ICYMI: Chairing Personnel Subcommittee Hearing, Warren Calls Out DoD Losing Billions to Contractor and Health Care Price Gouging
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In case you missed it, chairing a hearing of the
Pentagon watchdogs and budget experts from the
Transcripts and videos from
Transcript: Potential Budgetary Efficiencies Achieved Through Improvement to Management and
U.S.
Opening remarks below:
Senator
Good afternoon, I want to welcome our witnesses for today's Personnel Subcommittee hearing, and I want to offer a very special thank you to Ranking Member Scott for helping on committee and doing this on rather short notice and also for our other members for joining us as well as we examine opportunities to save money at the Pentagon.
Members of
I don't think it will be a surprise to anybody when I tell you - we have a lot of work to do on this front.
This year the
Some of my colleagues have already pledged that before the end of the year, they will pass a supplemental budget to give the
I support funding our military so it can do its job to keep Americans safe. I support making sure that service members have the pay and benefits they deserve and the high-quality equipment they need to do their work safely. I support adequate resources for the whole
But reports from Pentagon watchdogs and budget experts both inside and outside government have repeatedly shown that there are serious problems at the
Reports from
* the Government Accountability Office (GAO),
* the
* the Special Inspector General for Afghanistan Reconstruction,
* the
* the Cost Assessment and Program Evaluation office, and
* the Pentagon's own auditors.
have all identified billions and billions and billions of dollars that do nothing more than line the pockets of giant defense contractors, often with little or no oversight from the Pentagon.
When the
Pentagon officials themselves estimate the savings just from tightening up our practices in hiring contractors--just that one area alone--would be about
This hearing will focus on a few of the key findings from budget experts. I appreciate their willingness to appear as witnesses. They have identified cost savings across the Pentagon's work, but because this is the Personnel subcommittee, we're going to focus today on issues of waste related to how
I'll note - as a measure of how little Congressional oversight there has been and how determined
Before turning to our witnesses, let me briefly highlight two key problems in this subcommittee's jurisdiction that clearly require congressional oversight.
First,
By now, most people know that over-the-top price gouging occurs on spare parts and weapon systems.
Earlier this year, I called out
But price gouging isn't limited to spare parts and weapons systems. It also happens when
Another way that taxpayers get gouged is through its contractor workforce. Our nation's defense is often supported through contractors who feed our troops, house out military families, transport needed equipment, and perform a wide range of tasks that, in past years, were either done by active duty military or civilian employees. Over the past quarter-century,
This has created a huge industry of military contractors, turning them into billion-dollar businesses. But in many cases, hiring a contractor costs more than simply paying a federal employee to perform exactly the same function. At a minimum,
It is
But let me be crystal clear. If the Pentagon wants more funding this year, above the 100% of their budget request that has already been fulfilled by
* Give DoD more access to cost and pricing data from contractors;
* Tie any increases in upfront payments to contractors to requirements that they deliver goods and services on time;
* Remove a requirement in current law that military services must send
* Require contractors to disclose changes in average prices and gross margins; and
* Require any
For many of these proposals, bipartisan legislation already exists to make these changes.
If other senators want to dump more money into the
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Round 1 of questions below and video HERE (http://ct.symplicity.com/t/wrn/3b223d834501b409ef7200b5cbaf6422/2665571418/realurl=https:/youtu.be/nfu2FWBOi1M):
Over the past two decades, the
One way of cutting it would be about
One thing that's, you know there are different types of contracts. There are people who mow lawns and much of their costs would probably be labor. There are people who sit in chairs next to civilians and military (personnel) in the Pentagon. Their costs are probably mostly labor. But, there are also service contracts that provide maintenance of tanks, and such like that, where you would expect a much smaller portion of those costs would be labor. And, you know, they're buying parts and so.
Now, every time that
In other cases there's outright fraud. In 2014, the
Now,
Unfortunately, it gets worse from here. When
The GAO has put
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The
We should require the Pentagon to put better systems in place to collect these data and then make these data to you and to us.
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Round 2 of questions below and video HERE (http://ct.symplicity.com/t/wrn/3b223d834501b409ef7200b5cbaf6422/2665571418/realurl=https:/youtu.be/g_ryYvBceVk):
The
We've talked about two examples today: breast pumps that are for sale at the local Walmart for
Medical supply companies make a profit when they can sell items to private insurance companies - that's how they stay in business. But insurance companies typically set a cap on what they will reimburse for a product.
Your audit found that the reason DHA was paying these clearly inflated prices was either because the federal government had failed to set price caps, or maximum reimbursement rates, for these products. In other words, DHA had effectively told these companies that they were willing to pay whatever it was the company wanted to charge.
Even in cases where the DHA has set those rates, the DHA continually failed to enforce the caps or to clawback money when they had been overcharged from the original agreement.
Interestingly enough, the former head of DHA - the one who made these decisions to not seek voluntary repayments because he said we're just not going to get anything from that, retired from the agency in 2019 and, a year later, joined the board of the largest TRICARE contractor.
Yesterday, I sent a letter this morning to both the
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Round 3 of questions and closing remarks below and video HERE (http://ct.symplicity.com/t/wrn/3b223d834501b409ef7200b5cbaf6422/2665571418/realurl=https:/youtu.be/fRmkammZk-c):
This initiative was called
The GAO wrote, and I want to quote what GAO said: determining whether to contract for such services, eliminating duplicative or unnecessary services, and effectively managing and overseeing contractors is vital to
Under this practice, the Army should figure out, how many contracts does it have for grounds maintenance, how many does it need, and how can it cut costs by perhaps consolidating contracts. It's pretty simple, something we do in our own households.
So, do you have any idea,
So, I just want to make sure I understand that the military services are not doing similar reviews to the kind you talked about across other areas to eliminate duplicative contracts and save money?
If we got even a tenth of that savings, we would be talking about real money here. When
This is just one area where
I just want to thank all of our witnesses. I want to thank you for your service, I want to thank you for your testifying today, I want to thank you for continuing to make recommendations, and to stay on this. I also want to thank
We are committed to ensuring service members and their families receive all of the resources and all of the support that they need. It is clear from today's hearing that
And our witnesses today have identified other areas where we can say, and we know there are more reports coming on this. I remain concerned that the Pentagon is too focused on increasing its budget and neglecting to exercise due diligence to prevent waste and fraud in the money that we have already allocated.
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Original text here: https://www.warren.senate.gov/newsroom/press-releases/icymi-chairing-personnel-subcommittee-hearing-warren-calls-out-dod-losing-billions-to-contractor-and-health-care-price-gouging
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