Sen. Sanders wants DoD to rein in contractor payments

Vermont Sen. Bernie Sanders, in a letter to Defense Secretary James Mattis first obtained by ABC News, criticizes the Pentagon for what he called “excessive” and “obscene” compensation to the nation’s largest defense contractors.

In the letter, Sanders argues the Pentagon needs to “fundamentally reform its procurement and business operations to crack down on the widespread waste and abuse of private defense contractors.”

The senator pointed out that the CEOs of top defense companies like Lockheed Martin and Raytheon were paid over $20 million in total compensation, including stock options. Yet, he says, 90 percent of those companies’ revenue comes from the federal government in the form of defense contracts.

“I think the American people would like to know why a defense contractor can pay its CEO over $20 million, while your salary is capped at $205,700 and other members of the military are paid far less,” Sanders wrote to Mattis. “What kind of message does it send when a defense contractor is paid 100 times more than the Secretary of Defense?”

“I can tell you that one of Secretary Mattis’ top three priorities is reforming the way we do business. That’s why, on Feb. 1, we began reorganizing the former office of acquisition, technology, and logistics. The reorganization is the largest of the department since the 1986 Goldwater-Nichols Act. This reorganization implements overdue Congressionally-mandated reforms and necessary improvements to better support the services. Also, as USD(A&S) Ellen Lord testified to the SASC, Dec. 7, ‘Secretary Mattis has placed priority on implementing these provisions alongside other Department-wide reforms and practices required to improve the lethality and readiness of our military’,” Commander Patrick Evans, a Department of Defense spokesperson told ABC News.

Lockheed Martin Corp declined to comment and Raytheon Company did not respond to request for comment from ABC News.

There has long been a limit on what the federal government can contribute to an individual’s salary.

Prior to 2012, executive compensation limits capped how much the government could pay a company’s five top executives.

The National Defense Authorization Act of 2012 expanded the “executive compensation cap” to all employees, not just the top executives. This meant that the most the government could compensate an individual was $487,000, and any salary that individual received above that amount would come from the company.

An exception could be made if the individual had highly specialized technical talent, for example in cybersecurity, deemed necessary for the contract.

Sanders asked Mattis if the law regarding executive compensation caps on defense contractors like Lockheed Martin should be amended further.

“Those corporate interests should never take precedence over the interests of taxpayers or our national security,” Sanders wrote. “But paying exorbitant salaries to defense contractor CEOs makes that outcome more likely, and that is simply unacceptable.”

Sanders also asked Mattis to look into defense contractor fraud, as well as ways to hold defense companies accountable when contracts go over the original cost estimates.

“When a company like Lockheed Martin receives over 90 percent of its revenue from defense spending, has paid hundreds of millions in fines for fraud, and is responsible for some of the worst cost overruns in history, it should not be allowed to pay its CEO 100 times more than the Secretary of Defense,” Sanders told ABC News. “The Defense Department has a responsibility to crack down on the widespread waste, fraud, and mismanagement at the Pentagon.”

The Department of Defense is currently undergoing its first-ever audit, slated to be completed in September, that will look at the Pentagon’s financial statements for 2017.