Department Of Defense Appropriations Act, 2010
Floor Speech
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Mr. SANDERS. Madam President, in recent weeks there has been some discussion about what types of organizations might or might not receive Federal funding. I think that is a very appropriate discussion for this legislation which obviously expends many hundreds of billions of taxpayer dollars.
One of the concerns I have is that a number of the largest defense contractors in this country, it turns out, over a period of years, have, time after time, been involved in illegal behavior. I think the American people and the taxpayers of this country want to know how it happened that year after year we continued to do business, to the tune of tens and tens of billions of dollars, with large corporate interests--in this case, defense contractors--that were then found guilty of defrauding the American people. How many times do you have to be found guilty before we say enough is enough? Let me give you a few examples--really, quite a few--of what I am talking about.
According to the Project on Government Oversight, the three largest government contractors--Lockheed Martin, Boeing, and Northrop Grumman--have a history riddled with fraud and other illegal behavior. Combined, these companies, these three companies, have engaged in 109 instances of misconduct since 1995 and have paid fees and settlements totaling over $2.9 billion. Despite this history, these organization received over $77 billion in government contracts in 2007 alone.
Let me repeat. Three major defense contractors--Lockheed Martin, Boeing, and Northrop Grumman--have engaged, combined, in 109 instances of misconduct since 1995 and have paid fees and settlements totaling $2.9 billion. This is not a videotape on a TV show having some people say stupid things. These are people who have been found guilty of defrauding the taxpayers of this country and have paid fees and settlements totaling $2.9 billion.
Let me give you some specificity here.
The largest contractor, Lockheed Martin, has engaged in 50 instances of misconduct since 1995, paying fines and settlements totaling $577 million. Yet in 2007 it still received $34 billion of government contracts.
According to the U.S. Attorney's Office, in 2008 Lockheed Martin Space Systems Company paid $10.5 million to settle charges that it defrauded the government by submitting false invoices for payment on a multibillion-dollar contract connected to the Titan IV space launch vehicle program.
According to the Department of Justice, in 2003 Lockheed Martin paid $38 million to resolve allegations that it fraudulently inflated the costs of performing several Air Force contracts for the purchase and navigation and targeting pods for military jets.
In 2001, Lockheed Martin paid $8.5 million to settle criminal charges that it lied about its costs when negotiating contracts for the repair and restoration of radar pedestals installed in U.S. warships, costing the Navy millions of dollars, also according to the Department of Justice.
But this behavior is not unique to Lockheed Martin. Boeing, the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft, has engaged in 31 instances of misconduct since 1995 and paid $1.5 billion in fines and settlements.
I know people here have expressed concerns about what one group did in, clearly, stupid behavior. But what about a company such as Lockheed Martin which has paid $8.5 million to settle criminal charges? What about companies such as Boeing which has engaged in 31 instances of misconduct since 1995 and paid $1.5 billion in fines and settlements? In 2000, for example, according to the Department of Justice, Boeing agreed to pay $54 million to settle charges that it defrauded the Army by selling it more than 140 helicopters containing defective gears, putting the lives of the men and women in the Air Force in danger. These defective gears resulted in the deaths of at least five servicemen. We are not talking ACORN here. We are talking about $54 million to settle charges and actions that may have resulted in the death of at least five servicemen. How many years does this have to go on before we begin to deal with it? In 2007, Boeing received $24 billion in Federal contracts.
Finally, Northrop Grumman, the third largest contractor, has a similar history, with 27 instances of fraud totaling $790 million over the past 15
years. In 2003, according to the Project on Government Oversight, Northrop Grumman paid $111.2 million to settle charges that a subsidiary overcharged the United States on government contracts; i.e, ripping off the taxpayers. According to the Department of Justice, the Northrop Grumman subsidiary engaged in five separate schemes that increased the cost the Government paid for space projects.
Also in 2003, according to the Department of Justice, Northrop Grumman paid the United States $80 million to settle charges that it overcharged the government and knowingly installed substandard parts in target drones designed for the Navy.
Over and over and over again, year after year after year, the largest defense contractors engage in illegal activity to rip off the taxpayers and, in some instances, put in danger the lives of the men and women in the Armed Forces.
