Report: Pentagon Funneled COVID Funds To U.S. Defense Contractors
The Washington Post reports that the Pentagon funneled a $1 billion fund allocated by Congress for building up the nation’s medical equipment supplies to defense contractors.
- The taxpayer money meant to fight the coronavirus was spent on making things like jet engine parts, body armor and dress uniforms, despite U.S. health officials saying that major funding gaps remain in the country’s pandemic response.
The Cares Act, which Congress passed earlier this year, gave the Pentagon money to “prevent, prepare for, and respond to coronavirus.” But a few weeks later, the Defense Department began reshaping how it would award the money in a way that represented a major departure from Congress’s original intent.
Robert Redfield, director of the Centers for Disease Control and Prevention, said in Senate testimony last week that states desperately need $6 billion to distribute vaccines to Americans early next year.
There remains a severe shortage of N95 masks at numerous U.S. hospitals. These are the types of problems that the money was originally intended to address.
- The Post reported that the Trump administration "has done little to limit the defense firms from accessing multiple bailout funds at once and is not requiring the companies to refrain from layoffs as a condition of receiving the awards."
- Mandy Smithberger, a defense analyst at watchdog group Project on Government Oversight, said: “This is part and parcel of whether we have budget priorities that actually serve our public safety or whether we have a government that is captured by special interests.”
- At least 10 of the approximately 30 companies that received the DoD funds also received loans through the Paycheck Protection Program, according to the report. Both programs were part of the CARES Act.
The $1 billion fund was allocated under the Defense Production Act, which allows President Trump to compel U.S. companies to manufacture products in the nation’s interest.
His administration was under intense pressure this spring to use the law to address dire shortages in medical-grade masks and other supplies.
- However, the Pentagon altered how the money would be spent, opting to give hundreds of millions of dollars to defense contractors, primarily for projects unrelated to the pandemic.
- Firms including Rolls-Royce and ArcelorMittal received $183 million to maintain the shipping industry; $80 million went to a Kansas aircraft parts company; and a domestic manufacturer of Army dress uniform fabric got $2 million.
The virus-related funding came at a time when U.S. military spending was already near all-time highs. The $686 billion defense budget for fiscal year 2019 is comparable to a typical year during the Cold War or the period shortly after 9/11, although it has declined somewhat as a percentage of the economy. Major defense contractors such as Lockheed Martin, General Dynamics and Northrop Grumman have remained financially healthy despite some pandemic-related disruption, and have continued paying stock dividends to investors.
- Congress is currently debating another massive stimulus package, “and the Pentagon and defense contractors have called for another $11 billion to be directed toward their programs.” (WaPo)