Pentagon contractors didn’t get much airtime during the House Armed Services Committee markup of the annual defense policy bill last week. Never mind the fact that the arms industry receives almost half of the military budget, or that they stuff their shareholders' pockets excessively at the taxpayers’ expense.
Still, the committee managed to deliver a mixed bag of contract-related proposals — a pleasant departure from the defense industry’s usual unadulterated triumph in this bill.
Starting on a positive note, Rep. Chris Deluzio (D-Pa.) — both a freshman and newcomer to the committee — offered an amendment to name and shame companies that sabotage contract negotiations for their financial benefit. Adopted by the committee on a bipartisan basis, the amendment requires the Pentagon to publicly identify contractors that delay providing the Pentagon "accurate, complete, and current" cost information during contract negotiations.
This certified cost information is critical for the department to negotiate fairly priced contracts. According to the Government Accountability Office, less than 1 percent of about 542,000 Pentagon and NASA contracts required certified cost and pricing data in fiscal year 2020. Even when cost data is required, military contractors often refuse or delay providing it to avoid negotiating fair deals — and in the absence of competition, there’s a pretty good chance those companies will receive the contract award anyway. It’s nearly impossible to find out for sure, since the Pentagon doesn’t track delays publicly (if at all), much less their impact on the time it takes the department to award contracts.
Rep. Deluzio’s amendment would help fix that by shining light on the worst offenders in the defense industry. Publicly tracking the companies that stall contract negotiations would help the department better understand if, or how often, the Pentagon awards contracts to companies that haven’t provided certified cost information — on the few occasions it’s actually required. Not only would the amendment illuminate which companies essentially force the department’s hand into bad deals, but it would also hopefully disincentivize them from doing so.
While the amendment is a big step toward increasing contractor accountability, weapons firms didn’t come away from committee markup empty handed.
The committee adopted an amendment from Rep. Brad Finstad (R-Minn.) that would authorize retroactive price increases to existing Pentagon contracts, without any evidence for their need. Funnily enough, Sen. Kevin Cramer (R-N.D.) offered the same exact amendment — and I mean verbatim — to the Senate version of the fiscal year 2023 NDAA. He argued the amendment would provide “contract flexibility” to “tackle rising costs” for contractors impacted by inflation, without any public data on those costs. That amendment ultimately failed, in part because the Pentagon asked for evidence of inflation impacts that contractors never provided.
The department also repeatedly pointed out that it has no authority to increase prices for firm fixed price contracts specifically, unless the contract contains a clause specific to authorizing price adjustments. After all, the whole point of a firm fixed price contract is that the price is set in stone. But the amendment to authorize contract price increases was also unnecessary because military contractors already had access to extraordinary inflationary relief through an existing law.
Of course, Congress ended up significantly amending that law to grant military contractors easier access to inflation relief in the final fiscal year 2023 NDAA. I wrote about that provision a few months ago, noting that the Pentagon may be slow to issue congressionally mandated guidance on implementing the new law. Nearly seven months after the law’s enactment, the Pentagon still hasn’t issued guidance on implementation. It was due March 23.
Even with no guidance on how the Pentagon will implement the new authority to increase contract prices, the House Armed Services Committee adopted Rep. Don Bacon’s (R-Neb.) amendment to extend the authority another year. It remains to be seen if or when the Pentagon will produce the guidance, but it’s worth noting that contractors still haven’t provided any public data demonstrating the need for inflation relief. The Pentagon has been asking for it since at least last September. But contractors clearly don’t respond well to data requests.
And lawmakers are in very different places when it comes to contractor accountability. Rep. Deluzio successfully pushed for information that will help the Pentagon determine the extent to which military contractors intentionally stall contract negotiations to avoid providing cost data. That information ultimately helps the Pentagon tackle the price gouging issue by ensuring it’s negotiating fair prices on contracts. Other lawmakers seem to disdain data-driven work by granting military contractors pricing adjustments with zero evidence of their need, turning an inflation bailout into an ever-flowing money spigot.
Nevertheless, I’ll take a mixed bag over a slam dunk for the defense industry any day.