These are only a few snapshots of what appears to be a culture of fraud and entitlement within the military contracting community. We owe it to taxpayers to begin to get to the bottom of the situation. To reform the culture of greed, of illegal behavior, we have to expose it first. For that reason, I am offering an amendment under which the Secretary of Defense would calculate the total amount of money that goes to companies that have engaged in fraud against the United States and then make recommendations about how to penalize repeat offenders. We have an expression when we deal with criminal justice. We say: Three strikes, you are out.
A lot of these guys are getting a lot more than three strikes. They keep striking out and they come back and get lucrative defense contracts. How many times do they have to strike out?
I hope very much this study will be a first step in the process of cleaning up the world of defense contracting. I look forward to continuing to work to make absolutely sure the money we have set aside for our national defense is, in fact, spent on national defense, on protecting the men and women who bravely serve us in the Armed Forces and is not frittered away on fraudulent bids, illegal behavior, and wasteful projects.
I hope very much that when the amendment comes up, we will have bipartisan support. I cannot understand why anybody would be opposed to having us finally address this outrage. I hope the Senate will pass it.
I yield the floor.
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Mr. SANDERS. Let me congratulate Senator Casey for that very good amendment. I look forward to supporting it.
Mr. President, I wish to say a few words on amendment No. 2617, which is pending, and talk about why I offered it.
This is a very important amendment. Everybody in the country is concerned that we have today a $12 trillion national debt. Everybody is concerned that this year we will run up the largest deficit in the history of the country. What that means is the taxpayers rightfully and absolutely want to know that the money we expend, whether it is for defense, which is what we are discussing this evening, whether it is for housing, education, any other purpose, they want to know that every nickel of Federal dollars spent is expended as wisely and as cost-effectively as possible. They also want to know that the corporations and the institutions and the individuals who receive that Federal funding are honest and trustworthy in terms of how they can expend those Federal dollars. That is what the people want, and they certainly have every right to those expectations.
Several weeks ago, the Senate voted to prohibit any funding going to an organization called ACORN. That decision was largely motivated by a videotape which showed employees of ACORN involved in an outrageous and absurd discussion with actors who were posing as a prostitute and a pimp. Those employees, appropriately enough, were fired for their outrageous behavior. My understanding is that over a period of 15 years, ACORN received about $53 million to promote affordable housing, encourage voter registration, and other things. I voted against the ACORN resolution, not because I condoned the behavior of these employees or other problems associated with the organization over the years. I don't. I opposed it because we need a process to determine what the criteria are in terms of defunding an organization engaged in improper or illegal behavior.
Frankly, I don't think a videotape on TV is good enough justification. We need a process, and that is what this amendment is about.
The sad truth is, virtually every major defense contractor has, for many years, been engaged in systemic illegal and fraudulent behavior while receiving hundreds and hundreds of billions of dollars of taxpayer money. We are not talking here about the $53 million that ACORN received over 15 years. We are talking about defense contractors that have received many billions of dollars in defense contracts and, year after year, time after time, have violated the law, ripping off the taxpayers big time.
In some instances, these contractors have done more than steal money from taxpayers. In some instances, they have actually endangered the lives and well-being of the men and women who serve our country in the Armed Forces.
Let me cite a few examples. According to the Project on Government Oversight, a nonpartisan, widely respected organization focusing on government waste, the three largest government defense contractors, Lockheed Martin, Boeing, and Northrop Grumman, all have a history riddled with fraud and other illegal behavior. Combined, these companies have engaged in 109 instances of misconduct since 1995. This is going back to 1995, 109 instances of misconduct, and have paid fees and settlements for this misconduct totaling $2.9 billion.
Let me repeat that. These three companies--Lockheed Martin, Boeing, and Northrop Grumman--have engaged in 109 instances of misconduct since 1995 and have paid fees and settlements for this misconduct totaling $2.9 billion. Here is the kicker: Despite violating the law time after time after time, despite being fined time after time after time, guess what the penalty has been.
