Watchdog to audit Pentagon’s use of COVID-19 funds on defense contractors

The Pentagon’s internal watchdog will audit whether the department appropriately used coronavirus relief funding to boost the defense industrial base, according to a memo released Thursday.

The audit aims to determine whether the Pentagon “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,” according to the memo from the Pentagon inspector general’s office, dated Wednesday.

The announcement of the audit comes after lawmakers asked the inspector general to investigate the Department of Defense’s (DOD) use of $1 billion from the CARES Act following a Washington Post report that detailed how the department used most of the money on defense contractors rather than medical supplies.

While the announcement came after congressional requests, the Office of Inspector General (OIG) planned to do the audit before lawmakers called for one, according to a letter to Sen. Elizabeth Warren (D-Mass.) and Rep. Ro Khanna (D-Calif.) obtained by The Hill.

“As we communicated to your staff, the DoD OIG had previously planned an audit of DoD CARES Act awards to increase defense industrial base manufacturing capacity,” said the letter, also dated Wednesday.

Warren and Khanna, who requested an inspector general investigation last month, said they were pleased with Thursday’s announcement.

“We raised alarms about the Pentagon’s possibly illegal use of taxpayer funds meant to address COVID-19, and we’re glad the inspector general is investigating,” they said in a joint statement. “There must be a thorough investigation, and DoD officials must be held accountable if they used money for PPE and medical supplies to line the pockets of defense contractors.”

Critics argue the Pentagon’s use of the funding on jet engine parts, body armor, dress uniforms and other military equipment is in contravention of the CARES Act’s stipulation that the money be used to “to prevent, prepare for and respond to coronavirus.”

While the Post report provided new details on the exact contracts the Pentagon has awarded, the department notified Congress in late May it planned to use $688 million of the funding to shore up the defense industrial base.

Still, the report brought new scrutiny from lawmakers. Earlier this month, several House panels launched an investigation into how the Pentagon used the money.

The department has vigorously defended itself against allegations of wrongdoing, arguing the money was never intended to be restricted to medical supplies, that it kept Congress fully informed of its plans and that helping the defense industrial base through the pandemic-fueled economic downturn is an appropriate response to the COVID-19 crisis.

“The CARES Act did not limit — nor did it intend to limit in its language — the use of Defense Production Act (DPA) Title III to only medical resources,” chief Pentagon spokesman Jonathan Hoffman said in a seven-paragraph statement after the Post report. “As part of the efforts to mitigate economic damage, the act allowed monies to be spent to support individuals and industries that had been impacted by COVID. This is exactly what DOD has done.”

House Armed Services Committee Chairman Adam Smith (D-Wash.) has also said the Pentagon did nothing illegal, however debatable one thinks the department’s spending priorities are.

“Three committees in Congress are doing an investigation of this, and I’m not one of them because there’s nothing to investigate here in my view,” Smith said at an event this month. “We gave a billion dollars to DoD to deal with COVID-related expenses, and very specifically in that, it said one of the COVID-related expenses you could deal with was the defense industrial base, which they did. And now we’re chewing on them for doing that.”

“Now, you can quibble about the fact that they spent roughly two-thirds of the money on that,” Smith added. “Should they have spent more on testing equipment and PPE and building 6-feet distance into training? Did they balance the money out the correct way? We can argue about that, but there was nothing illegal about what they did.”

Updated at 2:20 p.m.