![Following a largely preordained election, Vladimir Putin was sworn in last week for another six-year term as president of Russia. Putin’s victory has, of course, been met with accusations of fraud and political interference, factors that help explain his 87.3% vote share. If this continuation of Putin’s 24-year-long hold on power makes one thing clear, it’s that he and his regime will not be going anywhere for the foreseeable future. But, as his war in Ukraine continues with no clear end in sight, what is less clear is how Washington plans to deal with this reality. Experts say Washington needs to start projecting a long-term strategy toward Russia and its war in Ukraine, wielding its political leverage to apply pressure on Putin and push for more diplomacy aimed at ending the conflict. Only by looking beyond short-term solutions can Washington realistically move the needle in Ukraine. Since Russia’s full-scale invasion, the U.S. has focused on getting aid to Ukraine to help it win back all of its pre-2014 territory, a goal complicated by Kyiv’s systemic shortages of munitions and manpower. But that response neglects a more strategic approach to the war, according to Andrew Weiss of the Carnegie Endowment for International Peace, who spoke in a recent panel hosted by Carnegie. “There is a vortex of emergency planning that people have been, unfortunately, sucked into for the better part of two years since the intelligence first arrived in the fall of 2021,” Weiss said. “And so the urgent crowds out the strategic.” Historian Stephen Kotkin, for his part, says preserving Ukraine’s sovereignty is critical. However, the apparent focus on regaining territory, pushed by the U.S., is misguided. “Wars are never about regaining territory. It's about the capacity to fight and the will to fight. And if Russia has the capacity to fight and Ukraine takes back territory, Russia won't stop fighting,” Kotkin said in a podcast on the Wall Street Journal. And it appears Russia does have the capacity. The number of troops and weapons at Russia’s disposal far exceeds Ukraine’s, and Russian leaders spend twice as much on defense as their Ukrainian counterparts. Ukraine will need a continuous supply of aid from the West to continue to match up to Russia. And while aid to Ukraine is important, Kotkin says, so is a clear plan for determining the preferred outcome of the war. The U.S. may be better served by using the significant political leverage it has over Russia to shape a long-term outcome in its favor. George Beebe of the Quincy Institute, which publishes Responsible Statecraft, says that Russia’s primary concerns and interests do not end with Ukraine. Moscow is fundamentally concerned about the NATO alliance and the threat it may pose to Russian internal stability. Negotiations and dialogue about the bounds and limits of NATO and Russia’s powers, therefore, are critical to the broader conflict. This is a process that is not possible without the U.S. and Europe. “That means by definition, we have some leverage,” Beebe says. To this point, Kotkin says the strength of the U.S. and its allies lies in their political influence — where they are much more powerful than Russia — rather than on the battlefield. Leveraging this influence will be a necessary tool in reaching an agreement that is favorable to the West’s interests, “one that protects the United States, protects its allies in Europe, that preserves an independent Ukraine, but also respects Russia's core security interests there.” In Kotkin’s view, this would mean pushing for an armistice that ends the fighting on the ground and preserves Ukrainian sovereignty, meaning not legally acknowledging Russia’s possession of the territory they have taken during the war. Then, negotiations can proceed. Beebe adds that a treaty on how conventional forces can be used in Europe will be important, one that establishes limits on where and how militaries can be deployed. “[Russia] need[s] some understanding with the West about what we're all going to agree to rule out in terms of interference in the other's domestic affairs,” Beebe said. Critical to these objectives is dialogue with Putin, which Beebe says Washington has not done enough to facilitate. U.S. officials have stated publicly that they do not plan to meet with Putin. The U.S. rejected Putin’s most statements of his willingness to negotiate, which he expressed in an interview with Tucker Carlson in February, citing skepticism that Putin has any genuine intentions of ending the war. “Despite Mr. Putin’s words, we have seen no actions to indicate he is interested in ending this war. If he was, he would pull back his forces and stop his ceaseless attacks on Ukraine,” a spokesperson for the White House’s National Security Council said in response. But neither side has been open to serious communication. Biden and Putin haven’t met to engage in meaningful talks about the war since it began, their last meeting taking place before the war began in the summer of 2021 in Geneva. Weiss says the U.S. should make it clear that those lines of communication are open. “Any strategy that involves diplomatic outreach also has to be sort of undergirded by serious resolve and a sense that we're not we're not going anywhere,” Weiss said. An end to the war will be critical to long-term global stability. Russia will remain a significant player on the world stage, Beebe explains, considering it is the world’s largest nuclear power and a leading energy producer. It is therefore ultimately in the U.S. and Europe’s interests to reach a relationship “that combines competitive and cooperative elements, and where we find a way to manage our differences and make sure that they don't spiral into very dangerous military confrontation,” he says. As two major global superpowers, the U.S. and Russia need to find a way to share the world. Only genuine, long-term planning can ensure that Washington will be able to shape that future in its best interests.](https://responsiblestatecraft.org/media-library/following-a-largely-preordained-election-vladimir-putin-was-sworn-in-last-week-for-another-six-year-term-as-president-of-russia.jpg?id=34283894&width=1245&height=700&quality=90&coordinates=0%2C77%2C0%2C77)
