Chairing Subcommittee on Personnel, Senator Warren Highlights Need for Ethics Legislation Across Federal Government

Hearing

I'm pleased to welcome you all to today's hearing to receive testimony on public integrity and anti-corruption laws at the Department of Defense.

The people who choose to serve at the Department of Defense are talented and dedicated professionals who are committed to their mission of keeping American lives safe. Like all Americans, I appreciate their service and I appreciate their commitment to our nation.

But respect for these individuals cannot blind us to an ugly underbelly at DoD: There has long been a too-cozy relationship between the Department and an increasingly powerful group of defense contractors that reap huge profits from hundreds of billions of dollars in government contracts. The appearance and the reality of the Pentagon being captured by the defense industry undermines our public confidence and threatens our national security.

Every year, the Department of Defense receives more discretionary taxpayer dollars from the federal budget than any other part of government.

DoD and the defense industry often defend the enormous Pentagon budget by pointing out that it supports substantial investments in development and research to make our country more innovative and more competitive. But that story does not fit the facts. A recent DoD study reported that defense contractors' federal investments are increasingly going to their shareholders rather than being invested in more research and development. In fact, from 2010 to 2019, big defense companies spent 73% more on stock buybacks and dividends than they did during the previous decade.

Because federal contracts are so profitable for defense companies, these companies want the inside track on how to win those contracts. A preferred strategy is to hire former Pentagon employees to put together the bids and then to present them to their former colleagues in government. After all, if a defense industry staffer used to work in the next cubicle over from a Pentagon acquisitions officer, there's a better chance that the industry staffer can get his phone calls and emails returned. A better chance the industry staffer can schedule a sales pitch. A better chance that the sales pitch will go well. And, with all the latest intelligence on what the Department wants to fund, the industry staffer who just left the Department of Defense has the best possible chance of turning former friendships into dollar signs for the defense industry.

This model isn't hypothetical. A 2019 analysis by the GAO found that the Pentagon's 14 largest contractors have on staff 1,700 former Department of Defense senior civilian and military officials. 1,700 former DoD people using their DoD contacts on behalf of the defense industry. That's an entire small town working full-time just to gather in government contracts for the defense industry.

Those who defend the revolving door between the Pentagon and the defense industry say that these government employees are hired for their expertise, but, again, the facts belie that story. In fact, a new analysis released today by my office found that 91 percent of the government employees hired by the top defense industries don't become top executives. Nope. 91 percent of the government employees hired by the top defense industry companies become registered lobbyists for their new employers.

The biggest weapons contractors all have former senior Pentagon officials on their board. Their star-studded cast includes: Lockheed Martin, with a former chairman of the Joint Chiefs of Staff and a former DoD general counsel on their board; Boeing, with a former chief of naval operations; Raytheon, with a former deputy secretary of defense and vice chairman of the joint chiefs; General Dynamics, with a former secretary of defense; Northrop Grumman, with a former Air Force chief of staff and chief of naval operations.

It's clear that these companies think the best way to succeed is to buy influence with the DoD.

Influence peddling occurs in multiple forms. Instead of going to work directly for a single giant defense industry contractor, some former military officers hang out a shingle when they retire and offer their services to foreign governments. They rake in the cash. A former Navy SEAL earned $258,000 a year as a special operations adviser for Saudi Arabia. An Air Force colonel received $300,000 a year to work for a Russian-owned satellite company. These foreign governments claim they're buying advice, but no one is fooled. In reality they are purchasing favors, influence, and a good name for themselves in Washington -- whether that's in America's national security interest or not.

Ethics lapses take other forms as well. The Wall Street Journal reported on DoD and other executive branch officials who owned stock in companies that stood to benefit from their official activities. In one case, a Pentagon official owned stock in Alibaba while weighing in on whether the U.S. federal government should bar other Americans from investing in Alibaba because of its ties to the Chinese government. The worst part: DoD signed off on the official's work and didn't see a problem.

Ethics requirements are essential to safeguard the integrity of the Pentagon's work. But too often, legislation has moved our ethics laws in the wrong direction. Last year's National Defense Authorization Act got rid of a requirement for the DoD Inspector General to report on certain aspects of the Department's ethics compliance. A few years ago, I barely defeated a proposal DoD advocated for writing into federal law that would have further watered down lobbying restrictions on former Pentagon officials. We need more oversight of ethics enforcement, not less.

I was concerned to see that DoD's written testimony for today's hearing claims that DoD specific rules can be "counterproductive" and "undermine rather than promote a shared commitment to ethics." What undermines this commitment is DoD fighting laws passed by Congress instead of enforcing those laws.

To be clear, problems of undue influence are not unique to the Department of Defense. I've introduced comprehensive legislation to address ethics failures both at DoD and across the federal government. But failure to strengthen ethics laws elsewhere in government is not an excuse for tolerating terrible ethics lapses at DoD.

Ultimately, these conflicts of interest hurt competition and create an uneven playing field. At today's hearing, I want to hear from our witnesses about the threats posed by conflicts of interest, whether current protections in federal law are sufficient to protect those conflicts, the process for approving retired national security officials who are working for foreign governments, and any other areas where laws and policies could and should be strengthened.

In 1959, Congress held 25 hearings to investigate the revolving door between defense contractors and senior military officials. General Omar Bradley, our country's first chairman of the Joint Chiefs of Staff, testified he did not believe any former government official should "bring any influence" to win contracts for a company.

The generation that fought World War II took ethics responsibilities seriously and we should do the same. When defense contractors have an outsized influence over the Pentagon or when senior leaders see no issue with selling their credentials to the highest bidder, our national security policy is compromised and it is time to put a stop to this.

To our witnesses, I say thank you and welcome for appearing. Now I will turn to Ranking Member Scott for his comments to open this hearing.

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