Legislation introduced to strengthen efforts preventing military contractor price gouging

U.S. Rep. John Garamendi (D-CA) and U.S. Sen. Elizabeth Warren (D-MA) have introduced a bill to strengthen acquisition laws by preventing military contractor price gouging.

“As Chair of the Armed Services Subcommittee on Readiness, I know how much we pay for parts to keep military equipment ready,”
Garamendi said. “We know that taxpayers and service members are routinely overcharged by defense contractors due to loopholes in current regulations. We cannot allow taxpayer money to be wasted to inflate the bottom lines of giant defense contractors. Our service members need the tools to properly negotiate prices. This is just common sense.”

The legislators cited several Inspector General reports determining that defense contractors regularly charge the military excessive prices.

The measure would close the loopholes, tie financial incentives for contractors to performance, and provide the U.S. Department of Defense with the information necessary to prevent future rip-offs.

“For far too long, military contractors have been price gouging the Pentagon to make fatter profits, and American taxpayers shouldn’t have to foot the bill,” Warren said. “The end result is a military budget that is way too large. We need some basic rules on the road to prevent military contractors from price gouging.”

American Economic Liberties Project Research Director Matt Stoller said the commercial item definition has been abused by defense contractors for too long.

“This legislation would finally start moving Pentagon procurement in the right direction,” he said. “By ensuring that the Department of Defense is more wary of abuses in sole-source contracting, as well as forcing large defense contractors to disclose their margins and paying them when they perform, Congress could ensure that the military gets better weapons at a lower cost.”