TITLE: Veterans became eligible for billions. Private firms saw a chance to profit.
https://www.washingtonpost.com/politics/2024/05/23/va-benefits-for-profit-companies-pact-act/
EXCERPT: Senators savored the moment on a summer day outside the Capitol — the passage of a sweeping, bipartisan agreement to add $280 billion in new benefits and health care for millions of veterans exposed to toxic burn pits.
More than a year after taking effect, the Honoring our Pact Act has proved enormously popular. This week, President Biden announced that more than 1 million disability claims have been approved under the new law.
But glitches, slowdowns and other mishaps have dogged the program’s rollout by the Department of Veterans Affairs, enabling the growth of an unregulated shadow industry that promises to drastically boost tax-free disability checks, according to lawmakers, advocates and leaders in the claims industry — in exchange for veterans signing away thousands of dollars in future benefits.
Despite a federal law that prohibits charging veterans for help in applying for compensation for wartime injuries, as many as 100 unaccredited, for-profit companies now are making hundreds of millions of dollars, a Washington Post review found. The overwhelmed veterans agency says the government is all but powerless to stop the practice, particularly since Congress years ago stripped criminal penalties from the law. And now a cadre of mostly Republican lawmakers is pushing to do away with the restrictions altogether, a plan bankrolled by a well-funded industry group led by a former high-ranking Trump administration VA official.
Interviews with current and former employees, VA officials and court documents reveal a booming industry that charges veterans anywhere from $5,000 to $20,000 for help filing disability claims that by law should be free. Many former service members are enticed by aggressive online and TV sales pitches from the largely veteran-led groups that promise a success rate of up to 90 percent in boosting benefits.
“It looks like they’re throwing you a lifeline when they’re just taking advantage of you,” said Miranda Powell, 28, a Navy veteran from Topeka, Kan., who paid a claims company $8,000 for helping her win an increase to her disability rating.
The industry says it’s simply educating veterans about how to negotiate a long-troubled VA benefits system and that its services are fully legal since clients ultimately submit their own claims. While government lawyers have sent them numerous notices to cease and desist, the companies argue that the law doesn’t expressly forbid their services.
“VA Claims Insider is an education company. Period,” spokesman Jeff Eller said of one of the industry’s founding companies. Seeking accreditation from VA “would be like a doctor pursuing a law degree or a plumber deciding to get HVAC certified — it doesn’t make any sense.”
Free services provided by Veterans of Foreign Wars, Disabled American Veterans, state and local veterans agencies and other accredited, nonprofit groups have failed to keep up with VA’s cumbersome bureaucracy, the companies say. Industry leaders say that veterans should have a choice to pay for help and don’t get charged if they don’t win compensation.
Jim Hill II, co-founder and chief executive officer for Gainesville, Fla.-based Trajector Medical, which specializes in preparing medical evidence for claims, said the vast majority of his company’s clients have already tried and failed to secure benefits with the help of free groups. “The veterans service organizations have already taken a crack and lost.” His and other firms declined to provide data to support their assertion that they get better results than accredited groups.
But some current and former employees of the firms say they make unrealistic promises and embrace tactics that can put veterans’ claims at risk. Many companies devote minimal time to individual cases, former clients and employees say.
“These companies are incredibly savvy,” said Maureen Elias, a senior benefits official at VA and co-chair of a task force the White House created in December to protect veterans from scams. Veterans “infer that somehow filing through them is going to be more beneficial to them than filing through VA, but they’re misinforming people.”
TITLE: New Bipartisan Bill Allows Military Contractors To Fleece Taxpayers
https://www.levernews.com/new-bipartisan-bill-allows-military-contractors-to-fleece-taxpayers/
EXCERPT: After receiving more than $3.8 million in 2024 campaign donations from political action committees and individuals associated with the military industry, members of the House committee overseeing Pentagon spending just inserted two provisions into an upcoming bill that would exempt many more private products and services from competitive pricing guidelines and provide contractors far more leeway in what they can charge the Defense Department.
Last year’s Pentagon spending bill totaled nearly $884 billion. Over the past decade, more than half of that budget has gone to military contractors, according to an analysis from the Quincy Institute for Responsible Statecraft. Many of the top military contractors — including Boeing, RTX Corporation, Lockheed Martin, General Dynamics, and Northrop Grumman — have seen sizable stock-value increases since the war in Gaza began in October 2023 while shooting down shareholder efforts at increased transparency.
The provisions in the 2025 Pentagon spending bill are part of the 344-page National Defense Authorization Act of 2025 (NDAA), an annual piece of legislation that outlines policy and funding for the Defense Department. The provisions in question — Sections 811 and 812 — make good on a wishlist of policy changes that many military companies have been lobbying on for years, said Julia Gledhill, a research associate at the Stimson Center, a nonpartisan think tank focused on international security.
“These provisions are terrible policy and [the military] industry might as well have written them,” Gledhill told The Lever. “It’s really clear that [military contractors] don’t want us to know their profit margins, so they’re just trying to further conceal their costs.”
The Pentagon spending bill was drafted by the House Armed Services Committee, which has been a focus of campaign donations from the military industry. So far this election cycle, military industry political action committees and affiliated individuals have given more than $3.8 million to the 58 members of the committee, according to data compiled by Open Secrets.
