The Senate is throwing small business a bone in the annual defense policy bill.
The legislation currently includes a provision aimed at improving timely payments to small businesses doing military work. Ultimately, ensuring small businesses are paid quickly saves taxpayer dollars.
The challenge is that the government doesn’t usually hire small businesses to do military work; it hires larger prime contractors, which include defense giants like Lockheed Martin and Raytheon. But prime contractors outsource between 60 and 70 percent of Pentagon contract work. And while the department grants prime contractors agreeable payment terms and generous contract financing, the department doesn’t have much information about how primes treat the small business subcontractors they hire.
By largely denying subcontractors the cash flow they need, primes risk adding to the taxpayers’ burden. Businesses in need of cash flow are forced to borrow, sometimes by selling unpaid invoices for primes to factoring companies. In exchange, factoring companies provide small businesses with the cash to pay their bills — at a cost. Businesses may have to sell their unpaid invoices at a discount, losing value on the subcontract itself, in addition to paying any relevant fees. The costs of this form of borrowing are paid by either the taxpayer or the small business: It depends on whether the business successfully advocates to increase the subcontract price to account for these costs. Otherwise, the costs cut into the business’s profit.
Ironically, small business subcontractors need advantageous payment terms and stable financing the most — but such terms are effectively only available to prime contractors working directly for the Pentagon. Indeed, the Prompt Payment Act requires the government to pay primes in a timely fashion, and it even mandates the government pay interest on any late payments. Subcontractors don’t typically enjoy these benefits, often leaving them strapped for cash.
Both the Government Accountability Office and the Congressional Research Service have pointed out the lack of data on how primes flow funds to subcontractors. That doesn’t mean there isn’t existing guidance on paying subcontractors; there is. There’s even an existing requirement for the Pentagon to include in contractors’ performance evaluations an assessment of the contractor’s history with reduced or late payments to subcontractors. Unfortunately, however, public access to that information is limited — and considering the scale of late payments to subcontractors in 2022, performance evaluations aren’t deterring companies from underpaying or paying subcontractors late.
To make matters worse, according to the GAO, the Pentagon’s oversight processes “are not designed to and do not provide comprehensive visibility” into how or whether payments are transferred from primes to suppliers at all. This is despite the fact that in some cases, primes’ failure to transfer payments to small business subcontractors directly impacts the Pentagon’s costs, and thus, the taxpayers’ too. The Pentagon itself has said that it relies on subcontractors to report missing or late payments from primes, but subcontractors don’t even always know that their ultimate customer is the government.
That’s right! Even though subcontractors can go to the Pentagon with particular payment issues they’re having with a prime, sometimes they don’t even know that’s an option because they don’t have access to the prime contract number under which they’re working, much less the assigned contracting officer.
All of this to say, the Senate provision is prescriptive about how to ensure small business subcontractors are made whole when primes fail to deliver full and/or timely payments. But that aside, it isn’t terribly different from existing guidance on paying subcontractors. Tracking incomplete and late payments to subcontractors is great to shame primes for bad behavior — but technically the Pentagon is already required to do that, albeit mostly privately. Primes’ track record on paying subcontractors should be totally accessible to the public, and not just contracting officers at the Pentagon.
Transparency is critical to better understanding the challenges that subcontractors face so that Congress can advance better payment protections for small businesses doing work for the Pentagon. Doing so will not only save the taxpayer money, it will also stoke competition in an industry that sorely needs it.
Julia Gledhill is an analyst in the Center for Defense Information at the Project on Government Oversight. Before joining POGO, she was a foreign policy associate at the Friends Committee on National Legislation.
President Trump's latest comments criticizing NATO and the ensuing media reaction obscure the fact that Americans have long held dissenting opinions on the U.S. relationship to European security.
As has happened all too often throughout the Trump era, the heat of escalating rhetoric on the part of the 45th President and his committed adversaries has distracted from the more substantive foreign policy debate.
