The world's largest defense contractors not only blatantly overbill the US government, but they also do not convert the extra profit back into production, instead distributing it among the shareholders. Who would have thought?
The legislators ask the president of the Senate to launch an investigation against the actors in the military industry, because there is a high chance that they are engaged in war profiteering in connection with Ukraine. The idea is based on the work of the Truman Commission in 1941 - then the investigation saved billions of dollars.
Bernie Sanders and five other senators have written to Senate Democratic Majority Leader Chuck Schumer asking him to set up a commission to investigate possible war profiteering by US military companies. According to the representative of the state of Vermont, the "Big Five" companies, the pillars of arms shipments to Ukraine, are now pocketing such sums that a serious monitoring system is required to be set up -
with particular regard to unclear financial movements, overinvoicing and how companies use extra profit.
In this way, Sanders would practically reintroduce the functioning of the Senate body, the group known as the "Truman Committee", which worked extremely efficiently during the Second World War, into the control of the war machine.
Led by Harry S. Truman, who was still a senator in 1941, the board rigorously reviewed US military contracts to eliminate waste, overbilling, corruption, and to prevent corporate greed and extra profit at the expense of the US military. go. The operation of the commission proved to be a real success story: according to estimates, the intensive control system saved 15 billion dollars in military spending, not to mention the lives of thousands of soldiers who, due to the negligence of companies, received insufficient equipment delivered at sky-high prices. Truman's role on the committee and the success of the board contributed greatly to his later election as president.
Sanders and his colleagues claim that the world's largest defense contractors, including Lockheed Martin and RTX (formerly Raytheon), are overbilling the government, but they have no intention of reinvesting the extra profit into production capacity, instead distributing it among shareholders - that is, in the Ukraine war, the the state is used as a cash cow and deliberately harmed.
There would be something to investigate
The senators also attached a justification supported by concrete data to their letter. As written,
the five largest companies (Lockheed Martin, Boeing, RTX, General Dynamics and Northrop Grumman) organize huge share buybacks from incoming government orders while abusing their sheer size, taking advantage of their market dominance,
that is, that the Pentagon practically has no opportunity to enter into contracts with others.
According to the Sanderses, the increase in profit obtained by buying back shares would not be a problem in itself, but all this comes at the expense of the development of new defense capabilities and the increase of capacities - the extra profit overrode everything, which is why the Stinger, produced by RTX and declared a miracle weapon in Ukraine, continues to become more expensive (seven times so far). missile system, and that is why a supplier active in the aerospace industry, such as TransDigm, was only willing to enter into a contract for parts with the Ministry of Defense with a surcharge of several thousand percent.
Senator Sanders also drew attention to the fact that weapons manufacturers' products are highly objectionable both in terms of production costs and efficiency. The contract won by Northrop Grumman for the production of Sentinel missiles underwent continuous modifications due to the company's budget demands: the price of the systems (per unit) suddenly jumped from 118 million dollars to 162 million dollars, so that the company seemed to be driven only by extra profit, and not by real budget problems struggled. Lockheed Martin is the bastion of the production of the new super-fighters, the F-35s: the project will be the most expensive Pentagon purchase of all time with its total cost of 1.7 trillion dollars, but according to the report of the Ministry of Defense, more than 800 defects have been found on the machines until 2021 alone, including software and maintenance issues. However, in the absence of a plan B, the Department of Defense still pays, and Lockheed continues to reap billions of dollars from the program's budget, even allowing itself the impudence of billing for the cost of repairing its own obvious mistakes.
"This phenomenon has a name: war profiteering. The greed of the military companies does not only affect the American taxpayers, but also the Ukrainians. The procedure of the owners hunting for extra profit and unjustifiably raising their prices means that they sell much less weapons for the same amount of state money, so that much less gets to Ukraine as well."
- writes Sanders in his letter, pointing out that Lockheed signed contracts worth 46 billion dollars in 2022 alone, but spent a quarter of the revenue not on capacity increases and new investments, but on paying dividends - and then continued to raise prices.
The Afghan example
In an interview, Sanders specifically stated: since the Pentagon is the only state agency with budget accounting problems every year, he has no doubt that huge overruns and frauds are lurking in the background.
"Currently, the government is asking for billions of dollars to help Ukraine fight. I support this myself. But we want to make sure that the money is actually used for what it's being asked for, not to increase the earnings of shareholders of big American companies to an unprecedented degree. That's why we look to the Truman Commission as a model,” the senator said.
You don't have to go far back in time in the history of the USA to find examples of war profiteering.
In connection with the involvement in Afghanistan, such scandalous manipulations have come to light that would have shaken the Pentagon and the American army to their foundations - if they had not smeared the whole thing at the highest levels.
According to the report of an oversight committee set up at the time, some of the funds and weapons intended for Afghanistan never even left the United States - the profits were skimmed off by everyone who could, so some of the money evaporated on the way. What arrived was handled by systemic corruption, in which the US military became a part in more than one case.
One of the biggest scandals - the people responsible for which have never been named - was triggered when it was revealed that the Pentagon had bought cargo planes for the Afghan forces for $549 million, which were inoperable, so they were later sold as scrap metal for about $40,000.
The bureaucratic sphere, which can be paid off at any time, and the entrepreneurial sphere, which distributes the money among themselves, always found a way to ensure that the sums are in order on paper, but in reality in the pockets of a corrupt interest circle.
Featured Image: F-15E Strike Eagles taxi into formation June 12, 2019, at Mountain Home Air Force Base, Idaho. (Staff Sergeant Jeremy L. Mosier/Air Force)
