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Taxpayer Money Earmarked for Masks and Swabs Used for Jet Engine Parts and Body Armor

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Taxpayer Money Earmarked for Masks and Swabs Used for Jet Engine Parts and Body Armor

2020-09-23 22:08:24

By Laura Tucker, Staff writer; Image: Pentagon (Image source: Aude via Wikimedia Commons)


There has been such a fight the past few months over the next coronavirus stimulus package: who it will help and what it will entail. What will add an extra wrinkle to those discussions is that one of the original packages wasn't used the way it was intended to.

There have been many questions about where the money really went. To add to that, The Washington Post ran a story this week about $1 billion that was earmarked to provide needed medical equipment. Instead, the Pentagon used it for jet engine parts, body armor, and dress uniforms. This is information gleaned from a review of public records, individual contract announcements, congressional testimony, and interviews.

When the Cares Act was passed earlier this year, it gave money to the Pentagon to "prevent, prepare for, and respond to coronavirus." However, the Defense Department used the funds for items that seem far and away from that directive.

It's not that the medical equipment isn't still needed, as it is. Centers for Disease Control and Prevention director Robert Redfield testified to the Senate last week that states are still in desperate need of $6 billion to distribute vaccines when they become available. Additionally, many U.S. hospitals are still short on N95 masks, the very items that $1 billion was earmarked for.

"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," said defense analyst Mandy Smithberger at the Project on Government Oversight.

DOD officials report they're trying to seek a balance between helping medical production and supporting the defense industry.

"We are thankful the Congress provided authorities the resources that enabled the [executive branch] to invest in domestic production of critical medical resources to protect key defense capabilities from the consequences of COVID," said the Pentagon's undersecretary for acquisition and sustainment, Ellen Lord, in a statement.

"We need to always remember that economic security and national security are very tightly interrelated, and our industrial base is really the nexus of the two."

After The Post published its report on how this money was spent, two House Democrats requested an investigation and public hearings on the spending. They questioned the legality of the "unacceptable" way the money was used.

The Trump administration is not holding the defense companies to the policy of no layoffs in order to get the rewards. Some even received the funding despite getting other bailout funding from the Paycheck Protection Program.

The $1 billion was allocated to the DOD through the Defense Production Action. This allows the president to demand companies manufacture products that are in the nation's interest. Trump described it as a "tremendous hammer" and said in August he has "used the DPA more comprehensively than any president in history."

He was being pressured to use the law to require companies to help with the supply of masks, ventilators, and other supplies. Yet, after the stimulus package was passed, the Pentagon decided to give the money to defense contractors for projects that don't have much to do with the coronavirus pandemic.

$183 million was given to companies that include Rolls-Royce and ArcelorMittal. Tens of millions of dollars were given to satellite, drone, and space surveillance technology. $80 million went to a Kansas aircraft parts business, and $2 million went to a manufacturer of Army dress uniform fabric.

The House Committee of Appropriations has said the DOD's decision to give the DPA funding to defense contracts was against the intent of the Cares Act — to encourage the manufacturing of personal protective equipment.

"The Committee's expectation was that the Department would address the need for PPE industrial capacity rather than execute the funding for the [defense industrial base]," wrote the committee in a report on the 2021 defense bill.

Pentagon officials insist they have been transparent with Congress about its plans for using the funding. Officials says their priorities were influenced by an industry study from 2018. It showed how shortfalls in supplies could affect the U.S.'s ability to compete with China.

The stimulus funding "became an opportunity for the Department to take what is almost a windfall and use it to try and fill what are some very critical industrial base needs ... but that are only tangentially related to COVID," noted Bill Greenwalt, a visiting fellow with the conservative American Enterprise Institute that oversaw defense acquisitions during the George W. Bush administration.

Military spending was already at all-time highs before the stimulus funds came through. The fiscal 2019 defense budget was $686 billion and is comparable to a typical Cold War year and when the country was reeling after 9-11. Major defense contractors are still financially healthy.

It's been argued that the DOD awards are important to ensure the niche manufacturers don't go out of business during the pandemic. More than a third of the stimulus awards were for less than $5 million, and those went to smaller firms that work on drone technology and make Army dress uniforms.

Hundreds of millions of dollars were also sent to larger, more established companies, including General Electric subsidiary GE Aviation. It received two awards worth $75 million. A Rolls-Royce subsidiary received $22 million for upgrades to a plant in Mississippi.

It was also learned through government data that at least 10 of close to 30 companies known to have received funds also received loans through the Paycheck Protection Program.

Not that the Pentagon didn't have good intentions. It initially planned to use most of the money on medical supplies. Lord said at a congressional hearing that three-quarters would go toward medical resources and the rest to defense contractors. Yet in June, she said the department realized that defense contracts had "critical needs as well."

$17 billion in HHS funding was used for the medical industry instead, and that allowed more money for defense contractors.

"So it expands the pool and allows us to use even more money while taking the balance of the $1 billion that came through for DPA Title III and use a portion of that for the defense industrial base," explained Lord at the hearing. 

This knowledge will present a new wrinkle in the fight to get a new stimulus package passed. If funding isn't going to be used as intended, then what is the point spending months and months arguing over how the money will be spent?

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