Follow us on social

$4000 soap dispensers on Air Force planes? Just you wait.

$4000 soap dispensers on Air Force planes? Just you wait.

Provisions in this year's NDAA would allow military contractors to gouge taxpayers even more

Analysis | Military Industrial Complex

Time is running out for Congress to pass the annual defense policy bill. After the election, lawmakers must reconcile the differences between their versions of the National Defense Authorization Act (NDAA) and set the topline for Pentagon spending in fiscal year 2025. When they do, they must strip two measures that will make it easier for contractors to engage in price gouging.

While the House abided by the spending caps Congress established in last year’s debt deal, the Senate added about $25 billion to the president’s budget request for the Pentagon — bringing the department’s topline to a whopping $912 billion. This is excessive, and the increase will not make Americans any safer. Lawmakers should communicate that to those negotiating the final NDAA.

Members of Congress cannot, however, overlook two seemingly benign provisions in the House version of the bill. If retained, Sections 811 and 812 of the House-passed NDAA would bolster contractors’ ability to price gouge the Pentagon — already a significant issue for the military. Just this week the Department of Defense (DOD) Inspector General found that Boeing overcharged the Air Force by nearly a million dollars on various products for the C-17 military transport aircraft. In one case, Boeing overcharged the military for a soap dispenser by nearly 8,000%, more than 80 times the commercial price.

A million dollars is a drop in the bucket when it comes to overall Pentagon spending. But this isn’t the first time Boeing has price gouged the department, and the practice is rampant throughout the arms industry. Two weeks ago, the Department of Justice (DOJ) announced that Raytheon will pay nearly a billion dollars to resolve a government investigation that exposed the company for overcharging on government contracts. Whistleblowers exposed both Boeing and Raytheon for price gouging. Without them, the agencies may have never discovered that the contractors overcharged taxpayers.

Unfortunately, the true scale of military price gouging is unknown. The Pentagon obligated $431 billion for military contracts in fiscal year 2023, nearly half of its total base budget. So, the government often relies on whistleblowers to alert it to potential price gouging by military contractors. Lawmakers can also request inspectors general to conduct investigations into potential misconduct. Several members are dedicated to this effort and to preventing contractors from overcharging the government in the future. Congress overall, however, has played an integral role in expanding the opportunities for price gouging.

Sections 811 and 812 of the House NDAA are part of a decades-long effort to legalize price gouging. Congress has achieved this goal, in part, by broadening the array of products and services considered to be commercial by the Pentagon. According to the Federal Acquisition Regulation, contractors are not required to submit to the Pentagon certified cost and pricing data for commercial products and services. These data include the cost of labor and the price of materials; they must be current, complete, and accurate.

More often than not, the Pentagon needs certified cost and pricing data to negotiate fair prices with military contractors. Certified data is particularly critical when the department is negotiating prices for products or services that may not be available in the civilian marketplace, or for which there is a sole source. In these cases, Pentagon officials have few other tools to ensure they are making fair deals with military contractors.

In theory, it would be easier for the Pentagon to negotiate reasonable prices for commercial products and services. Commerciality implies some level of price competition. But Congress has broadened the definition of commercial products and services to the degree that the designation has become virtually meaningless. There is no requirement, for example, that commercial products are sold to the public.

Section 811 would further expand what products and services are considered commercial, exempting an even greater portion of military contractors from certified cost and pricing data requirements. This would further erode the Pentagon’s bargaining power in negotiations with military contractors.

While Section 811 broadens the pool of so-called commercial products, Section 812 provides the Pentagon the green light to rely on uncertified cost and pricing data in certain cases. Uncertified data can be incomplete, dated, or inaccurate. Contractors can legally omit any information that may indicate to the Pentagon that they are charging 80 times the fair and reasonable price — as did Boeing for a soap dispenser.

Even the White House “strongly opposes” Section 812, asserting that it would disincentivize contractors from keeping costs under control, “creating unnecessary risk for taxpayers.” The provision would hamper some prime contractors’ ability to obtain certified cost and pricing data from subcontractors, increasing the likelihood that the prime contractors overcharge the government, which ultimately pays the bills.

The Pentagon is most capable of spending taxpayer dollars wisely when it obtains certified cost and pricing data. It helps the department assess a contractor’s costs, and thus, what its profit margins may be. Sections 811 and 812 of the House NDAA only hurt the Pentagon’s ability to negotiate fair prices on military contracts. By retaining them in the final NDAA, Congress would be acting against the best interests of both their constituents and the Pentagon.


Top photo credit: Page 17, Department of Defense (DoD) Inspector General: Audit of C-17 Spare Parts Pricing (10/25/24).
Analysis | Military Industrial Complex
POGO The Bunker
Top image credit: Project on Government Oversight

Army prematurely pushes Black Hawk replacement into production

Military Industrial Complex

The Bunker appears originally at the Project on Government Oversight and is republished here with permission.

keep readingShow less
Abrams M1A2 Main Battle Tank
Top photo credit: An Abrams M1A2 Main Battle Tank is loaded onto a trailer headed to Vaziani TrainingArea May 5, 2016, in preparation for Noble Partner 16. (Photo by Spc. Ryan Tatum, 1st Armor Brigade Combat Team, 3rd Infantry Division)

Gutting military testing office may be the deadliest move yet

Military Industrial Complex

With the stroke of a pen, Secretary of Defense Pete Hegseth has gutted the Pentagon’s weapon testing office.

His order is intended to “eliminate any non-statutory or redundant functions” by reducing the office to 30 civilian employees and 15 assigned military personnel. The order also terminates contractor support for the testing office.

keep readingShow less
President of Egypt Abdel Fattah el-Sisi
Top image credit: President of Egypt Abdel Fattah el-Sisi attends the 34th Arab League summit, in Baghdad, Iraq, May 17, 2025. Hadi Mizban/Pool via REUTERS

Egypt's energy gamble has left it beholden to Israel

Middle East

As the scorching summer season approaches, Egypt finds itself once again in the throes of an uncomfortable ritual: the annual scramble for natural gas.

Recent reports paint a concerning picture of what's to come, industrial gas supplies to vital sectors like petrochemicals and fertilizers have been drastically cut, some by as much as 50 percent. The proximate cause? Routine maintenance at Israel’s Leviathan mega-field, leading to a significant drop in imports.

But this is merely the latest symptom of a deeper, more chronic ailment. Egypt, once lauded as a rising energy hub, has fallen into a perilous trap of dependence, its national security and foreign policy options increasingly constrained by an awkward reliance on Israeli gas.

For years, the Egyptian government assured its populace and the world of an impending energy bonanza. The discovery of the gargantuan Zohr gas field in 2015, hailed as the largest in the Mediterranean, was presented as the dawn of a new era. By 2018, when Zohr began production, President Abdel Fattah el-Sisi declared that Egypt had "scored a goal," promising self-sufficiency and even the transformation into a regional gas exporter. The vision was that Egypt, once an importer, would leverage its strategic location and liquefaction plants to become a vital conduit for Eastern Mediterranean gas flowing to Europe.

Billions were poured into new power stations, further solidifying the nation's reliance on gas for electricity generation, which today accounts for a staggering 60 percent of its total consumption.

keep readingShow less

LATEST

QIOSK

Newsletter

Subscribe now to our weekly round-up and don't miss a beat with your favorite RS contributors and reporters, as well as staff analysis, opinion, and news promoting a positive, non-partisan vision of U.S. foreign policy.