The Pentagon Fraud Papers: Contractors That Defrauded DOD Were Rewarded With $285 Billion in New Contracts

The Pentagon Fraud Papers: Contractors That Defrauded DOD Were Rewarded With $285 Billion in New Contracts

The Pentagon Fraud Papers: Contractors That Defrauded DOD Were Rewarded With $285 Billion in New Contracts

Vermont Senator Sanders wanted to know how the Pentagon deals with companies that defraud it. He demanded an accounting. Over a three-year period, contractors convicted of committing civil and criminal fraud were given new contracts worth $285 billion. Yes, that’s billion with a “B.”


Defense contractors that were convicted of defrauding the Pentagon received new contracts from the Department of Defense in the amount of $285 billion.

That’s a shocking number.

Even more shocking is the determination of the Department of Defense to continue the practice of steering taxpayer dollars into the bank accounts of contractors that the courts say intentionally stole money from the federal government.

Now, the question is whether Congress will be as tough on multinational corporations with long-term patterns of wrongdoing as it was on a community group that made a few mistakes.

In the fall of 2009, after some embarrassing revelations about misdeeds committed by low-level employees of Association of Community Organizations for Reform Now, Republicans forced Democrats in Congress to move with rare speed and dramatic reach to prevent the allocation of federal money to the advocates for low- and moderate-income families.

In so doing, they established an “ACORN Standard” for policing federal expenditures, which holds that if even a few employees of an organization that feeds at the public trough stand accused of engaging in activities that appear to be inappropriate, then federal funding must be yanked. (And now some of the same players are trying to apply a variation on the standard to Planned Parenthood.)

Vermont Senator Bernie Sanders was interested in whether the “ACORN Standard” was being applied uniformly, or just to community groups with which President Obama was once associated.

Sanders decided to look at where the real money is spent by the federal government: the Department of Defense.

“The sad truth of the matter is that virtually every major defense contractor in this country has, for a period of many years, been engaged in systemic, illegal, and fraudulent behavior, while receiving hundreds and hundreds of billions of dollars of taxpayer money,” the independent senator explained in a statement delivered on the Senate floor in the fall of 2009. “We’re not talking here about the $53 million that ACORN received over 15 years. We’re in fact talking about defense contractors who have received many, many billions in defense contracts and year after year, time after time, violated the law, ripping off the taxpayers of this country big time. And in some instances, these contractors have done more than ripping off the taxpayers. In some instances, they have endangered the lives and well being of the men and women who serve our country in the armed forces.”

To prove his point, Sanders attached a provision to a defense spending bill, which required the the Pentagon produce a report detailing instances of contract fraud and how they were dealt with. A preliminary report was made available Wednesday and it revealed that there’s a lot of fraud—involving more than 100 contractors during just the brief period that was studied.

But the real revelation involved how the Pentagon deals with convicted contractors. It gave them new contracts and lots more money. How much? A remarkable $285 billion during just the three-year period in thr latw 2000s that was covered by the report.

That’s $285 billion with a”b.”

The preliminary report concluded that:

1. The Pentagon distributed $270 billion from 2007 to 2009 to ninety-one contractors involved in civil fraud cases that resulted in judgments of more than $1 million.

2. The Pentagon spent another $682 million during the same period on thirty contractors convicted of hard-core criminal fraud in the same three-year period. Billions more went to firms that had been suspended or debarred by the Pentagon for misusing taxpayer dollars.

“With the country running a $14 trillion national debt, my goal is to provide as much transparency as possible about what is happening with taxpayer money,” says Sanders.

But transparency is different from accountability.

The provision Sanders attached to the defense spending bill also required the Pentagon to detail how it was moving to address fraud. In particular, the provision directed the Department of Defense to recommend ways to punish fraudulent contractors.

The Pentagon saw no need to act. “The department believes that existing remedies with respect to contractor wrongdoing are sufficient,” concluded the Report to Congress on Contractor Fraud.

Sanders, who has emerged as the Senate’s chief watchdog when it comes to the frivilous and fraudulent financial dealings of major federal agencies, is of a different view.

“It is clear that DOD’s current approach is not working,” says the senator, who adds that “we need far more vigorous enforcement to protect taxpayers from massive fraud.”

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