Department of Energy, but Obama administration officials asked him to stay on at the Pentagon to ensure continuity.

Loren Thompson, a Virginia-based defence consultant, said Carter's departure robbed the Pentagon of an experienced manager and could also open the door for mergers among bigger defence companies.

"Carter was the policymaker who said no mergers between top-tier defence contractors. That prohibition is likely to leave with him," he said.

Before becoming deputy defence secretary, Carter was the defence undersecretary for acquisition, technology and logistics, wrangling with complicated weapons programs such as Lockheed Martin Corp's F-35 fighter programme.

His deputy and successor in that job, Frank Kendall, was also mentioned as a possible contender for the No. 2 position.

Kendall is seen as a strong, no-nonsense inside manager, and someone whom Hagel likes and respects.

Carter said he had long planned to step down on Dec. 4 but delayed his announcement because of financial uncertainty facing the Defence Department, which has been affected by the partial government shutdown that started on Oct. 1 and across-the-board budget cuts that forced it to put civilian employees on unpaid leave this summer.

"I have decided that this situation might well continue and I don't want any more time to pass before giving you the opportunity to begin a smooth transition," Carter said in his resignation letter to Hagel.

Hagel and other senior officials gave Carter a standing ovation at the meeting where his departure was announced.