Rep. Mike Rogers (R-Ala.), chairman of the committee, has received nearly $2 million from the military industry for election efforts throughout his 20-year career. Rep. Adam Smith (D-Wash.), ranking member of the committee, has received more than $1.5 million from the military industry for election efforts throughout his 26-year career.
Spokespeople for Rogers and Smith forwarded requests for comment to the House Armed Services Committee's communications directors, who did not respond before publication.
“As a member of the House Armed Services Committee, I’m disappointed to see provisions in the NDAA that would allow contractors to further obscure pricing data,” Rep. Ro Khanna (D-Calif.) told The Lever. “This would lead to more inflated costs and waste taxpayer money when we could be investing it instead on a modern national security to actually keep us safe and domestic priorities like education and healthcare.”
One of the bill’s provisions would expand the definition of commercial products — items available to the general public that aren’t subject to the Pentagon’s fair-pricing controls — to include the parts and components of larger products such as planes and computers, as well as the services associated with building and repairing those products.
“[The military] industry has successfully lobbied Congress for decades to expand what is considered commercial in the defense contracting realm,” Gledhill said.
The other provision in the Pentagon spending bill would allow military contractors to charge the Defense Department for products and services based on prices from the past 12 months, rather than continuing to require a market analysis to determine their actual fair-market price.
The idea behind the pricing change is that the free market keeps prices reasonable, so the analysis isn’t necessary, said William Hartung, senior research fellow at the Quincy Institute for Responsible Statecraft, a nonprofit think tank. But for some military contractors, the U.S. government is their only domestic customer, so the argument that competition will drive down prices doesn’t really apply.
“The argument is that the market will take care of it, but for some of these things, they’re very specific services or components so there’s not really people out there in the commercial world trying to buy these things and driving the price down,” Hartung told The Lever. “I think it is an attempt to give them even more leverage on the company side.”
The bill comes a year after a CBS News investigation found that military contractors were overcharging the Defense Department for various products and services. Many military companies sign Pentagon contracts that stipulate a fixed 12 to 15 percent profit, but Pentagon analysts found that many companies were overcharging, which “boosted total profits to nearly 40 percent or more,” according to a May 2023 news release from a bipartisan group of senators.
“Lockheed Martin, Boeing, Raytheon, and TransDigm are among the offenders, dramatically overcharging the department and U.S. taxpayers while reaping enormous profits, seeing their stock prices soar, and handing out massive executive compensation packages,” the senators wrote.
TITLE: F-35s are piling up on Lockheed tarmacs, presenting ‘unique’ risks to the Pentagon
https://www.defenseone.com/business/2024/05/f-35s-are-piling-lockheed-tarmacs-presenting-unique-risks-pentagon/396646/?oref=d1-skybox-hp
EXCERPT: Last July, the government stopped accepting new F-35s because of hardware and software delays with Technology Refresh-3, a $1.8-billion effort to enable new capabilities for the jet.
The number of jets accumulating outside Lockheed's plant is “grossly delinquent,” Rep. Rob Wittman, R-Va., chairman of the House Armed Services tactical air and land forces subcommittee, told reporters Wednesday.
“We know one thing for certain: it's going to be at least over 100 aircraft stacked up on the tarmac,” Wittman said.
The GAO report did not say how many aircraft are currently parked, saying the Defense Department deemed that figure “unsuitable for public release.”
But the report said that Lockheed would need to rethink its plans.
“If TR-3 software is delayed past April 2024, Lockheed Martin is projected to exceed its maximum parking capacity and will need to develop a plan to accommodate more parked planes,” it said.
Lockheed officials say they have all the infrastructure and capacity they need to park the aircraft until they are ready for delivery.
“Specific details about parking will not be shared due to security considerations,” officials said in a May 16 statement.
The situation is financial pain for Lockheed: the Pentagon is withholding payments of $7 million for each undelivered TR-3 jet, Bloomberg previously reported.
The government as well will face “significant liability” if any of the parked aircraft get damaged or lost while sitting at Lockheed’s facilities, according to the report.
“It is unique for so many critical DOD aircraft to be waiting for DOD acceptance, instead of stored at lower densities across many military locations throughout the world. This creates unique financial and schedule risks to DOD,” GAO said.
Once the TR-3 upgrade is ready, it will take about a year to deliver all of the jets Lockheed has parked, GAO said.
But challenges with software stability and delayed hardware are pushing the delivery of full TR-3 capability to 2025, the report said. The first TR-3 jets were supposed to be delivered last July.
The Pentagon is working on a plan to restart accepting the jets without the full TR-3 upgrade because, officials say, a part-capability is better than nothing. Those deliveries could start up as soon as July, officials say, but the interim version of the upgrade won’t be combat-ready and will only be used in training.
“According to program officials, this initial TR-3 software will allow the program to accept delivered aircraft but not deliver any new capabilities to the aircraft. TR-3 software with new capabilities will not be delivered until 2025, two years later than originally planned. This means the warfighter will continue to wait for these critical upgrades,” GAO said.
Specifically, the TR-3 software has had trouble supporting the F-35’s radar and electronic warfare systems. Some test pilots have said that they had to reboot their radar and electronic warfare systems mid-flight, according to the report.
“Program officials stated that early versions of radar and in-flight systems software can commonly experience rebooting issues. However, even after being nearly a year delayed, TR-3 software continues to be unstable, according to test officials,” GAO said.
BTW: The F-35 program is on track to cost over $2 trillion, making it the world’s most expensive weapons program.