Wyden, Colleagues Send Bipartisan Letter to Secretary of Defense Urging Investigation of Price Gouging by Defense Contractors

Washington, D.C. – U.S. Senator Ron Wyden said today that he and Senate colleagues from both parties have sent a letter urging the Secretary of Defense to conduct a thorough investigation after repeated instances of defense contractors overcharging the Department of Defense to secure excess profits of 40 to 50 percent, costing the U.S. taxpayers hundreds of millions of dollars.

“These companies have abused the trust government has placed in them, exploiting their position as sole suppliers for certain items to increase prices far above inflation or any reasonable profit margin,” Wyden and colleagues wrote recently to Secretary of Defense Lloyd Austin III.

 A recent CBS News report found the Defense Department would often negotiate fixed price contracts providing for private profits of 12 to 15 percent, only for Pentagon analysts to find overcharges that boosted total profits to nearly 40 percent or more. Massive overcharges from defense contractors accounting for hundreds of millions of dollars were uncovered in the investigation. Lockheed Martin, Boeing, Raytheon, and TransDigm are among the offenders, dramatically overcharging the Defense Department and U.S. taxpayers while reaping enormous profits, seeing their stock prices soar, and handing out massive executive compensation packages.

The letter comes after a Government Accountability Office report earlier this year showed the Defense Department accounting systems cannot generate reliable and complete information and are unable to even capture and post transactions to the correct accounts, in violation of statutory requirements. In 2021, a separate GAO report showed the Defense Department had failed to implement a comprehensive approach to combat department-wide fraud, despite regularly awarding contracts worth hundreds of billions of dollars.

“The DOD can no longer expect Congress or the American taxpayer to underwrite record military spending while simultaneously failing to account for the hundreds of billions it hands out every year to spectacularly profitable private corporations,” Wyden and colleagues continued. “We ask that you please provide us an update on the Department’s efforts to implement outstanding GAO recommendations related to financial management and fraud risk reduction, as well as your efforts to investigate the price gouging uncovered by CBS’ recent reporting.”

The letter was led by U.S. Senator Bernie Sanders, I-Vt. Alongside Wyden, the letter was signed by U.S. Senators Mike Braun, R-Ind., Chuck Grassley, R-Iowa, and Elizabeth Warren, D-Mass.

The text of the letter is here.

A web version of this release is here.