Shocking Report Reveals the Pentagon’s Addiction to Fraudulent Contractors

George Zornick
NationofChange / News Analysis
Published: Friday 21 October 2011
“The military’s own auditors have admitted that it cannot track 25 percent of the money it spends—in 2010, that would amount to $165.95 billion. For perspective, the entire budget of the State Department last year was $27.4 billion.”
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How often does the Pentagon award contracts to defense companies that have already been proven to be defrauding taxpayers? A report the Department of Defense did at the request of Senator Bernie Sanders (I-VT) reveals an answer that should make Washington very uncomfortable.

The report, released today, showed that hundreds of defense contractors found guilty of civil fraud received more than $1.1 trillion in defense contracts since 2001. The study took into account only companies that were found to have defrauded taxpayers of more than $1 million dollars.

More than $573 billion went directly to companies that were guilty of defrauding taxpayers, and when you factor in the awards that went to the parent companies of those contractors, the total is $1.1 trillion. Of that $573 billion, more than two-thirds—$398 billion—went to companies after they had been found guilty of fraud.

Companies convicted of “hard-core criminal fraud” received $255 million in contracts, $33 million of it after conviction.

Some of the country’s biggest defense contractors were implicated. “The ugly truth is that virtually all of the major defense contractors in this country for years have been engaged in systemic fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money,” said Sanders. According to the report:

Lockheed Martin in 2008 paid $10.5 million to settle charges that it defrauded the government by submitting false invoices on a multi-billion dollar contract connected to the Titan IV space launch vehicle program. That didn’t seem to sour the relationship between Lockheed and the Defense Department, which gave Lockheed $30.2 billion in contracts in fiscal year 2009, more than ever before.

In another case, Northrop Grumman paid $62 million in 2005 to settle charges that it “engaged in a fraud scheme by routinely submitting false contract proposals,” and “concealed basic problems in its handling of inventory, scrap and attrition.” Despite the serious charges of pervasive and repeated fraud, Northrop Grumman received $12.9 billion in contracts the next year, 16 percent more than the year before.

The report comes at a crucial time, as the Congressional supercommittee debating $1.2 trillion in deficit reduction is at least theoretically going to be looking at cuts to the Defense Department—and if they cannot agree, which seems increasingly likely, triggers will take half of that amount from defense spending.

Many Republicans are strongly opposed to any cuts—Senator Jon Kyl (R-AZ), a member of the panel, even threatened to quit if significant defense cuts were made. Senator John McCain (R-AZ) has already said he would try to undo any defense cuts if the trigger is hit.

Last week, Secretary of Defense Leon Panetta testified before Congress that if the trigger is hit and that amount is cut from military spending, “it’ll truly devastate our national defense.” As I noted, Panetta said President Obama agreed with him—a comment the White House has not yet corrected.

This stance is ludicrous giving the sheer amount of waste at the Pentagon. The military’s own auditors have admitted that it cannot track 25 percent of the money it spends—in 2010, that would amount to $165.95 billion. For perspective, the entire budget of the State Department last year was $27.4 billion.

The report commissioned by Sanders offers a grim accounting of how a lot of money can be wasted—by continuing to pay companies that have brazenly been ripping off the government for years. Battling that waste seems like a prime target for any legislators truly concerned with the country’s debt.

This story originally appeared in The Nation.
Copyright © The Nation – distributed by Agence Global.


ABOUT George Zornick

George grew up in Buffalo, NY and holds a B.A. in English from the State University of New York at Buffalo. Prior to joining The Nation, George was Senior Reporter/Blogger for ThinkProgress.org. He worked as a researcher for Michael Moore's SiCKO and as an Associate Producer on "The Media Project" on the Independent Film Channel. His work has been published in The Los Angeles Times, Media Matters, and The Buffalo News.

Hi We understand as

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Here's how the sweetheart

Here's how the sweetheart contracts are created. Major defense contractors will hire retired top brass military as consultants. They will practically tell the military what they need to buy from their company,and the money will flow. The military/industrial complex is ravenous and no one can check the flow of power and $.

It's still all about perverse

It's still all about perverse greed and new "Piratical Capitalism."

It's time to fix it. It's time things got ugly.

Let’s wake up America!

The 1% of Piratical Capitalists are strangling the other 99% of Americans and the rest of the world to death!

I’m sick and tired of the Democrats, the Republicans, the tea party, and the news media!
I’m sick and tired of listening to incessant political nonsense while we the people, are losing everything!

Are we supposed to remain passive while we lose our jobs, our homes, our families, our health, our savings, our future, and our lives!? Are we…really!?!?! Do you people out there want to let this happen!?

Are we just supposed to lie down and die?! Sure, greedy corporations and the elite rich would love that wouldn’t they? If we’re dead, then we can’t cause any trouble. If we’re dead, then we can’t come after them!

We’ve been blind and passive way too long. We keep dancing around the real solution here, while the rich pay off our politicians and the courts to stay free and so they can repeatedly rape us!

No-way, it’s time we put a stop to this! They need a lesson here. Unfortunately, the American Revolution, the French Revolution, and the Russian Revolution were necessary because the royals and elite rich just never did get it. They didn’t care that millions of people were being hurt or dying because of them.

We have that same exact international situation right here…right now. We’re not dead yet, and there are millions and millions of us around the world. And that, is OUR POWER!

People, we are in the midst of a Global Revolution! It’s happening now and it’s time we pulled these arrogant royals off of their thrones. Yes people, IT’S TIME IT GOT UGLY!

