October 07, 2022

Senator Warren Seeks Answers from DoD and NDIA on Contractor Inflation Adjustments and Lobbying Practices

“The continued disregard of lobbying and ethics laws requires stronger enforcement of existing laws and the need for more stringent rules”

Text of Letter to DoD (PDF) | Text of Letter to NDIA (PDF)

Washington D.C. – U.S. Senator Elizabeth Warren (D-Mass.) sent two letters this week; one to Under Secretary of Defense for Acquisition and Sustainment, Bill LaPlante urging the Department of Defense (DoD) to insist on receiving certified cost data to justify any adjustments for inflation to current contracts and another  to David Norquist, President and Chief Executive Officer of the National Defense Industrial Association (NDIA), expressing concerns that their lobbying efforts to increase the Pentagon’s budget to account for inflation could be violating post-government ethics restrictions.

“There are too many instances where major defense companies made tens of millions, and my office has been made aware of instances of hundreds of millions of dollars in excess profit on individual firm fixed price contracts,” wrote Senator Warren to DoD.  “I have not seen, however, any instances where industry associations suggested those excess profits be returned to the warfighter and taxpayers. I urge you to make sure DoD’s future policies don’t further exacerbate this kind of price gouging.”

Several defense industry trade associations like the NDIA, the Aerospace Industries Association, and the Professional Services Council have launched a joint campaign for the DoD and Congress to adjust contracts to account for inflation. While some adjustments are likely merited, any changes should be based on companies providing certified cost or pricing data to ensure the increases are both appropriate and necessary. 

The NDIA in particular released a report on September 13th calling for a $42 billion increase in the Pentagon’s budget. Ethics opinions obtained by Senator Warren’s office indicate that two of the authors of this report are still in their cooling off periods for engaging in direct and indirect lobbying activities, potentially violating  lobbying restrictions.

“NDIA is clearly trading on the white paper authors’ previous DoD service, noting that ‘all served as comptrollers in the Department of Defense, underlining the significance of the study,’” wrote Senator Warren to NDIA. “This statement alone makes a mockery of the purpose of post-government employment restrictions, which is to ‘prevent former Federal employees or officers exerting undue influence gained from Federal employment and using information gained while working for the Federal Government to unfairly benefit a new employer.’”

Senator Warren is asking Mr. Norquist to provide information on NDIA’s lobbying practices no later than October 21, 2022.  The Senator is also asking for a response from DoD before October 21, 2022.

Senator Warren has been the leading voice for making sure that the defense industry does not exert undue influence on the Department of Defense:

  • In July 2022, at a hearing of the Senate Armed Services Committee today, Senator Warren raised concerns to Dr. Radha Plumb, nominated to be Deputy Under Secretary of Defense for Acquisition and Sustainment, about continued weaknesses in revolving door laws and the ongoing need to address conflicts of interest between the Pentagon and private defense contractors.
  • In June 2022, Senator Warren introduced the bicameral Stop Price Gouging the Military Act, which would enhance DoD’s ability to access certified cost and pricing data.
  • In July 2021, Senator Warren released a statement on the Senate Armed Services Committee’s bipartisan adoption of her amendment to raise the recusal standard for Department of Defense employees. Under her amendment, Pentagon officials will be prohibited from participating in matters that affect the financial interests of their former employer, former clients, or former direct competitors for four years.
  • In January 2021, Senator Warren questioned General Lloyd Austin, III, the nominee to be Secretary of Defense, at a Senate Armed Services Committee hearing on his commitment to recuse himself from all matters concerning Raytheon for four years.
  • Senator Warren has also fought to preserve existing ethics laws, including defeating a provision from DoD and Senator Inhofe in the fiscal year 2021 National Defense Authorization Act to weaken Section 1045. 
  • In December 2020, Senator Warren reintroduced the Anti-Corruption and Public Integrity Act to strengthen congressional independence from lobbyists and institute a lifetime ban on lobbying by former members of Congress, Presidents, and agency heads.
  • In July 2020, in response to questioning from Senator Warren in a hearing of the Senate Armed Services Committee, 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 May 2019, Senator Warren introduced the Department of Defense Ethics and Anti-Corruption Act, which would enforce limits to the influence of contractors on the military, restrict foreign influence on retired senior military officers, and assert greater transparency over contractors and their interaction with the DoD.