This week we broke a record: In the second quarter of 2020, the U.S. economy fell at an annual rate of 33 percent. As the largest annualized drop in our history, this staggering statistic underscores the breadth and depth of the coronavirus’ effect across all industries, including the defense industrial base.
As Congress considers competing proposals for COVID-19 relief, we must ensure that any additional funds provided to the Department of Defense are targeted to protecting jobs and strengthening our industrial base. But we owe it to taxpayers to apply oversight and negotiate on their behalf. We cannot panic and hand out blank checks to defense contractors. To do so would set an irresponsible precedent for years to come.
Congress has acknowledged that our industrial base needs help during this pandemic. In March, the Coronavirus Aid, Relief, and Economic Security Act included a provision, Section 3610, to allow employees of federal contractors with critical skills to remain paid if the federal facilities where they work closed due to the pandemic. This additional flexibility would keep workers ready to return as soon as conditions allowed.
Since then, Section 3610 has taken on a life of its own, with senior administration officials estimating that agencies across the federal government could be on the hook for billions of dollars to carry out this law. With debate on the next coronavirus supplemental bill upon us, the calls for new funding are growing louder. We must explain to American taxpayers and workers what is, and is not, at stake.
The confusion stems from two separate issues: whether to use the generous funding already provided to the Department of Defense to pay contractors for the time they were locked out of their workplaces; and to what extent the pandemic and economic shock will make it more expensive to build weapons and perform research now and in the coming years.
The Department of Defense has unofficially asked Congress for nearly $11 billion in emergency funds to cover these costs for this year alone, split between these two purposes. The lack of detail in this request raises serious questions. For example, why are other federal agencies finding money in their regular budget to pay for their 3610 contractor pay claims, but the Pentagon cannot?
Americans should know that the CARES Act appropriated $10.5 billion for defense needs, with nearly unlimited flexibility for the Department of Defense to reprogram these funds to address urgent priorities. In addition to that infusion of money, the department has numerous other ways to support defense contractors. At the outset of the coronavirus, the department worked with states and localities to deem defense contractors as essential and therefore able to continue working. In April, the department issued a regulatory change on progress payments for existing contracts, increasing the cash flow to the defense industrial base and encouraging major contractors to advance cash to the supply chain, infusing billions of dollars in cash to companies that needed near-term cash flow.
And this brings us to our real problem with the $11 billion set aside for contractor reimbursements in this latest emergency appropriations bill: We do not know what it is for, what problems it will and will not fix, and why other funding and tools are not working. We also suspect that the Pentagon has not done its homework on behalf of American taxpayers before asking for this money. The proposal appears to be based on contractor requests, in the midst of a rapidly changing situation, without asking tough questions about how the funds would be used to prevent American job loss and what the long-term budgeting and recovery strategy may be.
Before Congress provides many billions of dollars to make up for the work that has been lost due to coronavirus closures, we should know which programs have been impacted, how much each program may need to recover and whether taxpayers will be on the hook for more money if the disruptions continue. The Department of Defense, in particular, has a weapons budget that exceeds the highest levels of the Reagan-era defense buildup — even when adjusted for inflation. Given the amount of base and supplemental funds already at the department’s disposal, Congress needs more thorough justification for additional spending, both for Section 3610 and for other needs.
Generally speaking, it might make sense to appropriate additional funds to make sure that a shipbuilding program or airplane is completed on time. In other cases, however, taxpayers may reasonably question whether it is worth paying more money in light of other priorities. We have before us a unique opportunity to think strategically about future readiness risks and make the defense industrial base more resilient. Hastily throwing money at the problem is simply not the solution to a complex problem.
We appreciate the hard work of the hundreds of thousands of companies, of all sizes, that make up the defense industrial base. When the Pentagon spends CARES Act dollars, or any appropriations, we depend on senior leaders to negotiate hard with defense companies to get the best deal for the taxpayers. There is nothing wrong with tough negotiating when billions of dollars are at stake; as public servants, it is our duty.
Sen. Dick Durbin, D-Ill., is the Democratic whip and the ranking member on the Senate Appropriations Committee’s Defense Subcommittee. Rep. Adam Smith, D-Wash., is the chairman of the House Armed Services Committee.
