SAN DIEGO -- Navy Secretary Carlos Del Toro today questioned the defense industry’s commitment to delivering naval capabilities on time and on budget, suggesting some unnamed companies are prioritizing stock prices and executive compensation over necessary capital investments, and promising to take legal action to ensure taxpayers receive adequate return on investment.
“Through initiatives like the Taxpayer Advocacy Project, I have directed our contract community and Office of General Counsel to ensure that we will leverage all legal means at our disposal to ensure that the American people are getting what they paid for,” Del Toro said, though he provided few additional details on this new initiative.
Speaking to a room full of defense contractors during the West 2024 conference, Del Toro congratulated companies for record profits, pointing to quarterly financial statements. But, he said, industry needs to deliver key warfighting capabilities -- including submarines, ships and aircraft -- on time, on budget and without excuses.
“You can't be asking for the American taxpayer to make greater public investments while you continue to goose your stock prices through stock buybacks, deferring promised capital investments, and other accounting maneuvers that -- to some -- seem to prioritize stock prices that drive executive compensation rather than making the needed, fundamental investments in the industrial base at a time when our nation needs us to be all ahead flank,” he said.
Del Toro’s comments break from the typical talking points of senior Navy officials, who generally emphasize the partnership between defense contractors and the service and promote collaboratively tackling industrial base issues.
But as the Navy faces heightened pressure to maintain an advantage over China, industry is struggling with often-cited workforce and supply chain issues, and key weapon and shipbuilding programs like the Virginia-class submarine face significant delays.
Now, the Navy is serious about holding industry accountable for poor performance and misconduct, according to Del Toro, who said he has directed a “deep dive into holding individuals accountable” for these offenses too.