The Bunker: The Contractors’ Pie Keeps Growing
(Source: Project on Government Oversight; issued July 08, 2020)
By Mark Thompson
WAR, INC. 1.0: Commerce is booming, just like bombs.

Last year, there were 53,000 U.S. contractors working for the Pentagon in the Middle East, 50% more than the 35,000 U.S. troops they were there to support. That shift to contractors—there was a 1-to-1 ratio in Iraq at the height of that war in 2008—highlights the growing commercialization of combat, and other military duties, according to a new study from the Costs of War project at Boston and Brown universities. “In 2019, the Pentagon spent $370 billion on contracting–more than half the total defense budget of $676 billion and a whopping 164% higher than its spending on contractors in 2001,” Heidi Peltier writes.

Why should taxpayers care? Basically, because contracting out war doesn’t lead to lower costs. That’s despite contrary claims from the military-industrial-complex of how much money is being saved by “privatizing” much of the U.S. military. “This is because contractors lack competitive pressures to reduce the prices they charge to the government,” Peltier says. Not only were 45% of Pentagon contracts classified as “non-competitive” last year, many so-called “competitive” contracts were of the “cost-plus” variety, which removes incentives to keep costs down.

“Between 2008 and 2019, the Department of Defense spent over $1.2 trillion on such cost-type contracts, none of which were subject to the cost-reducing pressures of private markets,” the study adds. “Other contracts include lifetime service agreements and sole-supplier contracts, which effectively create monopolies.”

This military machine keeps humming because it pays its workers “from 20 to 166% above the national average” for similar civilian jobs, the report notes. When cuts are proposed, the predictable cries come from defense workers/voters and their representatives in Washington, D.C. The rest of us don’t care enough to do much about it, so this zany form of socialism continues.

There’s another benefit to this ruse. Contractors, especially those on the front lines performing simple tasks like laundry and lunch for the troops, help the U.S. military keep troop numbers down in dangerous places. It’s another way—like doing away with the draft, and congressional disdain for actually declaring war—that lets the U.S. wage war at arms-length.

WAR, INC. 2.0: Why the contractors’ pie keeps growing

The traditional relationship between buyer and seller has broken down at the Pentagon, and elsewhere in the federal government. “Like so many other areas of the economy, government contracting has been entirely transformed over the past 25 years, and almost exclusively to the benefit of corporate interests,” argues Richard Loeb, a law professor at the University of Baltimore and lawyer with the American Federation of Government Employees.

In a report for the American Economic Liberties Project, Loeb highlights the stiff prices the Pentagon paid defense contractor TransDigm that generated outrage last year. The company got bipartisan “tongue-lashings” at a congressional hearing for selling a $1,700 cable assembly for $7,800, a $300 connector for $1,100, and a $650 motor rotor for $5,500. (Mandy Smithberger and Scott Amey, my colleagues at the Project On Government Oversight, took a deep dive into this). The company refunded $16 million to the federal government, but that was basically it.

“TransDigm had not violated any laws, regulations, or other government contracting policies,” Loeb notes. “Every major defense contractor follows the same pricing laws, regulations, and government policies as TransDigm to boost their own profits at taxpayers’ expense.” Loeb blames the Clinton administration for relaxing contracting rules that have given the private sector the upper hand. His argument is pretty complicated and technical for us average taxpayers, but seems, if you’ll pardon the expression, right on the money.

WAR, INC. 3.0: The tightening vise

As contractors suck more money out of the defense budget, generals and admirals keep looking for magical pots of gold at the end of their fiscal rainbows. Some of that lusted-after leprechaun loot is the military services’ recurring call to create a special fund—separate and apart from their own budgets, of course—dedicated to nuclear weapons. While atomic warheads are funded through the Department of Energy, the platforms needed to deliver that doomsday cargo (bombers, submarines and missiles) are paid for by the services.

But it’s going to cost the Pentagon an estimated $432 billion to keep its nuclear triad up and running for the next decade. Roughly half of that will go to replacing its aging fleets of subs, bombers and ICBMs. If the Air Force and Navy have to foot that bill, it’s going to mean less money for weapons they actually use, along with beans and boots. “There are either going to be some significant trades [i.e. cuts] made, or we’re going to have to find a fund for strategic nuclear deterrence, that we can use to modernize,” General Dave Goldfein, the outgoing Air Force chief of staff, said July 1. What’s interesting is that nuclear weapons account for a relatively small slice of total Pentagon spending. It’s about 5% this year, slated to rise to 6% in 2021 under President Trump’s proposed budget (a 20% hike), and to 6.8% in 2024.

The Air Force and Navy would be very happy to shift the cost of rebuilding the nation’s nuclear triad off of their books. Unfortunately, you and The Bunker would still be on the hook for a Pentagon now spending, annually, more than the Cold War average. This purported dwindling ability to pay for what the Pentagon says it needs is due in no small part to the tightening grip of defense contractors, as detailed in The Bunker’s first two items, above.

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