Washington D.C. (WWLP) – Senator Elizabeth Warren is urging the Pentagon to demand certified cost data from defense contractors seeking inflation-based cost increases to fixed-price contracts.
Warren argues that more oversight is required to ensure that companies will use the increased funds appropriately, and further, raises concerns that defense industry lobbying could violate post-government ethics restrictions.
As a member of the Senate Armed Services Committee, she’s often the only one to routinely question Pentagon buying practices and potential conflicts of interest of potential nominees with contractor ties. This week, Warren wrote a letter to Department of Defense (DoD) Under Secretary of Defense for Acquisition and Sustainment, Bill LaPlante this week, accusing defense companies of “price-gouging” without appropriately outlining what the increased funding is meant to cover. Warren writes, “There are too many instances where major defense companies made tens of millions, and my office has been made aware of instances of hundreds of millions of dollars in excess profit on individual firm fixed price contracts.”
In her letter, Warren recognizes that the COVID-19 pandemic has created supply chain and financial issues for defense contractors, but also notes that LaPlante himself remarked that “during COVID, one of the best places to be was to have a contract with the U.S. government.” She argues that these companies are taking advantage of the lack of detailed oversight, using taxpayer money to executive compensation packages, pay for stock buybacks, and paying out cash dividends. A spokesperson from LaPlant’s office said in a statement that they will respond to the senator directly.
In a separate letter addressed to the National Defense Industrial Association (NDIA) President, David Norquist, Warren raises concerns over alleged violations of post-government ethics restrictions. On September 13th, NDIA called for $42 billion increase in the Pentagon budget, causing Warren to accuse the organization of marketing itself on its post-government employees still in their “cooling off” period. Warren says that since leaving his post as Deputy Secretary of Defense in February 2021, Norquist is subject to a two-year ban on influencing employees of the executive branch on matters that were part of his responsibility under his role as Deputy Defense Secretary, such as managing the defense budget.
NDIA spokesperson, Scott Rekdal, has responded to Warren’s claims, saying that Norquist and another former government employee are in full compliance with employee restrictions. Rekdal says that neither employees were present at a meeting when the report was previewed to the DoD, adding that the paper is a bipartisan effort by team of former Defense Department officials on the possibly “destructive impact of inflation on national security”.