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# Northrop Grumman, of Los Angeles, a manufacturer of bombers, warships and military electronics, had 2007 profits of $1.8 billion on sales of $32 billion.
# General Dynamics, of Falls Church, Va., had profits in 2008 of about $2.5 billion on sales of $29 billion. It makes tanks, combat vehicles, and mission-critical information systems.
# Raytheon, of Waltham, Mass, reported about $23 billion in sales for 2008. It is the world's largest missile maker and Bloomberg News says it is benefiting from "higher domestic defense spending and U.S. arms exports."
# Scientific International Applications Corp., of La Jolla, Calif., an engineering and technology supplier to the Pentagon, had sales of $10 billion for fiscal year ending Jan. 31, 2009, and net income of $452 million.
# L-3, of New York City, has enjoyed sales growth of about 25% a year recently. Its total 2008 sales of $15 billion brought it profits of nearly $900 million. Its primary customer is the Defense Department, to which it supplies high tech surveillance and reconnaissance systems.
# EDS Corp., of Plano, Tex., purchased by Hewlett-Packard in May, 2008, had 2007 sales of nearly $20 billion. Its priority project is building the $12 billion Navy-Marine Corps Intranet, said to be the largest private network in the world.
# Fluor Corp., of Irvine, Tex., an engineering and construction firm, had net earnings of $720 million in 2008 on sales of $22 billion.
The good times continue to roll for military contractors under President Obama, who has increased the Pentagon's budget by 4 percent to a total of about $700 billion. One reason military contractors fare so well is that no-bid contracts with built-in profit margins tumble out of the Pentagon cornucopia directly into their laps. The element of "risk," so basic to capitalism, has been trampled by Pentagon purchasing agents even as its top brass rattle their missiles at socialist governments abroad. If this isn't enough, in 2004 the Bush administration slipped a special provision into tax legislation to cut the tax on war profits to 7% compared to 21% paid by most U.S. manufacturers.
Former Halliburton subsidiary KBR, according to author Pratap Chatterjee in his "Halliburton's Army"(Nation Books), raked in "more than $25 billion since the company won a ten-year contract in late 2001 to supply U.S. troops in combat situations around the world." As all know, President Bush's Vice President Dick Cheney previously headed Halliburton (1995-2000) and landed in the White House the same year Halliburton got its humungous outsourcing contract. Earlier, as Defense Secretary, (1989-1993) Cheney sparked the revolutionary change to outsourcing military support services to the privateers. Today, Halliburton ranks among the biggest "defense" winners of all.
Halliburton's army "employs enough people to staff one hundred battalions, a total of more than 50,000 personnel who work for KBR, a contract that is now projected to reach $150 billion," Chatterjee writes. "Together with the workers who are rebuilding Iraq's infrastructure and the private security divisions of companies like Blackwater, Halliburton's Army now outnumber the uniformed soldiers on the ground in Iraq."
Accompanying Pentagon outsourcing, Chatterjee writes, "is the potential for bribery, corruption, and fraud. Dozens of Halliburton/KBR workers and their subcontractors have already been arrested and charged, and several are already serving jail terms for stealing millions of dollars, notably from Camp Arifjan in Kuwait."
There's likely no better example of how Halliburton/KBR literally burned taxpayers' dollars than its destruction of $85,000 Mercedes and Volvo trucks when they got flat tires and were abandoned. James Warren, a convoy truck driver testified to the Government Affairs Committee in July, 2004, "KBR didn't seem to care what happened to its trucks"It was common to torch trucks that we abandoned"even though we all carried chains and could have towed them to be repaired."
Bunnatine Greenhouse, once top contract official at the U.S. Army Corps of Engineers, made headlines by demanding old-fashioned free enterprise competitive bidding. She told a Senate committee in 2005: "I can unequivocally state the abuse related to contracts awarded to KBR represents the most blatant and improper abuse I have witnessed" in 20 years of working on government contracts. Greenhouse was demoted for her adherence to the law, Chatterjee said, but she became a cover girl at "Fraud" magazine and was honored by the Giraffe Society, a tribute to one Federal employee who stuck her neck out.
Tales of Halliburton/KBR's alleged swindles fill books. Rory Maybee, a former Halliburton/KBR contractor who worked at dining facilities in Camp Anaconda in 2004 told the U.S. Senate Democratic Policy Committee "that the company often provided rotten food to the troops and often charged the army for 20 thousand meals a day when it was serving only ten thousand." Food swindling, though, is small potatoes. Say Stiglitz and Bilmes: "KBR has also been implicated in a lucrative insurance scam that has gouged U.S. taxpayers for at least $600 million."
To fatten profit margins, contractors who cheat U.S. taxpayers apparently think nothing of underpaying their help. "While the executives of KBR, Blackwater, and other firms are making profits, many of those performing the menial work, such as cooking, driving, cleaning, and laundry, are poorly paid nationals from India, Pakistan, and other Asian and African countries," Stiglitz and Bilmes write. "Indian cooks are reported to earn $3-$5 a day. At the same time, KBR bills the American taxpayer $100 per load of laundry." Blackwater, the security firm repeatedly charged with shoot-first tactics, fraudulently obtained small-business set-aside contracts worth more than $144 million, they assert.
According to "Blackwater"(Nation Books) by Jeremy Scahill, the security firm in 2004 got a five-year contract to protect U.S. officials in Iraq totaling $229 million but as of June, 2006, just two years into the contract, it had been paid $321 million, and by late 2007 it had been paid more than $750 million. Scahill reports an audit charged that Blackwater included profit in its overhead and its total costs. The result was "not only in a duplication of profit but a pyramiding of profit since in effect Blackwater is applying profit to profit." Scahill writes, "The audit also alleged that the company tried to inflate its profits by representing different Blackwater divisions as wholly separate companies."
