Congress awarded the Pentagon $1 billion to “prevent, prepare for, and respond to coronavirus” back in March. Instead of using the money to produce masks and other medical equipment, The Washington Post reports the money was spent on defense contracts to make things like jet engine parts and body armor.
The $1 billion fund was allocated under the Defense Production Act, which allowed President Donald Trump to compel companies to produce products in the country's interest.
The newspaper reports that the Pentagon changed how the money would be spent and sent defense contractors hundreds of millions of dollars from the fund to complete projects that did not have much to do with the coronavirus response.
Defense Department lawyers had ruled that the funds could be used for defense production, which is a determination that Congress later disputed.
The Democrat-controlled House Committee on Appropriations said the Defense Department’s decision to use DPA funding for defense contractors went against its intent in that section of the Cares Act, which was aimed toward manufacturing 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 DIB (defense industrial base),” the committee wrote in its report on the 2021 defense bill.
Ellen Lord, undersecretary of defense for acquisition and sustainment, told the newspaper her office has worked with Congress and federal agencies to meet the needs of both the medical and defense industries.
“We are thankful the Congress provided authorities and resources that enabled the [executive branch] to invest in domestic production of critical medical resources and protect key defense capabilities from the consequences of COVID,” Lord said 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.”
The newspaper reports that contracts awarded under the fund include: $183 million to firms including Rolls-Royce and ArcelorMittal to maintain the shipbuilding industry; tens of millions of dollars for satellite, drone, and space surveillance technology; $80 million to a Kansas aircraft parts business suffering from the Boeing 737 Max grounding and the global slowdown in air travel; and $2 million for a domestic manufacturer of Army dress uniform fabric.
“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,” Mandy Smithberger, a defense analyst at the Project on Government Oversight, a watchdog group, told the newspaper.
Some of the defense contractors who received funding from the Pentagon also received financial help under the Paycheck Protection Program, according to the newspaper. Defense Department spokeswoman Jessica Maxwell said the two programs are not “in conflict or duplicative.”
In addition, companies who received a Pentagon contract were not required to promise not to layoff workers in exchange for the award.
Bill Greenwalt, a visiting fellow with the conservative American Enterprise Institute who oversaw defense acquisitions in the George W. Bush administration, said the 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.”
But defense industry groups claim that the DOD awards are vital to ensuring that niche manufacturers, like companies that sell aircraft parts for military jets, don’t fold amid the pandemic.
“As you lose some of these capabilities, some of them are gone forever, and it comes at a very high price to reconstitute them,” Wes Hallman, vice president for policy at the National Defense Industrial Association, a trade group, told the newspaper.
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