Today, the U.S-European security relationship has never been more sacrosanct, at least in the mind's eye of the national security establishment and their allies in the mainstream press. Yet historically, the range of debate and criticism of this ostensibly sacred pact has been far more open than nostalgia or the modern commentariat may suggest.
Throughout American involvement in NATO, the nation's national security elites, members of Congress, commentators, and, yes, presidents, too, have all challenged the contours of commitment to the organization and its members at one time or another. Furthermore, they did so when Western countries faced a significantly larger Soviet military deployed deep into the heart of Central Europe.
During the early Cold War, the nature of American involvement in the alliance and its commitment to staff Europe with a permanent garrison were not seen as beyond question, even by American officials in positions of authority. In fact, American Cold War architects sold an American garrison in Europe as a temporary measure meant to shore up allies still licking their wounds from the Second World War. In congressional testimony concerning the ratification of the NATO treaty, Sen. Bourke B. Hickenlooper (R-Iowa) pressed Secretary of State Dean Acheson on if he thought the treaty meant that the U.S. would leave "substantial numbers of troops over there." An indignant Acheson responded, "[t]he answer to that question, Senator, is a clear and absolute 'No.'"
Even as Acheson's assurances to Congress proved hollow, NATO's first commander, General Dwight D. Eisenhower, while supportive of NATO's legal mechanisms of collective security, believed that America's garrison and material aid were temporary. Eisenhower warned that if "in 10 years, all American troops stationed in Europe for national defense purposes have not been returned to the United States, then this whole project will have failed."
In Congress, the extent of American military involvement remained a persistent issue for the Republican Right. Be they principled noninterventionists or Asia First unilateralists, the extent of American troop presence in Europe remained a contested issue. Retired Army officer Bonner Fellers, writing in a July 1949 issue of Human Events, a conservative magazine, summed up the widely agreed-upon position of these dissenters. While Fellers believed that the NATO treaty had "enormous psychological value," as it served as a "symbol of unity" and deterrence, he did not think that that should translate into a massive and permanent military garrison in Western Europe.
Fellers revisited the issue two years later in an article for Human Events, which was read into the Congressional Record. Rather than see the American European garrison as a deterrent, Fellers asserted that it could be viewed as a provocation and argued that the "presence of our forces on the Rhine gives Stalin a visible symbol, a unifying agent which tends to enlist the support of all Russians behind the Kremlin."
It is important to note that Fellers was hardly a dove. Instead, he was a committed anti-communist who loathed the Soviet Union and supported a nuclear deterrence on the cheap, a Fortress America 2.0. Yet, he, like many within the Republican Right, did not allow their ideological priors to automatically dictate a desire for endless security commitments to Western Europe.
On Capitol Hill, Fellers's views were common and supported by conservative Republicans who saw an American military garrison as an expensive handout to allies whose rebuilt economies could shoulder their defense, all while providing little deterrent effect. In 1953, speaking on the issue of America's military mission in Europe, Rep. Lawrence H. Smith (R-Wis.) asked rhetorically, "[w]here is the threat of military aggression?"
According to Smith, after returning from a fact-finding mission in Europe, his subcommittee on Europe reported that "there was no fear of communism in the hearts and the minds of the people there." The sentiments espoused by Fellers and Smith persisted in pockets of the Republican Right throughout the early Cold War despite the ideological demands of the era.
During the final decades of the Cold War, opposition to the presence of an American military garrison in Western Europe and the continuation of military aid emanated primarily from the left wing of the Democratic Party as a new generation of Democrats took office and sought to rein military spending and commitments. On Capitol Hill, Democrats attempted to force American troop level cuts in Europe in the House in 1988, and the Senate in 1990.
With the fall of the Berlin Wall and the collapse of the Soviet Union, the horseshoe of opposition to maintaining the status quo thickened as a body of conservative Republicans joined progressive Democrats in opposing NATO expansion, first in 1994 and then in 1999. While both votes failed, and the United States maintained a sizeable garrison in Europe, the opposition to outdated Cold War paradigms remained and flowed freely, untainted by the scurrilous charge of echoing "Putin talking points."
