"Ash Carter plans to stay at the Pentagon at the President's request," a senior administration official emails us. "He's doing an outstanding job for Secretary Panetta and has been a friend of Senator Hagel for years. Carter is playing a key role in the transition process in getting Hagel up to speed on Defense Department issues as he prepares for the confirmation process. Wendy Anderson, Carter's chief of staff, has also known Hagel for a long time and is part of the transition team. For this and other reasons, Pentagon insiders see a smooth, seamless handover from Panetta and Hagel after Hagel is confirmed."
Carter was rumored to be in line for a Cabinet post, either as defense secretary or as energy secretary. As the Pentagon's former "weapons buyer," he is widely viewed as the top government official on defense spending and procurement issues. His continuance gives Obama -- and Hagel -- a resource in managing the lingering budget fight with Congress.
On Thursday, Defense Secretary Leon Panetta said a "perfect storm" of budgetary uncertainty faced the Pentagon, due to the continuing resolution funding fiscal 2013, the sequester threat in March, and the unresolved debt ceiling crisis. Carter will be front and center with Hagel to weather that storm.
For more, see Gordon Lubold's Friday edition of the Situation Report.