July 15, 2020

After Inquiry from Warren, Department of Defense Says Big Defense Contractors Cannot Divert Increased Progress Payments During COVID-19 to Share Buybacks, Dividends, or Executive Salaries

Text of Warren Letter to DoD (PDF)

Text of DoD Response (PDF)

Washington, DC - In response to questions from United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Armed Services Committee, about risks from changes to Department of Defense (DoD) pricing and contracting policy amid the COVID-19 pandemic, the Under Secretary of Defense for Acquisition and Sustainment Ellen Lord said big defense contractors cannot divert the increased progress payments towards share buybacks, dividends, or executive salaries. 

In her response to Senator Warren's questions, Under Secretary Lord said the five contractors that will receive the largest disbursements through the increased progress payment rates are Northrop Grumman Systems; United Launch Services, LLC (a subsidiary of a joint venture between Boeing and Lockheed Martin); Raytheon Company; Lockheed Martin Corporation; and the Boeing Company. Lord also said the increased progress payments will continue as long as the COVID-19 emergency continues.  

"Big defense contractors should not be able to use the COVID-19 crisis to profit -- and DoD must use every tool available to hold these contractors accountable," said Senator Warren. "I will continue to ask questions and request information on increased progress payments to ensure there is no waste, fraud, or abuse under this policy." 

In May, Senator Warren wrote to Under Secretary Lord raising concern that this increase in progress payments could expedite billions of dollars of taxpayer funds to giant defense contractors that use the funds for stock buybacks or other methods of enriching upper management. 

Read DoD's full response here.