The Pentagon has paid $1.1 trillion to hundreds of defense contractors and their parent companies that have defrauded the government over the past ten years, according to a Department of Defense report released Thursday.
More than 300 contractors involved in civil and criminal fraud cases that resulted in judgments of $1 million or more during the last decade were paid a total of $573.7 billion by the US military, including $398 billion that was paid to contractors after judgments for fraud. When awards to parent companies are included, the Pentagon awarded $1.1 trillion to the top 37 companies that defrauded the US military since 2000.
Raytheon, for example, spent nearly $4 million to settle a civil case with the government in 2002 and $2.5 million to settle a case in 2000. Since the cases were settled, the Pentagon has awarded Raytheon's aircraft and engineering divisions a total of $1.8 billion.
Lockheed Martin paid $10.5 million in 2008 to settle charges that the company submitted false invoices on a multibillion dollar contract connected to a space vehicle program. Despite the fraud, the Department of Defense awarded Lockheed $30.2 billion in contracts in 2009.
Another $33 million was paid to 54 companies after they were convicted of criminal fraud against the government. Companies found guilty of criminal fraud received a total of $255 million during the ten-year period.
The report, which was prepared for Sen. Bernie Sanders (I-Vermont), follows a report released by a Congressional commission that found $33 billion to $60 billion in taxpayer money had been lost due to contract fraud and waste in the wars in Iraq and Afghanistan. The commission blamed the problem on ill-conceived contracting projects, lack of government oversight and "criminal behavior and blatant corruption," according to its report.
Sanders called the latest report "shocking" and called on the government to take aggressive steps toward making the contracting process transparent to avoid wasting taxpayer dollars while the country is running a $15 trillion deficit.
"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.
The Department of Defense reported that it has sanctions in place and several contractual and administrative "remedies" are available to deal with contract fraud, but the report admits that "it is unclear, however, that these remedies are sufficient." The scope and size of contract oversight operations has increased during the past two years, according to the report, and the Pentagon plans to continue increasing its oversight workforce and capabilities.