Southeast Allegheny News

CARNEGIE, P.A. — On June 30, House Armed Services Committee member Congressman Chris Deluzio (PA-17) joined Congressman John Garamendi (D-CA), the Ranking Member of the House Armed Services Subcommittee on Readiness, to reintroduce the “Stop Price Gouging the Military Act.” This legislation would close loopholes in current acquisition laws, tie financial incentives for contractors to performance, and provide the Department of Defense (DoD) with the information necessary to prevent future rip-offs. U.S. Senator Warren (D-MA), Chair of the U.S. Senate Armed Services Subcommittee on Personnel, and U.S. Senator Mike Braun (R-IN) introduced companion legislation in the U.S. Senate.  

As they stand, current acquisition laws contain loopholes that make it nearly impossible for DoD to obtain the necessary data to combat price gouging. The legislation would require contractors to provide cost or pricing information to DoD if there isn’t adequate price competition that results in at least two responsive and responsible offers. 

“Price gouging by defense contractors is ripping off the American people, shortchanging our service members, and weakening our national security—all to line the pockets of shareholders of some of our nation’s biggest corporations,” said Representative Chris Deluzio. “We have to push back. I am proud to join Rep. Garamendi, Senator Warren, and Senator Braun on the ‘Stop Price Gouging the Military Act’ to close these loopholes and bring some sanity back into the way our government works with the defense industry.” 

“As a senior member of the House Armed Services Committee, I know how much we pay for parts to keep military equipment ready,” said Representative John Garamendi. “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, and that’s why we introduced the ‘Stop Price Gouging the Military Act’. I thank Congressman Deluzio for joining me in introducing this legislation in the House, and I thank Senators Warren and Braun for doing the same in the United States Senate. We will work together to ensure this legislation becomes law.” 

“Defense contractors have been exploiting loopholes in the law and raking in massive profits by price-gouging the Pentagon and American taxpayers,” said Senator Elizabeth Warren. “My bipartisan bill with Senator Braun and Representative Garamendi would close these loopholes and ensure that DoD has the necessary tools to prevent these abuses.”  

“Defense contractors are taking advantage of the DoD and American taxpayers by charging more and delivering less,” said Senator Mike Braun. “This bipartisan legislation will inject transparency and accountability into the process by closing loopholes to prevent defense contractor price gouging.” 

Specifically, the Stop Price Gouging the Military Act would: 

• Strengthen Truth in Negotiations Act Provisions. Closes a loophole in the law to require contractors to provide the federal government cost or pricing information if there isn’t adequate price competition that results in at least two responsive and responsible offers.  

• Revise the Definition of Term “Commercial Item” for Purposes of Federal Procurement Statutes. Restores market dynamics to the commercial item definition by adopting an Obama administration proposal to tie to whether a good or service is actually sold to other customers.  

• Progress the Payments Incentive Pilot. Initiates a Department of Defense pilot first proposed by the Trump administration to tie payments to performance by lowering advanced payments for companies to 50% while providing contractors the opportunity to receive payments up to 95% if they meet certain conditions. Specifically, contractors would be rewarded for:  

• Meeting program schedules and milestones 95% of the time;  

• Not having major outstanding corrective action requests;  

• Having required business systems;  

• Timely responses to requests to provide certified cost or pricing information; 

• Disclosing first tier subcontractor data, beneficial owners, and total executive compensation;  

• Meeting small business subcontracting goals; and  

• Providing subcontracting opportunities for the blind and severely disabled. 

• Increase Disclosure by Traditional Defense Contractors. Mirroring disclosures already required by publicly traded companies, requires traditional defense contractors to annually share with the Under Secretary of Defense for Acquisition and Sustainment changes in the volume of goods or services sold, changes in the average price, and gross margins. 

Ahead of the introduction of the Stop Price Gouging the Military Act, Congressman Deluzio also successfully included a cost and price transparency amendment in the House committee-passed version of the National Defense Authorization Act (NDAA). This amendment would name and shame defense contractors that sabotage contract negotiations for their financial benefit, as well as publicly identify contractors that delay providing the Pentagon “accurate, complete, and current” cost information during contract negotiations. This amendment and the full NDAA now head to the House Floor for a vote.

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Original source can be found here.