Natalia Chi
A bipartisan group U.S. Senators asked The Pentagon is set to launch an investigation Wednesday into years of price gouging by defense contractors.
Secretary of Defense Lloyd Austin, Senator Bernie Sanders (D-Vermont), Senator Elizabeth Warren (D-Massachusetts), Senator Chuck Grassley (R-Iowa), Senator Mike Brown (D-) Indiana), in a letter to Senator Ron Wyden (D-Oregon). 6-month study completed in 60 minutes Widespread price gouging has become apparent. Experts told 60 Minutes that military contractors overcharge the Pentagon for nearly every product the Pentagon purchases each year.
“Lockheed Martin, Boeing, Raytheon, and Transdigm are among the violating companies, making huge profits, skyrocketing stock prices, and paying huge executive salaries while the Department and U.S. taxpayers We are grossly overcharging,” the senators wrote. “These companies abuse trust from the government and use their position as the sole supplier of certain commodities to drive prices well above inflation and reasonable profit margins.”
In March, Deputy Secretary of Defense Kathleen Hicks announced the largest budget in Pentagon history. $842 billion. Almost half will go to defense contractors.
“Dollars wasted on expensive weapons and spare parts cannot be used to counter adversaries or support military personnel,” the senators wrote.
A letter from five senators to Secretary of Defense Lloyd Austin states that in 2020, the Pentagon’s Office of the Inspector General reported: about 1 in 5 Many of the ongoing investigations were related to procurement fraud. The Department of Defense is on the Office of Government Accountability High Risk List. Financial management Since the 1990s.
“The Pentagon no longer knows how Congress and the U.S. taxpayer underwrite record military spending while failing to account for the hundreds of billions of dollars they distribute each year to hugely profitable private corporations. We cannot hope,” the senators wrote.
Shea Assad, now retired after rising to the top Pentagon ranks and winning the contract negotiator award, cited the Patriot weapon system as an example of 60 Minutes. In 2015, President Assad ordered a review, and Army negotiators said Lockheed Martin and its subcontractor Boeing had significantly overcharged the Pentagon and U.S. allies for Patriot PAC-3 missiles by hundreds of millions of dollars. I discovered that
Lockheed Martin told 60 Minutes that it “is working constructively and ethically with the U.S. government to support the goals of national defense, intelligence and international security cooperation.” “We negotiate all programs in good faith with the government to meet the needs of the government’s mission with the best and most effective technology and systems that comply with the Federal Acquisition Regulations and all other applicable laws. .”
After the review, the Department of Defense negotiated a new follow-on contract. The Pentagon saved $550 million.
“…[W]We take our commitment to supporting combatants and our commitments to the U.S. government and taxpayers very seriously,” a Boeing spokesperson said.
Retired Air Force Lt. Gen. Chris Bogdan, who oversaw the purchase of the country’s most important weapons system, said 60 Minutes pointed to another problematic Lockheed Martin deal. In 2012, he spearheaded the faltering F-35 Joint Strike Fighter program, seven years behind schedule and $90 billion above initial estimates. Bogdan said the biggest costs are yet to come. Support and maintenance could ultimately cost taxpayers he $1.3 trillion.
Lockheed delivers aircraft for which the Department of Defense paid for design and construction, but under contract Lockheed and its suppliers have control over some of the classified information (design and repair data) necessary to repair or upgrade the aircraft. was holding
The 60 Minutes report also covered Raytheon, where Assad was a top executive before joining the Pentagon. Army negotiators said Raytheon made an “unacceptable profit” from the Patriot missile defense system by vastly exaggerating the cost and time it would take to build radar and ground equipment. Raytheon said it was working to “resolve the matter fairly” and informed investors that it was setting aside $290 million to cover its presumed liability.
TransDigm, a fast-growing company led by CEO Nick Howley, also participated in the 60 Minutes report. TransDigm has acquired a company that manufactures spare parts for the military. Last year, Howley was called before Congress for the second time on charges of price gouging. Assad’s review team revealed that the government would pay Transdigum $119 million for parts that should have cost $28 million.
TransDigm told 60 Minutes that it complies with the law and charges market prices.
The company told 60 Minutes in an emailed statement on Thursday: “TransDigm companies manufacture over 500,000 parts, primarily for commercial aircraft in service around the world. We are also proud to supply the Department of Defense with reliable, high quality aircraft products…We are working directly with the Department of Defense to ensure a better exchange of information than TransDigm, and we are doing business with TransDigm. We will continue to work with the Department of Defense to improve procurement processes related to…”
The Pentagon previously responded to Sunday’s 60 Minutes report, writing in part as follows: We are committed to evaluating all DoD contracts for fair and reasonable pricing in order to maximize combat capabilities and services available to us.” One of the surest ways to get a reasonable price in a contract, but for some defense requirements the Department of Defense relies on a single supplier and contracting officers use statutory contracts. regulators to negotiate sole sourcing agreements and protect taxpayer interests. …”
CBS News also reached out to Raytheon for comment on the letter from senators.
