Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Aerospace & Defense newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (October 2, 2020, 10:57 PM EDT ) Four House committee leaders announced an investigation Friday into the U.S. Department of Defense's "potentially inappropriate" use of $1 billion in COVID-19 stimulus funds, after the department directed the bulk of funding into shoring up the defense industrial base.
That Coronavirus Aid, Relief, and Economic Security, or CARES, Act funding was intended to be used to help prop up domestic production of urgently needed medical supplies and personal protective equipment, or PPE, Reps. Jim Clyburn, D-S.C., Maxine Waters, D-Calif., Carolyn Maloney, D-N.Y., and Stephen Lynch, D-Mass., said Thursday.
Instead, the DOD has reportedly used a significant part of the funding for "lucrative" contracts to defense contractors to make items such as body armor, dress uniforms and jet engine parts, the lawmakers said.
They directed Defense Secretary Mark Esper to provide documents by Oct. 16 outlining exactly how the DOD has spent that funding, why those recipients were chosen and the decision-making process that went into using the funding to stimulate the defense industrial base.
"As Congress considers additional coronavirus relief legislation, Americans deserve to know that the Trump administration is following the law and using relief funds for their intended purpose — to aid the nationwide pandemic response," the lawmakers said.
Clyburn chairs the House Select Subcommittee on the Coronavirus Crisis, Waters leads the House Financial Services Committee and Maloney is in charge of the House Oversight Committee, while Lynch chairs the Oversight National Security Subcommittee.
A representative for the DOD did not respond directly to the investigation on Friday, referring Law360 instead to a Sep. 23 statement from Jonathan Hoffman, the Pentagon's chief spokesman.
The DOD has been clear that it had indeed used the bulk of that CARES Act funding, about $700 million, to shore up the defense industrial base, with Hoffman saying the controversy over the spending had stemmed from a "misunderstanding by some about what the CARES Act did and did not do with respect to the Department of Defense."
The $1 billion was provided to the department to use Title III of the Defense Production Act, or DPA, to "prevent, prepare for, and respond to the coronavirus," Hoffman said. Title III allows the government to ensure domestic industrial resources are available to support national defense and homeland security.
The CARES Act did not limit — nor intend in its language to limit — that funding only to spending on medical resources, instead allowing it to be spent to support individuals and industries impacted by COVID-19, which includes the defense industrial base, according to Hoffman.
"This is exactly what DOD has done," he said.
Clyburn, Waters, Maloney and Lynch disagreed, saying that although there may be legitimate reasons to support the defense industry during the pandemic, that CARES Act funding was specifically intended to expand domestic capacity to produce medical supplies. There are still shortages of key supplies such as PPE and testing equipment, more than six months after a national emergency was declared, the lawmakers said.
They pointed to a report that had accompanied the 2021 defense appropriations bill passed by the House in July, which they said had made clear that using that money to support the defense industry wasn't Congress' intent.
Other Democratic lawmakers have also criticized the DOD's usage of its CARES Act funding. Sen. Elizabeth Warren, D-Mass., and Rep. Ro Khanna, D-Calif., for example asked the DOD's Office of Inspector General on Sep. 25 to launch an investigation.
Not all Democrats have been as critical, however, with the DOD's acquisition chief Ellen Lord getting a seemingly sympathetic ear from Sen. Tim Kaine, D-Va., at an Oct. 1 hearing of the Senate Armed Services Readiness and Management Support Subcommittee.
Lord reiterated the DOD's belief that it has acted in line with the terms of the CARES Act, while giving members of the subcommittee an outline of all of the DOD's COVID-19 spending under the DPA, with Kaine saying he was "glad [Lord] was able to address this."
--Additional reporting by Jennifer Doherty. Editing by Emily Kokoll.
For a reprint of this article, please contact reprints@law360.com.
