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Bipartisan Group of Senators Call for DOD to Investigate ‘Price Gouging’ by Major US Defense Contractors

By Connor Freeman | The Libertarian Institute | May 29, 2023

A bipartisan group of Senators sent a letter to the Defense Department chief calling for an investigation into major American arms dealers accused of systemic “price gouging,” on Wednesday, according to The Hill.

The letter, signed by the likes of Sens. Bernie Sanders (I-VT), Elizabeth Warren (D-MA), Mike Braun (R-IN) Ron Wyden (D-OR), and Chuck Grassley (R-IA), cites former Pentagon officials, auditors, and other insiders who spoke to CBS and accused military-industrial complex giants, such as Lockheed Martin, Raytheon, and Boeing, of ripping off the US taxpayer.

During a recent 60 Minutes report, Shay Assad, who worked as a Pentagon contract negotiator for 40 years, cites numerous examples while explaining to the outlet that these firms overcharge the DOD for “[everything from] radar and missiles … helicopters … planes … submarines… down to the nuts and bolts.”

The report said these “astronomical price increases” have worsened sharply amidst Washington’s exponentially rising demand for weapons systems to both bolster Taiwan – in a thinly-veiled effort to destabilize China – and support NATO’s proxy Kiev during its war with Russia.

“Lockheed Martin, Boeing, Raytheon, and TransDigm are among the offenders,” the senators asserted. Their letter continues, “[these contractors are] dramatically overcharging the Department and U.S. taxpayers while reaping enormous profits, seeing their stock prices soar, and handing out massive executive compensation packages.”

Secretary of Defense Lloyd Austin, the letter’s recipient, sat on Raytheon’s board of directors before accepting his current post. The lawmakers charge that these companies are securing profits ranging from 40% to even as high as 4,000%.

The military budget will soon surpass the once unthinkable $1 trillion mark. The DOD has requested a record $842 billion for the next fiscal year, roughly half of which will go to “the offenders,” just such private defense contractors.

While the Joe Biden administration has asked Congress to approve a nearly $900 billion military budget. The hawkish legislature will almost certainly add tens of billions more to Biden’s proposed budget. For 2023, Congress added another $45 billion to Biden’s already mammoth request for $813 billion, resulting in a finalized $858 billion annual military spending bill.

Even these eye-opening numbers do not tell the whole story, because the real national security state budget is already fast approaching $1.5 trillion.

The lawmakers’ letter also expresses concerns about the Pentagon’s ability to audit, track and mitigate fraud risk. The DOD’s accountability system is completely “broken.” Assad said, “No matter who they are, no matter what company it is, they need to be held accountable. And right now that accountability system is broken in the Department of Defense.”

The Senators complained that, for decades, this obscene, unaccountable spending has been ongoing. The letter cites a 2021 Government Accountability Office (GAO) report which found the Pentagon failed to implement any comprehensive solution to combating this “unconscionable” fraud, as Assad has described it.

“The DOD can no longer expect Congress or the American taxpayer to underwrite record military spending while simultaneously failing to account for the hundreds of billions it hands out every year to spectacularly profitable private corporations,” the Senators declared. These firms “have abused the trust government has placed in them…exploiting their position as sole suppliers for certain items to increase prices far above inflation or any reasonable profit margin,” the letter continued.

“It’s not really a true capitalistic market because one company is telling you what’s going to happen. [It’s a] monopoly,” retired DoD auditor Mark Owen told CBS.

Connor Freeman is the assistant editor and a writer at the Libertarian Institute, primarily covering foreign policy. He is a co-host on Conflicts of Interest.

May 31, 2023 - Posted by aletho | Corruption, Militarism | Boeing, Lockheed Martin, Raytheon, United States