This is why.

THE NEW AMERICAN PIRATES, ARE KILLING AMERICANS.

This is not about glamorized or fictional piracy. This is, “real piracy.”

Hundreds of our wealthiest leaders and most powerful corporations know that in the next few years, they will be able to siphon, skim, and steal, so much “NEW CASH,” that they and their progeny will be ultra-rich for generations to come.

Welcome to the modern “Piratical Capitalism” movement. And, welcome to WAR!
No, this is not funny, or fiction, or a conspiracy, it is just simple greed and simple theft.
The new pirates of America have launched an all-out siege on us…the 99%, in order to capture, amass, and hold many trillions of dollars for themselves.

All of the recent political power grabs and nonsensical debating is purely a slight-of-hand deflection. President Obama, Democrats, Republicans, the International Press, and even the Tea Party, are watching the tiny pea in the shell game…while the rich and powerful “Piratical Right” is stealing America right out from under us.

Consider that their combined total plunder from corporate flipping, downsizing, offshore labor, speculation, price fixing of oil and energy plus, corruption in defense, health care, banking, student loans, foreclosures, etc., etc., is a trillion dollar treasure for these pirates.
Go ahead, put your own calculator to it.

Are they smarter than we are? Yes, and they are laughing at us. I, we, you, and all of us, have not been able see the big picture of what is happening to our own country and to our own people. The rape and theft of America, has been cleverly packaged, promoted, and sold under the guise of “cost-cutting,” “deregulation,” and “free enterprise.”

The “Piratical Right” is directly responsible for millions of people dying, getting sick, losing their jobs and homes, losing their ability to fight, their spirit, and even losing their will to live. The sick smell of this carnage now permeates the air across America.

To us, this is all unimaginable, because we look for some sense or the morality of things. These modern-day American pirates however, have no moral compass. They are devoid of any conscience, humanity or soul, and are feeding on the flesh of the American people.

Don’t look to the President, the Senate, Congress, the press, or any political party to help. Sadly, they just don’t see it, don’t care, or are part of it. “We the people” are on our own. Start asking questions. Demand answers. If we don’t fight back America…who will!?

History has taught us how to stop piracy!

It shouldn't be shocking to

It shouldn't be shocking to anyone who can remember American History. Military contracts have long been a hot bed of corruption. Harry Truman as a Senator headed a panel that investigated and found fraud in WarII contracts. Ike (a former General) warned us of the Military Industrial Complex.

And here we are, taxpayers paying for the wheel to be re-invented (almost) with every major Defense contract.

I think Sen. Sanders should

I think Sen. Sanders should file a bill to make these companies pay back the country for all the waste that they have caused. If they do not do it, make a list of the companies that have caused this disaster and ban them from applying again for a program. There are certainly companies in the US that would be delighted to received a contract for work...and then some. All Gov't employees including the congress should submit resignations if they fail to support the cuts to the defense department. It is no wonder the country is in the poor house...and at the same time, go after those so called mercenaries in Iraq who stole all the money for equipment and buildings and anything they could get their hands on!! There are billions there to be had with that situation....

Bust'em Dano!

Bust'em Dano!

These so call fiscal

These so call fiscal hyprocritics Republicans are strongly opposed to any cuts—such as Senator Jon Kyl (R-AZ), should quit when significant defense cuts are made. And his buddy Senator John McCain (R-AZ) has should write a special bill for this home state of Arizona to pay for any "undo any defense cuts if the trigger is hit." Ask your other Buddy Candor in the House for any off-set advice! We can' t afford more spending, remember?

We are bringing the troops

We are bringing the troops home from Iraq, and beginning to wind down the war in Afghanistan. Other than what is absolutely vital to maintain those troops abroad, all defense contracts should be declared null and void. All contractors should be taken off the list.
Require each contractor to re-apply for status - which will be denied for past fraudulent actions. Get some new contractors in - not old companies with new names - clean up the defense contracting business - its overdue, and now is the time to do it.
Get someone in the Defense Department that knows actual, REAL costs for items they are getting bids for - keep it all honest - IS that possible.

No more war. It's that

No more war. It's that simple.

Jaberwocky, you could not be

Jaberwocky, you could not be more right on!

I remember in the late 80's

I remember in the late 80's the Postal Service had a contract with a company that was under indictment for Federal Fraud. The PS did not break the contract. Dirt is dirt, no matter where you find it.

Just think, over 1o years

Just think, over 1o years that comes to 1.65TRILLION dollars, or 25% of the total amount of spending cuts that are being demanded in Congress. Sounds to me that the only place that cuts need to be made are the Defense Department. Cut them down and force them to put some controls on what they are doing, and save a whole bunch of money.

Panetta's credibility is

Panetta's credibility is shot.

This is proof that the military can get by on far less. Fraud should not be a military tradition.

Never forget what Eisenhower said about the military industrial complex. He was alarmed about the waste and abuse clear back then.

In this country, and

In this country, and elsewhere, too, war is a racket. We have known that since at least General Smedley Butler (see his book "War as a Racket").

When it comes to military affairs, Congress has basically abdicated its powers of oversight decades ago. Instead, the Pentagon does what it pleases and issues its dictates to Congress.

Given what we know about the

Given what we know about the US and it's governance (or rather, lack thereof), is this really a surprise?! Yet another; and one of the many devious and insidious ways that money has corrupted in all facets of each and every institution, bar none! Sad, but so very, very true...

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