Sanders Calls for Review of Pentagon Waste, Outrageous Pay for Contractor CEOs

WASHINGTON, March 7 – At a Senate Budget Committee hearing Wednesday, Sen. Bernie Sanders (I-Vt.), the ranking member of the committee, questioned the massive compensation packages of top defense contractor CEOs and demanded that the Pentagon end its waste and abuse of taxpayer funds following years of reports of fraud and mismanagement.

“It is essential that the Pentagon demonstrates that it is trustworthy and accountable with taxpayer dollars, and that has not been the case,” Sanders said. “I don’t think there’s any debate among anybody here that we want to be able to defend our country, that we want to make sure that the men and women in the armed forces have all of the equipment they need to protect their lives. But I would hope that nobody here believes that just because this is the Department of Defense, we will defend an enormous amount of bureaucratic waste.”

Sanders questioned why CEOs from the Pentagon’s top five defense contractors made a cumulative $96 million in compensation in 2016, especially when two of the top four American contractors—Lockheed Martin and Raytheon—get more than 90 percent of their revenue from taxpayer funds through the Pentagon. Incredibly, the CEO of Lockheed Martin makes 100 times more than the secretary of defense.

Sanders requested a report from Pentagon officials on how they can effectively negotiate CEO salaries of defense contractors.

“It sends a message if a corporation gets the overwhelming percentage of its revenue from the federal government to give their CEO a large salary. It tells me they’re going to do a lot of other things to ignore the needs of taxpayers,” Sanders said.

Sanders also addressed the pervasive fraud and waste within the Pentagon and its contractors and the need for the department to pass an independent audit. A 2011 report Sanders requested found that the Pentagon awarded more than $1.1 trillion worth of contracts to companies that had previously been found guilty of, or paid settlements to resolve charges of fraud against the government—including fraud involved in the sale of deficient products to the military.

Half of the Pentagon’s budget goes directly to contractors, and about $100 billion goes to the top five defense contractors in the U.S.—all of which have been convicted or settled lawsuits relating to fraud or misconduct against the federal government.

Additionally, the Pentagon is the only federal agency that has not passed a clean audit, 28 years after passage of the Chief Financial Officers Act of 1990, which required the entire government to undergo an audit.

Previous investigations have uncovered enormous waste by the Pentagon, including:

  • In 2011 the Commission on Wartime Contracting in Iraq and Afghanistan concluded that up to $60 billion spent in Iraq and Afghanistan had been lost to fraud and waste.
  • In 2015 the Special Inspector General for Afghanistan Reconstruction reported that the Pentagon could not account for $45 billion in funding for reconstruction projects.
  • In 2016 the Washington Post reported that the Pentagon buried an internal study that exposed $125 billion in bureaucratic waste.
  • Earlier this year Politico reported that an audit conducted by Ernst & Young for the Defense Logistics Agency found that it could not properly account for some $800 million in construction projects. 

Last month, Sanders voted against a two-year budget deal that granted the Pentagon a $165 billion increase to the Pentagon’s budget, beginning with an $80 billion increase this year alone.