Here is what the penalty is. It is a pretty harsh penalty. In 2007, their punishment was $77 billion in government contracts. That is a pretty steep penalty, I have to admit, $77 billion. This is not ACORN. They were defunded immediately because of a 2-minute videotape. These are guys who time after time violated the law, ripped off the taxpayers, and their punishment was in 2007, 1 year alone, not $53 million over 15 years but $77 billion in 1 year.
Based on a video on TV, we took away funding for ACORN. What are we going to do with the major defense contractors who have been found guilty in courts of law, not on a videotape, time after time?
Let me give a few specifics so we know what we are talking about. Lockheed Martin, the largest defense contractor in the country, has engaged in 50 instances of misconduct since 1995, paying fines and settlements totaling $577 million. Yet it received $34 billion in government contracts in 2007. That is telling them who is boss. That is sticking it to them for violating the law.
Here is the type of behavior we are talking about. According to the U.S. Attorney's Office, in 2008, Lockheed Martin's Space Systems Company paid $10.5 million to settle charges that it defrauded the government by submitting false invoices for payment on a multibillion-dollar contract connected to the Titan IV space launch vehicle program. According to the Department of Justice, in 2003, Lockheed Martin paid $38 million to resolve allegations that it fraudulently inflated the cost of performing several Air Force contracts for the purchase of navigation and targeting pads for military jets.
In 2001, Lockheed Martin paid $8.5 million to settle criminal charges that it lied about its costs when negotiating contracts for the repair and restoration of radar pedestals installed in U.S. warships.
But in fairness to Lockheed Martin, we should be clear that they are not the only defense contractors involved in fraud. Frankly, it is endemic in the industry. Boeing is the world's largest aerospace company and the largest manufacturer of commercial jet liners and military aircraft. Since 1995, Boeing has either been found guilty, liable, or reached settlements in 31 instances of misconduct and, as a result, paid $1.5 billion in fines, judgments, and settlements. I am talking about real money.
In 2000, according to the Department of Justice, Boeing agreed to pay $54 million to settle charges that it placed defective gears in more than 140 CH-47D Chinook helicopters and then sold the defective helicopters to the U.S. Army. When one of the gears failed in flight, it caused an Army Chinook helicopter to crash and burn while on a mission in Honduras, and five servicemen aboard were killed. We are not just talking about fraud; we are talking about activities which resulted in the death of U.S. servicemen.
In a report made public this past Tuesday, the DOD inspector reported that Boeing may have recovered $271 million in ``unallowable costs'' from the government. That is this last Tuesday. Still, Boeing received $24 billion in Federal contracts in 2007.
Finally, Northrop Grumman, the third largest contractor, has a similar history, with 27 instances of misconduct totaling $790 million over the past 15 years. It is not just the big three. On June 9, 2004, KBR overbilled for dining facilities by at least 19 percent, according to KBR's own studies, and it could be as high as 36 percent. As reported in its 2005 10-K, the government eventually agreed to withhold $55 million from KBR.
United Technologies reached a settlement amounting to over $50 million.
A few weeks ago the Senate voted to strip funding from an organization called ACORN which received $53 million in Federal funds for a period of 15 years. What do we do with some of the largest defense contractors that have time after time after time been involved with fraud?
I think one has to be pretty obtuse not to perceive that this type of behavior, this recurrent behavior, is systemic in the industry and it is part of the overall business model. Let me add, what I describe now is what these companies have been caught doing. We do not know what they have done in which they have not been caught.
The time is long overdue for us to get to the bottom of this situation. We owe that not only to the taxpayers of the country but to the men and women in our Armed Forces.
For that reason, I am proposing an amendment today under which the Secretary of Defense would calculate the total amount of money that goes to companies that have engaged in fraud against the United States, and then make recommendations about how to penalize repeat offenders. In other words, they have to be held accountable. It is absurd that year after year these companies continue doing the same things--illegal behavior, fraudulent activities--and year after year they keep getting away with it, and year after year they come back and they get hundreds of billions of dollars in Federal funds.
I hope very much this study will receive strong bipartisan support and will be a first step in moving us forward to cleaning up the world of defense contracting.
Mr. President, with that, I yield the floor.
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