Indeed, even as late as November 2016, President Obama mirrored the sentiments of then President-elect Donald Trump in stating that “[i]f Greece can meet this NATO commitment, all our NATO allies should be able to do so."
This latest fervor has, as all too often now, completely ignored these historical debates around American foreign policy commitments, creating in their passions an ahistorical sense of policy inevitability. If Americans past and present, from presidents on down, could question the contours of American security commitments and did so in far more perilous times, then so should we.
Last month, Foreign Policy published a report that stirred the debate on U.S. Middle East policy. It claimed “the Biden administration is reconsidering its priorities” in Syria and may conduct “a full withdrawal of U.S. troops.” Now, legacy media is debating the future of American involvement in Syria.
Missing from this discussion is the suffering that involvement has caused.
Writing for the New York Times, retired general Kenneth McKenzie warns “it’s not time for our troops to leave” Syria. Mere talk of a withdrawal (let alone actually withdrawing), he argues, is “seriously damaging to U.S. interests.” It “gives hope to Tehran” that Iran might rival American influence in the Middle East — which is bad, supposedly. Why Iran has less of a right to influence its own region than people thousands of miles away is unclear.
McKenzie also argues that American troops must remain to “secure the prisons holding ISIS fighters.” Without boots on the ground, militants might escape and the Islamist group could “rejuvenate itself.” McKenzie doesn’t believe the Syrian government could prevent prison breaks on its own, or even with Russian and Iranian support.
This argument is highly speculative. If the Americans leave, imprisoned ISIS fighters might escape. And, if enough do, they might rebuild their organization into a force too formidable for Syrian forces to handle. Multiple unlikely contingencies must materialize to even warrant taking this reasoning seriously.
But McKenzie’s claim suffers a more fundamental problem. It confuses the cause for the antidote. Everyone from Noam Chomsky to Rand Paul knows American intervention created the conditions that allowed ISIS to grow. Bombing Arab nations to smithereens, toppling their leaders, and starving governments through sanctions and outright theft generated a power vacuum. As did deploying troops indefinitely, which prevented states like Syria from maintaining territorial integrity and establishing the mechanisms for self-governance.
McKenzie believes the Syrian government is simply too weak to quell the increasingly small threat an ISIS in retreat poses. Assuming he’s correct, it’s worth asking why that’s the case. The facts again point to American intervention.
Nearly 13 years into its ongoing civil war, Syria is in tatters. Once a middle-income nation with respectable living standards, it’s now the poorest country on Earth. More than 90% of Syrians live below the international poverty line of $1.90 per day. Their paychecks are worthless, with the Syrian pound losing virtually all of its relative value since the war began.
It’s not all America’s fault. The Syrian government undoubtedly bears significant blame for the humanitarian crisis. But American sanctions hamstring it from improving matters. The infamous Caesar Act targets anyone who "engages in a significant transaction" with the Syrian government. Signed into law by Donald Trump, this heinous policy effectively precludes the international community from helping Syria rebuild.
A bipartisan but overwhelmingly Democratic coalition of lawmakers recently voted against slapping new sanctions on Syria. Unfortunately, for every one of them, there were 12 supporters of the legislation. Dubbed the Assad Regime Anti-Normalization Act, it would extend the sunset of the Caesar sanctions by eight years. The bill would also expand the list of proscribed transactions.
But there’s more. Years ago, with America’s blessing, Turkish-backed militias stole capital from over 1,000 factories in the city of Aleppo alone. This assault on the productive forces of Syria’s industrial hub left its economy in tatters. But that’s not all the United States and its allies stole. America’s occupying troops routinely commandeer Syrian wheat and petroleum. Trump admitted as much, saying that soldiers “were staying in Syria to secure oil resources.”
