The money was meant for medical supplies, but the Defense Department spent it on jet engine parts and body armor.
A new report revealed the Department of Defense (DoD) misused the $1 billion intended to produce coronavirus-related medical equipment and supplies. Instead, it used the allocated funds to hire defense contractors to manufacture military supplies.
In response to the COVID-19 pandemic, Congress passed the CARES Act—a landmark bill offering $2.6 trillion in relief—in March that gave the Pentagon $1 billion to “prevent, prepare for, and respond to coronavirus.” But according to the Washington Post, the agency amended how it could spend the taxpayer-backed funds, diverting it away from providing medical relief to combat a virus that has killed 200,000 people in the United States.
The report comes soon after US health officials requested additional funding to combat the coronavirus, including $6 billion to distribute vaccines early next year and provide medical-grade masks for hospitals enduring dire shortages. The Government Accountability Office said on Monday that “there have been shortages of personal protective equipment and testing supplies because very few of them are made in the U.S., and global demand for them is high.”
Pentagon officials said the department tried to balance ramping up medical production to combat the coronavirus and keeping the defense industry afloat. The US defense budget for the 2020 fiscal year is $738 billion. Currently, the US spends more on national defense than China, Russia, Saudi Arabia, India, France, Germany, Japan, South Korea, Brazil, and the United Kingdom combined. The DoD said it “lent its expertise to the Department of Health and Human Services as it seeks to purchase billions of dollars in needed medical equipment,” according to the Washington Post.
Some of the items and supplies paid out of the $1 billion COVID-19 funds included $183 million to Rolls-Royce and ArcelorMittal for shipbuilding, $80 million in bailout money to an aircraft parts business in Kansas, $2 million to produce Army uniform fabrics, and “tens of millions of dollars” to manufacture and invest in satellite, drone, and space surveillance technology.
The $1 billion fund—paid for by the taxpayer through the CARES Act—was granted under the Defense Production Act (DPA). The Cold War-era law allows the president to authorize the president to force private American companies to provide services and manufacture products to promote national defense.
In April, President Donald Trump invoked the DPA through an executive order. He has used it over 78 times throughout his tenure at the White House, and according to the president, has “used the DPA more comprehensively than any President in history.”
Several of the defense contractors paid by the Pentagon with the funds had already received bailout money from the Paycheck Protection Program (PPP), another stimulus provision from the CARES Act intended to support struggling small businesses. In other words, defense contractors double-dipped bailout money from both the PPP and the Pentagon.
The Trump administration was also scrutinized for its handling and distribution of the PPP program. During the first round of PPP funding, the administration awarded Shake Shack, Potbelly, the US Catholic Church, and other big businesses and entities with over $10 million while leaving thousands of small businesses struggling to survive the pandemic. Trump also prompted criticism when it was revealed that $273 million in pandemic relief aid was awarded to his top campaign donors.
In addition to mishandling PPP, the administration has also been under fire for other examples of misuse and mismanagement of CARES Act funding. In August, the Wall Street Journal reported that only about 15% of the $25 billion earmarked for coronavirus testing has been spent. The relief package also includes $2 billion to provide COVID-19 testing for uninsured people, but only $235.5 million were spent as of last month.
Several examples of misuse of pandemic relief funds have prompted independent watchdog groups to call for increased oversight on the federal government’s management of CARES Act funding. However, Trump has blocked oversight efforts by issuing legal rulings preventing independent oversight of the nearly $3 trillion stimulus package.