DOD watchdog investigating pandemic aid directed to defense contractors

By Tony Bertuca  / October 15, 2020

The Defense Department inspector general has begun an investigation to determine whether the Pentagon acted appropriately when it spent hundreds of millions of dollars in COVID-19 relief aid to prop up defense contractors.

"The objective of this audit is to determine whether the DOD awarded Coronavirus Aid, Relief, and Economic Security Act funding to increase the Defense Industrial Base manufacturing capacity in accordance with Federal regulations and Defense Production Act authorities," reads a new IG notice.

The investigation was called for by some congressional Democrats after a Washington Post story reported defense contractors have received hundreds of millions in pandemic aid.

However, House Armed Services Committee Chairman Adam Smith (D-WA) has said any suggestion in the Post story that DOD illegally spent pandemic aid is "inaccurate."

"There's nothing to investigate here, in my view," he said Oct. 6. "There was nothing illegal about what they did."

Smith said lawmakers could "quibble" with the Pentagon's spending choices, but noted Congress has always been aware of how DOD was spending its COVID-19 aid funds.

The Pentagon's CARES Act spending plan was first reported by Inside Defense in May. The plan stated DOD intended to use $688 million of its $10.5 billion in CARES Act funds to support critical contractors in the defense industrial base. The plan was delivered to Congress and covered elsewhere in the media soon after.

The Pentagon has denied accusations it improperly compensated defense contractors or blindsided Congress.

Pentagon acquisition chief Ellen Lord agreed with Sen. Tim Kaine (D-VA) at an Oct. 1 hearing when he characterized the aid as necessary "to shore up economic damage that is being visited upon some of the key actors in the supply chain so that we won't see an erosion of the supply chain that would hurt our national defense."

Meanwhile, the Pentagon inspector general notes the office may “revise the objective as the audit proceeds, and we will also consider suggestions from management for additional or revised objectives.”