The Bunker: Raytheon Rip-Off

The Bunker, delivered to our subscribers Wednesdays at 7 a.m., is a newsletter from the desk of National Security Analyst Mark Thompson. Sign up here to receive it first thing, or check back Wednesday afternoon for the online version.

This week in The Bunker: The Pentagon’s #2 contractor coughs up nearly $1 billion to settle government charges that it plundered the U.S. Treasury and bribed foreign officials; the B-2 strike on Houthi rebels might stay Iran’s hand when it comes to attacking Israel; don’t believe everything you read; and more.

RAYTHEON’S HAT TRICK

Pentagon’s #2 contractor fined nearly $1 billion

If you spend any time on the Internet, you know there’s often a list of “topics” at the end of an article. The October 16 Justice Department press release detailing wrongdoing by Raytheon had only four, each of which would make Willie (“because that's where the money is”) Sutton proud: False Claims Act; Financial Fraud; Securities, Commodities and Investment Fraud; and Foreign Corruption. Think of it as a grand slam of graft.

Raytheon agreed to pay more than $950 million to settle “two counts of major fraud” against the Pentagon. “These schemes to defraud caused the DOD to pay Raytheon over $111 million more than Raytheon should have been paid on the contracts,” Justice said. One case involved the sale of Patriot anti-missile systems to the Army for $619 million, $100 million more than U.S. taxpayers should have paid.

A separate bribery case involved “sham subcontracts” worth nearly $2 million to Qatari officials to win contracts in the Persian Gulf nation. “From the early 2000s into 2020, Raytheon paid more than $30 million to a Qatari agent who was a relative of the Qatari Emir and who, despite being retained as Raytheon’s representative in Qatar, had no prior background in military defense contracting,” the SEC said. (The Bunker, in contrast, has spent more than four decades exploring defense-contracting arcana, has spent time in Qatar, yet has never seen a dime from either Qatar or the U.S. military contractors supplying it with more than $26 billion [PDF] in the pipeline.)

Eight U.S. government heavyweights carpet-bombed Raytheon in the press release, even before a Pentagon official explained what was at stake. “The price we pay for equipment and services absolutely matters,” John Tenaglia, chief of defense pricing, contracting, and acquisition policy, said. “The more we pay, the less combat capability we can deliver for our nation’s warfighters.”

Then came the pro forma boilerplate: “The Justice Department’s resolutions ensure that the appropriate federal agencies can proceed with determining whether Raytheon or any other individuals or entities associated with the company should be suspended or debarred as federal contractors,” DOJ winked. But Raytheon, which became part of RTX in 2020 along with jet-engine-builder Pratt & Whitney, is #2 on the list of the Pentagon’s Big 5 contractors (behind Lockheed, and ahead of General Dynamics, Boeing, and Northrop). There’s virtually no chance that Raytheon, recipient of $27.8 billion in Pentagon contracts last year, will be barred or suspended.

That’s because Raytheon is the only company that builds the Patriot. It’s that sole-source relationship, built upon decades of Pentagon-pushed merger mania, that forced the government to vainly rely on Raytheon for honest data about its costs.

Raytheon’s financial penalty was lower than Pentagon regs allow because the company cooperated with the investigation and promised not to do it again. The company also fired certain employees who were responsible for this misconduct. Yet such plunder was rampant and years-long. The fraud cases apparently only came to light because of company worker Karen Atesoglu’s False Claims Act filing. Her persnicketiness earned her a $4.2 million slice of the Raytheon settlement. She is now, according to the government, “a former Raytheon employee.”

Bottom line: Perps are gone, and so is the whistleblower. So the whole charade can now start again.

REHEARSAL DINNER

Iran could be next on the menu

War has been escalating in the Middle East over the past month. The U.S. is playing a growing role that could lead to a showdown with Iran. It comes a year after the Iranian-backed Hamas (designated by the State Department as a “Foreign Terrorist Organization”) launched a surprise strike on Israel that killed about 1,200. But things are quickening. Israel killed the leader of Hezbollah, a second Iranian-sponsored “Foreign Terrorist Organization” allied with Hamas, September 27. Iran retaliated by firing a barrage of at least 180 ballistic missiles into Israel October 1.

Then, on October 16, Israel killed Hamas leader Yahya Sinwar, the architect of the initial October 7, 2023, attack. The same day, U.S. B-2 “stealth” bombers attacked targets in Yemen. They were trying to destroy weapons in five underground depots that a third, Iranian-backed “Specially Designated Global Terrorist Group” (beginning to notice a pattern here?), the Houthis, have been using to attack shipping in the Red Sea.

Israel is now weighing how to respond to that Iranian missile attack. The U.S. B-2 bombing is a clear signal to Tehran that it had better think twice before reacting to any Israeli counterstrike. The U.S. can unleash the same kind of attack on the buried bunkers that are at the heart of Iran’s almost-completed efforts to build a nuclear bomb.

Once again, the U.S. is in danger of sliding into war as Congress twiddles its thumbs. If the U.S. is truly committed to preventing Iran from getting nuclear weapons, now is the time for U.S. lawmakers to act. No, they shouldn’t declare war. But they should pre-emptively declare they will debate such a declaration before committing any U.S. forces to attacks on Iran.

U.S. citizens — and Iran’s mullahs — should be forewarned.

THE GOOD AND THE BAD

Ignore the “sky-is-falling” and “silver bullets”

As national-security media has been sliced, diced, chopped, and pureed into a pusillanimous porridge, stories generated by what’s left exaggerate the threats faced by the U.S. — and the wonders of its weapons.

Recent threats:

U.S. Highly Vulnerable to Nuclear First Strike

China’s Monster Amphibious Assault Ship Has Twin Island Superstructures Optimized For Aviation Ops

How Russia, China envision nuking US satellites: from above and below

Recent silver bullets:

U.S. Army Fires Updated Counter-Drone Weapon That Can Take Down Swarms of Targets at Once

Navy eyes prototypes in electromagnetic weapons, high-power microwave, and laser weapons to protect ships

Army Testing Robot Dogs Armed with Artificial Intelligence-Enabled Rifles in Middle East

Please, Dear Reader, ignore this kind of stuff. Military progress (oxymoron alert!) comes in tiny fits and starts. The state of the nation’s defense is never as bad as the critics aver, nor as lethal as its advocates maintain.

WHAT WE’RE READING

Here’s what has caught The Bunker’s eye recently

→ Milestone…

The two naval aviators killed when their EA-18 warplane crashed near Mount Rainier in Washington state on October 15 were women, Lieutenant Serena N. Wileman and Lieutenant Commander Lyndsay P. Evans, the Associated Press reported October 21.

→ Take it to the bank…

The Pentagon’s failure to ever pass an audit hurts its ability to prevail on the battlefield, a trio of defense experts said in Defense One October 16.

→ “Don’t ask, don’t tell” dented

The Pentagon announced that more than 800 military personnel booted out of the U.S. military under its anti-gay policy from 1993 to 2011 will have their service records upgraded to honorable discharges, the Washington Post reported October 16.

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Pulitzer Prize-winner Mark Thompson has been covering the Pentagon for more than 45 years.