The Pentagon and the arms industry are benefitting from a flood of new funding tied to fears of Russia and China and the Biden administration’s policies of sending tens of billions in U.S. military aid to Israel and Ukraine.
The potential impact of current hot wars in Europe and the Middle East and the potential new Cold War with China on the arms sector goes far beyond the demands of the moment. The Pentagon and the arms industry have been attempting to exploit public and congressional concern about the war in Ukraine to press for a series of changes in how weapons are purchased that would benefit weapons contractors while reducing government scrutiny of their activities. Proposed changes include providing cushy multi-year contracts, pushing arms sales out the door more quickly, changing weapons buying practices in ways that will make it easier to overcharge the government and provide substandard systems, and supersizing the defense industrial base by building new factories. These special favors for the arms contractors have long been on the industry’s agenda, but the current political environment offers their best chance in years to bring them to fruition.
But according to a new poll by Data for Progress, the public is wary of providing a blank check to the Pentagon and its allies in industry. Over 80 percent of Americans believe that the Pentagon should not receive additional funds unless and until it can pass an audit, which it has yet to do despite being required to do so by law since 1990. And 83 percent of the public wants contractors to provide honest information about the true costs of the items they are selling to the Pentagon to avoid the kind of rampant price gouging that has been exposed by independent experts and the Pentagon’s own Inspector General.
The Pentagon has been routinely overcharged on basic items, including $71 for a pin that could have been purchased for four cents. Then there’s the case of Transdigm, a major supplier of spare parts to the U.S. military. In a review of a small portion of the items the company supplies to the military, The Pentagon’s inspector general estimated that TransDigm received $16.1 million in excess profits for 46 parts sold to the Defense Logistics Agency and the Army. In one instance, TransDigm overcharged the Department of Defense by as much 4,451 percent for one part.
No one knows for sure how much money the Pentagon loses due to contractor overcharges, but based on the few cases that have surfaced publicly it is likely to be billions of dollars, or possibly even tens of billions.
As the Pentagon budget soars towards $1 trillion, it is more important than ever that contractors be prevented from ripping off the government on a grand scale. Earlier this year, Sens. Elizabeth Warren (D-Mass.), Mike Braun (R-Ind.) and Rep. John Garamendi (D-Calif.) introduced the “Stop Price Gouging the Military Act,” which would, among other things, require contractors to supply truthful cost or pricing information on the pricing of items it is supplying to the Pentagon. Without this data government negotiators are at a severe disadvantage in seeking to establish fair prices for basic items.
There are larger issues behind all of this, including whether the Pentagon’s current, ambitious strategy serves our security interests and how much decisions on what weapons systems to buy are distorted by pork barrel politics. Pursuing the wrong strategy and buying the wrong weapons systems represents waste writ large. Congress needs to ask tough questions about these issues if we are ever going to align Pentagon spending with an effective defense strategy. Now is an ideal time to raise these issues, before the rush to fund the Department of Defense locks in dysfunctional practices that will cost untold billions while making America less safe.
William D. Hartung is a senior research fellow at the Quincy Institute for Responsible Statecraft.