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Pentagon Fraud – “This has got to stop”

Photo: Office of Senator Bernie Sanders (I-VT)

The Senate has approved several amendments to the National Defense Authorization Act (S. 3254), which will bring greater transparency and accountability to federal contracting. The amendments, which OMB Watch endorsed, would:

  • Strengthen whistleblower protections for federal contractors and grantees, which ensures that employees of contractors and grantees cannot be fired or punished for reporting misconduct, modeled after the protections pioneered in the American Recovery and Reinvestment Act of 2009 – sponsored by Sen. Claire McCaskill (D-MO)
  • Require the Defense Department to publish its “revolving door” database of senior department officials who seek employment with defense contractors – sponsored by Sens. Bernie Sanders (I-VT) and Sheldon Whitehouse (D-RI)
  • Require the Defense Department to conduct an annual study on defense contracting fraud, including an assessment of its business with contractors previously penalized for fraud against the government and recommendations for reform – sponsored by Sens. Bernie Sanders (I-VT) and Joe Manchin (D-WV)

~ Senate Passes Amendments to Shed Light on Contractor Misbehavior

The Senate on Friday agreed to make the Pentagon compile annual reports on contracting fraud. The provision by Sen. Bernie Sanders was added to a Department of Defense authorization bill. Another Sanders amendment added to the bill today would make public a list of senior military officials who leave the government and land on the payrolls of defense contractors. “This country has a $16 trillion national debt. It is unacceptable that the Department of Defense continues to lose vast sums of taxpayer money because of fraud perpetrated by major defense contractors. This has got to stop,” Sanders said.

The contractor fraud provision would make the Department of Defense identify firms that received contracts after they were previously sanctioned for defrauding the Pentagon.

Over the past decade, the Department of Defense paid more than $400 billion to contractors who had been previously sanctioned in cases involving $1 million or more in fraud, according to a 2011 Pentagon report. That study, the first of its kind, was required by a Sanders amendment to an earlier defense authorization bill.

Major contractors among the many examples of fraud cited in the report included:

  • Lockheed Martin. The nation’s largest defense contractor landed $200 billion in taxpayer-funded contracts even after paying $60.95 million in fraud judgments and settlements over the previous 10 years. In 2008, for example, Lockheed paid $10.5 million to settle charges that it submitted false invoices for a multi-billion dollar contract connected to the Titan IV space launch vehicle program. The very next year, Lockheed received $30.2 billion in Pentagon contracts.
  • The Boeing Company. It paid at least $644 million in fraud judgments and settlements while it received more than $21 billion in contracts in the last decade. In 2000, for example, Boeing agreed to pay $54 million to settle charges that it placed defective gears in more than 140 Chinook helicopters and then sold the helicopters to the Army.
  • Northrop Grumman Corp. Despite paying at least $410 million in fraud judgments and settlements, the nation’s No. 3 defense contractor was awarded more than $9 billion in taxpayer-funded contracts in the last decade. In 2005, Northrop Grumman paid $62 million to settle charges that it concealed basic inventory problems. Despite the serious charges, Northrop Grumman received $12.7 billion in contracts the next year, a 16 percent increase over the year before.

Under a separate Sanders amendment, the Pentagon would have to shed light on defense contractors that hire retiring Pentagon brass to help them land lucrative government contracts.

A recent study by Citizens for Responsibility and Ethics in Washington and the Brave New Foundation found that 70 percent of recently-retired three-and-four star generals left the Pentagon for employment by major defense contractors. At least two of the former generals continued to serve on Defense Department advisory panels. The report did not find that any generals were breaking rules, but said that ethics codes are “riddled with loopholes” and suggested increased public scrutiny could prevent conflicts of interest. (Click HERE for original article)

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One Comment

  1. Comment by DoD IG WATCH:

    This will solve nothing. Yanking the warrants of any overseas contracting officer and centralizing solicitations under DCMA would however. http://www.usmilitarycontracting.org will be getting some good reading material for Congress and not fluff. It will identify the Contracting Commanders, units, and contracting officers and their actions. Readers can judge if the action was corrupt or not.

    http://www.usmilitarycontracting.com is an illegal website used the the DoD in Kuwait and other countries in the region when they should be utilizing FEDBIZOPPS – the only FEDERAL ACQUISITION REGULATION approved and mandated site. The GAO protests filed regarding those regions will be posted with the exhibits, the contracting officer’s name and the solicitation in question. The FOIAs about what contractors have been GIVEN contracts without full and open competition will also be posted.

    Even the Gansler Report that was a whitewash job about the Army’s ongoing corruption problem at Camp Arifjan didn’t mention MAJ John Cockerham, MAJ Pressley, or MAJ Momon. Why ? Camp Arifjan has ALREADY appeared with convictions from the Department of Justice in a report to Congress for every single year since 2006. The Subcommitte on Contracting Oversight ( made up of Congressmen and women ) has done little or nothing. The DOJ and the DoD have covered up mulitiple Qui Tams trying to recover U.S. Taxpayer money.

    This is just another whitewash job.


    (a) Annual Study and Report.–The Secretary of Defense shall conduct an annual study on defense contracting fraud and submit a report containing the findings of such study to the congressional defense committees.

    (b) Report Contents.–The report required under subsection (a) shall include with respect to the most recent reporting period the following elements:

    (1) An assessment of the total value of Department of Defense contracts entered into to with contractors that have been indicted for, settled charges of, been fined by any Federal department or agency for, or been convicted of fraud in connection with any contract or other transaction entered into with the Federal Government.

    (2) Recommendations by the Inspector General of the Department of Defense or other appropriate Department of Defense official regarding how to penalize contractors repeatedly involved in fraud in connection with contracts or other transactions entered into with the Federal Government, including an update on implementation by the Department of any previous such recommendations.

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