Julia Gledhill on the Military Congressional Industrial Complex

A 2021 report from Brown University’s Cost of War Project found that military spending totaled over $14 trillion since the start of the war in Afghanistan in 2001, with one-third to one-half of the total going to military contractors.

Julia Gledhill
Project on Government Oversight

A large portion of these contracts – one-quarter to one-third of all Pentagon contracts in recent years – have gone to just five major corporations: Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman. 

The $75 billion in Pentagon contracts received by Lockheed Martin in fiscal year 2020 is well over one and one-half times the entire budget for the State Department and Agency for International Development for that year, which totaled $44 billion.

Weapons makers have spent $2.5 billion on lobbying over the past two decades, employing, on average, over 700 lobbyists per year over the past five years, the report found. That is more than one for every member of Congress.

Julia Gledhill is an analyst with the Center for Defense Information, a unit of the Project on Government Oversight (POGO) in Washington, D.C.

Gledhill says that the five largest contractors are at the center of the military Congressional industrial complex that dominates Washington.

“These companies are too big and wield too much power,” Gledhill told Corporate Crime Reporter in an interview last month. “POGO is a leading advocate for a Congressional stock trading ban. Lawmakers can’t possibly keep taxpayers’ interests at heart when there is money in politics. They are owning and trading stocks in military companies while also sitting on the Armed Services Committee or Foreign Relations Committee.” 

“They are accepting campaign contributions. Mike Rogers (R-Alabama) is chair of the House Armed Services Committee. He’s the number one recipient of these defense corporations funds. We need to get money out of politics and institute revolving door reforms.”

“It has been called the Iron Triangle – the relationship between the defense industry, the Pentagon and Congress. And more broadly it’s the relationship between government and private industry. It gives corporations outsized influence on policy and therefore on defense spending.”

“I focus my work on revolving door reforms to try and chip away at that corporate influence on our national security policy making process. The other bucket of work is reforming the way that contractors work with the government. We have these companies that have successfully lobbied Congress to water down contracting regulations so that they can price gouge and knowingly push for inflated defense spending to improve their own financial positions. I lobby Congress to strengthen regulation and close the accountability loopholes that enable contractors to price gouge.”

“Congress has effectively legalized price gouging. So much of the price gouging that occurs is not in fact illegal. One major way that companies have done this is by redefining what the word commercial means. I’ll try and tease this out without getting too wonky.”

“Currently, if a company is selling something that is considered a commercial item, they don’t have to give the Pentagon the same information about cost and pricing than they would if it was a noncommercial. The rationale is that if you are selling something that is commercial, you can assume that it is competitively priced. There are probably other people selling that item on the marketplace.”

“The problem is that contractors have lobbied Congress to redefine what commercial means. They are being designated as commercial item suppliers when in fact the items that they sell are not commercial at all. They are not sold to the public. They sometimes don’t have many other suppliers selling that item. And it means that they have almost indiscriminate authority to set prices.”

What’s the estimated military budget going to be this year?

“It’s probably going to be over $1 trillion if you count national security spending outside of the Department of Defense budget like nuclear spending at the Department of Energy, defense related programs at the State Department. It is enormous.”

There is legislation in Congress that would reduce the military budget by $100 billion a year.

Are you pushing that legislation?

“The People Over Pentagon Act would cut the Pentagon budget by $100 billion a year. It is sponsored by Mark Pocan (D-Wisconsin and Barbara Lee (D-California). They are the leads in the House. They have a lot of progressive support behind them. POGO is generally supportive of cuts to the defense budget.” 

“We do try to adopt a more detailed approach. We really like another bill that Barbara Lee has introduced. That’s called The Audit the Pentagon Act. That would institute budget cuts to particular Department of Defense offices contingent upon their performance in the annual audit. We are bigger fans of that bill because it takes more of a targeted approach to defense budget cuts. But in general, we know we can make huge cuts in the defense budget.” 

“Three years ago, the Congressional Budget Office outlined three ways to cut $1 trillion from the defense budget over ten years. But we do look toward more specific detailed approaches because we don’t want to see Congress cut the budget and then give the Pentagon the decision making power to decide how they cut the pie.”

There used to be members of Congress like Senator William Proxmire (D-Wisconsin) who would watch the Pentagon budget like a hawk. There were hearings. Is there anybody coming up in Congress who is really vigilant about the Pentagon budget?

