Punishment for Fraud: More Military Contracts

Your tax dollars at work. No wonder cutting $200 billion from their budget is such a terrible idea.

Hundreds of defense contractors that defrauded the U.S. military received more than $1.1 trillion in Pentagon contracts during the past decade, according to a Department of Defense report prepared for Sen. Bernie Sanders.
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The report detailed how the Pentagon paid $573.7 billion during the past 10 years to more than 300 contractors involved in civil fraud cases that resulted in judgments of more than $1 million, $398 billion of which was awarded after settlement or judgment for fraud. When awards to "parent" companies are counted, the Pentagon paid more than $1.1 trillion during the past 10 years just to the 37 top companies engaged in fraud.

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Thankfully, it's just little companies and isolated incidents.

For example, Lockheed Martin in 2008 paid $10.5 million to settle charges that it defrauded the government by submitting false invoices on a multi-billion dollar contract connected to the Titan IV space launch vehicle program. That didn't seem to sour the relationship between Lockheed and the Defense Department, which gave Lockheed $30.2 billion in contracts in fiscal year 2009, more than ever before.

In another case, Northrop Grumman paid $62 million in 2005 to settle charges that it "engaged in a fraud scheme by routinely submitting false contract proposals," and "concealed basic problems in its handling of inventory, scrap and attrition." Despite the serious charges of pervasive and repeated fraud, Northrop Grumman received $12.9 billion in contracts the next year, 16 percent more than the year before.

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I guess they're just "too big to fail."

ETA: Hat tip to Reason's Hit & Run Blog

Zoombie said:

I could complain, but my parents work for Lockheed Martin >.>

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I'd be interested in their take on this article, then.

How long would it take some Senator's staff to write the a bill?

"If your company is convicted of fraud, no government contracts for 10 years."

There, all they need to do is put a title on it.

clintl said:

I wish we could do that. The fact is, however, that there are only a few companies that are capable of doing what Lockheed Martin and Northrup Grumman do. That's why we keep giving them contracts. We'd probably have to look to foreign companies for the work if we cut them off.

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In that case, if there's nobody else to do the job, that's pretty clearly an attack against the US. Up the ante.

"If your company is convicted of fraud, all officers will be summarily convicted of treason against the United States of America for aiding the enemy, taken out back, and shot."

Dambetcha the fraud would stop, immediately.

clintl said:

When in China...

I wouldn't go that far. But I would be wholeheartedly in favor of tossing some high level executives in prison for it.

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Yeah, it was a bit of hyperbole. At least for now.

I wonder how many high-level executives (or clerks actually involved) ended up in prison over those fraud convictions?

Throw a few butts in prison, then if it still doesn't stop, we can up the ante.

Manuel Royal said:

Three years ago, one of my naive hopes for the incoming administration was that there'd be a Truman-style commission on war profiteering, and some people would be going to prison, or possibly face capital treason charges. Nope.

(I also remember voting for a Constitutional scholar. Now we have a President who's asserted his right to assassinate anyone he pleases, including U.S. citizens.)

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The second sentence in paragraph B serves to explain paragraph A.

"Judge not, least you be judged," to put it generously.

jennontheisland said:

Even if there were other companies that offered the same services, these guys would still probably the lowest bidders (granted they seem to be bidding low with the assumption that they can just make up the difference with false invoices, but still: lowest bidders). And just imagine the complaints about squandering taxpayer money if the government didn't award a contract to the lowest bidder.

Besides, wouldn't laws restricting how contracts are awarded be big gubment controlling the economy? Aren't cries of "there otta be a law" bad for business and economically restrictive?

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I've never heard anybody argue that fraud should be legal, and there are already lots of laws on the books against it.

As for contract restrictions, any organization, government or not, can set terms to be met to be eligible for a contract. Most organizations would probably be loathe to grant contracts to companies that have defrauded them.

A specific law that deals with government contracts is different than a general law that impacts all contracts, even those to which the lawgiver is not a party.

Zoombie said:

Then after that, there is taking money and using it to make your dick bigger.

That's what the US government is doing right now >:V

(That's my angry face)

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Concise and to-the-point as always, Zoombie.

Lady Liberty to Uncle Sam. "You've already got three friggin' shotguns, two AK-47s, and a squad's worth of pistols. Do you really think you need matching machineguns to keep burglars out of the house?"

jennontheisland said:

Who said fraud should be legal?

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I don't know. I even said "I've never heard anybody argue that fraud should be legal." Did you think that was an accusation? Sorry. I was responding to "Aren't cries of "there otta be a law" bad for business and economically restrictive?" by pointing out "I've never heard...

jennontheisland said:

Laws preventing entities from entering into contracts with companies that meet certain parameters are restrictions. I've never heard you promote the idea of laws restricting economic activity before. I thought the idea of economic restrictions was just all around bad for the whole free market economy thing.

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Here's what I said:

A specific law that deals with government contracts is different than a general law that impacts all contracts, even those to which the lawgiver is not a party.

I have no problem with a law that says "To get taxpayer money, your company can not have been convicted of fraud in the last 10 years." It's the government equivalent of a private company setting their own policy not to buy from such companies. It's the government's job to protect my tax money against misuse, and I think that would be a law or policy that would contribute to protecting my "investment" in my country.

I have a big problem if the law instead reads "No company may do business with any other company that has been convicted of fraud in the last 10 years."

The second would be common sense, it seems to me, but not something the government should be dictating. I have the option not to own stock in a company that regularly deals with crooks. I have no such option when it comes to the government. They can take my money and give it to crooks without my say so.