According to the grievance-based worldview of Donald Trump, the United States is constantly being cheated. He purports to be addressing this through his trade policies and his attitudes toward international organizations such as NATO. Yet he seems to be a lot less concerned about another kind of cheating: the ongoing fraud committed against the federal government by military contractors.
This is an old story yet it takes on new relevance amid the current controversies over the murder of U.S.-based journalist Jamal Khashoggi by the Saudi government and ongoing American support for the brutal Saudi military intervention in Yemen. Trump’s main justification for refusing to take stronger action against the kingdom is his claim that it would jeopardize potential U.S. arms sales to the Saudis, the value of which Trump wildly inflates.
Trump usually frames this in terms of jobs, but it is actually more a matter of revenue and profits for major weapons producers such as Lockheed Martin and Raytheon. It comes down to this: Trump is undermining the moral stature of the United States and giving a green light to despots who want to eradicate dissidents, all in the name of pumping up the cash flow of a handful of corporations.
Although he fancies himself a master dealmaker, it is unclear what Trump is receiving in return from these companies. In the past, Trump has made noise about the cost of some Lockheed and Boeing contracts but there was little follow-up. The big weapons producers are not now among the president’s favorite tweet targets.
There is every reason to believe that the big contractors are continuing their long-standing practices of charging excessive amounts for their weapons and then cheating on the terms of the contracts. Sometimes they get caught doing the latter and are made to pay penalties they can easily afford.
To take a recent example: in early November the Justice Department announced that Northrop Grumman had agreed to pay $27.45 million to resolve allegations that it overstated the number of hours its employees had worked on two battlefield communications contracts with the Air Force. This matter, like most of the cases brought against military contractors, was handled primarily under the False Claims Act, which allows for a civil settlement and monetary penalties but no criminal liability.
The Northrop case was unusual in that there was a parallel criminal investigation of one of the contracts, but the Justice Department reached an agreement with the company under which it forfeited an additional $4.2 million and no criminal charges were filed.
This was just the latest in a series of False Claims Act cases in which Northrop has paid out in excess of half a billion dollars in penalties for various contract frauds. It is far from unique in this regard. For example, as shown in Violation Tracker, Boeing has paid out $744 million in penalties in eight False Claims Act cases since 2000 and Lockheed has paid $125 million in 13 cases.
It is bad enough that President Trump is abandoning U.S. support for human rights; it is even worse that he is doing so to benefit a group of corporations that regularly cheat the government he heads.