“I would say Senator Elizabeth Warren (D-Massachusetts) and Senator Bernie Sanders (I-Vermont) are the strongest advocates. But there are also a number of members who are interested in increasing accountability and preventing waste. It’s not exactly the same as cutting the defense budget. Senators Warren, Mike Lee, Angus King and Mike Braun are leads on a bill to repeal the statutory requirements for Pentagon wish lists.” 

“There is more right/left support for waste focused work – more so than there is such support for cuts across the board.”

“Everybody is well aware that there is a lot of wasteful spending in the Pentagon. The wish lists are requirements for the Pentagon to produce lists of funding requests for new programs outside of the formal budget process.  The Department of Defense is the only government agency required to produce these lists. It’s unfair. It puts upward pressure on the military budget. It also muddies strategy. We have military components having to make these formal budget requests to Congress and then also their wish list items.”

“Well, if you really needed these wish list programs, you would have included them in your budget request.”

How would you rate the Pentagon Inspector General’s work?

“POGO is very supportive of Robert Storch, the new Pentagon Inspector General. We were very loud supporters of his confirmation to this position. A couple of reasons why. First, the Pentagon Inspector General’s office was empty for almost seven years before Storch’s confirmation. And that created a huge problem for oversight. With no permanent IG in place, they are not doing the long-term strategic planning needed to ensure consistent and thorough oversight of the inner operations of the Pentagon.”

“Rob Storch also has a great track record in his previous position as the Inspector General of the National Security Agency. One thing we really love about him is that he took very clear steps to empower whistleblowers. He created a whole new resources page for whistleblowers within the NSA. And he’s worked to improve their protection against reprisal internally. And we’re really excited about the work that he’s doing in his new position. He has a lot on his plate.”

The IG was confirmed last year. Has he taken any substantive action that you can report on?

“He testified before Congress a couple of times. He has been facilitating the joint strategic oversight plan on Ukraine between the OIG offices at State and Defense and others. That’s a huge undertaking. There are literally 22 ongoing Ukraine related audits by the Defense IG’s office and then sixty plus other interagency audits ongoing. We are excited to see that.” 

The Pentagon has failed audits for five years. Since 1992, they have been in violation of law for not passing audits. Why has the Pentagon failed these audits? 

“One major reason is that they don’t have a good financial reporting structure. The killer fact from last year’s audit found that they could not sufficiently account for 61 percent of their $3.5 trillion in assets. That is well over half of their assets they don’t have proper and thorough records for.”

“We always say that the Pentagon is failing its audits. And I get that. They are basically failing. But the reality is that the actual result of the audit is worse than the failure. It’s called an unqualified opinion. That’s the result for the past five years. And it means that the independent auditors straight up do not have all of the materials necessary to come to a conclusion. They didn’t have all of the evidence they needed to make an opinion about the state of the Department of Defense.” 

“It could have been worse. It could have been an adverse opinion. The auditor could say – there is systemic and prevalent false financial reporting throughout the network. That’s the worst outcome. Instead, it was one step up from that – we don’t have enough information to even make a conclusion about this.”

Why is this so dysfunctional?

“The source is the consolidation of the defense corporations. Since the fall of the Soviet Union, defense corporations have shrunk from over fifty corporations to basically five. Those five primes pocket the vast majority of defense dollars. We are pushing back against that consolidation.”

“Back in 2016, a former Pentagon official, now Secretary of the Air Force, Frank Kendall, was looking at Lockheed’s proposed acquisition of Sikorsky Aircraft. The Department of Justice said – this is fine. Lockheed doesn’t make the same kinds of helicopters that Sikorsky makes. But Frank Kendall said at the time – I feel this might snowball and we should be wary. And the Department of Defense should have a bigger role in this review of mergers and acquisitions in the industry. He got a lot of pushback for that. The Department of Justice and the Federal Trade Commission told him to back off.” 

“I’m working on digging up a legislative proposal that was purportedly circulated seven years ago. Since 2016 we have seen multiple mergers and acquisitions in this industry that make it a lot harder to hold these companies accountable. They are getting bigger and bigger and increasing their ability to set prices.”

[For the complete q/a format Interview with Julia Gledhill, 37 Corporate Crime Reporter 16(13), April 17, 2023, print edition only.]

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