The Syrian state is starving. More American intervention isn’t what Syria needs. It needs the United States’ boot off of its neck.
In these discussions of states and militants, we mustn’t lose sight of what matters most: the people. American militarism in Syria has wrought dire human costs. It has helped to plunge Syrians into the depths of unimaginable despair. Over 80% of them are food-insecure and a similar proportion lack sustained access to electricity. Many enjoy just one hour of it per day. Without electricity, you can’t refrigerate food and it rots. That causes shortages. People have taken to eating out of the garbage.
McKenzie seems to care little about this immense suffering. And why would he? His job as a general was to project American military might, whatever the costs, a position he apparently continues as a guest writer for The New York Times.
Confiscating Russia’s sovereign assets is an act of economic war. Seizing and transferring these assets to Ukraine may make Washington feel virtuous, but it will not bring peace. Passage of this bill will only reinforce the view of hardliners in Moscow that Russia’s war lies not just with Ukraine, but really with the United States and the West. Any hope that the United States and Russia could work toward stabilizing or improving relations will subsequently be destroyed.
There is no justification for Russia’s invasion of Ukraine, but enacting this bill will make peace less likely. Ukrainians have courageously defended their country for nearly two years, but even Ukraine’s former top military commander General Valery Zaluzhny admits the war is now a stalemate.
Russia’s frozen assets could be used as a bargaining chip during negotiations, but once Congress provides the president the authority to seize Russian assets, there will be immense political pressure on him to carry out the policy to avoid looking weak. President Biden was recently pilloried by the media and members of my party for returning frozen Iranian assets in exchange for five American hostages. He is unlikely to make that decision again.
Confiscation will only convince Moscow that there is no negotiated settlement to be had with Ukraine. The result will be a destroyed Ukraine. More Ukrainian soldiers and civilians will die, and more cities and towns will be turned to rubble.
History is replete with examples of economic warfare turning into violent hostilities. Many historians believe the U.S. embargo of 1807, which was intended to punish France and England for their aggressions at sea, led to the War of 1812. Likewise, FDR’s decision to freeze Japan’s sovereign assets and implement an embargo on oil and gasoline exports led to Tokyo’s decision to attack Pearl Harbor.
The past teaches us the folly of embracing every proposed act of revenge. U.S. senators are duty-bound to ask whether our actions will ensure American security and prosperity. In regard to the REPO Act, the Russians already answered that question for us. Moscow says they will retaliate in kind against the United States and our allies, with some estimates claiming upward of $288 billion in Western assets that Moscow could confiscate.
Nicholas Mulder, an assistant professor of history at Cornell University, highlights the danger of the “destabilizing precedent that western countries would set by seizing assets to end a war they are not openly involved in.” Professor Mulder states that such an action “would broaden the coercive actions that states could take for disputes to which they are not a direct party.”
Confiscating Russia’s assets will also certainly convince other countries, including China, that the United States can no longer be trusted as the guarantor of the global economy. They will seek to move away from the dollar and hold their reserves in other currencies. This process of de-dollarization will be an unmitigated disaster as it will degrade America’s financial strength and ensure the prosperity Americans have come to expect is no longer attainable.
In addition, this bill will hand the Russians another tool to fuel resentment against the United States. American leaders speak of a “rules-based international order” but the theory that the United States can confiscate the assets of another country we are not at war with is legally dubious.
Professor Mulder argues that “economic reprisals are the prerogative of injured states, not of third parties.” Rather than compel respect for international law, our actions will demonstrate to our adversaries that we are flouting it. This bill will be used by the Kremlin to show the world that while Washington demands that others follow the rules, we are happy to break them whenever we see fit.
In a multipolar world, Washington can no longer expect to act with impunity, particularly when dealing with a nuclear power. We understood the serious dangers our country faced during the Cold War. But three decades of repeated foreign policy disasters proves that Washington’s foreign policy establishment is badly broken.
A good way to start on the road to fixing that broken foreign policy is rejecting this disastrous bill.