The Permanent War Economy
Abstract
In 1961 President Eisenhower described a permanent armaments industry and warned against its influence in the councils of government. This chapter tests the structure he described against current records. Five companies receive about 30 percent of Department of Defense contract obligations. The statutory requirement for certified cost data was set at $100,000 in 1962 and is $2.5 million today. The Inspector General's two audits of one spare-parts supplier, as described in House hearing testimony, found excess profit of $16.1 million and $20.8 million. GAO reports rising costs and longer delivery times across the weapons portfolio. Three of the five primes paid shareholders more than they spent on company-funded research in fiscal years 2021 to 2025. This project's sum of the five primes' Lobbying Disclosure Act reports is about $520 million over seven years. DoD's own 2023 study finds margins somewhat lower than commercial peers. The GAO, DoD and Inspector General documents cited here do not examine whether contractor profits rise as a conflict lengthens.
1.1 The warning
On 17 January 1961 President Eisenhower said in his farewell address that the United States had been compelled to create a permanent armaments industry of vast proportions, and that "we must guard against the acquisition of unwarranted influence" by the military-industrial complex.
Eisenhower delivered the address on radio and television as he left office. He said: "Until the latest of our world conflicts, the United States had no armaments industry." He then said the country had been "compelled to create a permanent armaments industry of vast proportions."
Evidence: Exhibit 327
The address also stated that the country annually spent on military security more than the net income of all United States corporations. The National Archives transcript prints "United State corporations", and the source spelling is kept here. The sentence on influence reads in full: "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex."
The sections below test the structure he described against records from the following decades: the size of the budget, the concentration of contracts, the check on contract prices, program outcomes, contractor returns and lobbying.
Exhibit 327 · Presidential address
Farewell Radio and Television Address to the American People
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.
Eisenhower's farewell address describing a permanent armaments industry and warning against unwarranted influence by the military-industrial complex.
- Source
- Dwight D. Eisenhower (National Archives milestone document)
- Date
- 17 January 1961
- Quoted from
- Paragraph beginning 'In the councils of government' (transcript is not paragraph-numbered)
- Grade
- Primary record
- Document
- https://www.archives.gov/milestone-documents/president-dwight-d-eisenhowers-farewell-address
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
1.2 The size of the budget
National defense outlays fell from 9.0 percent of GDP in 1960 to 5.5 percent in 1989 and 3.0 percent in 2025. In constant FY2017 dollars they rose from $416.0 billion in 1960 to $595.6 billion in 1989 and $697.2 billion in 2025.
The Office of Management and Budget's historical tables give national defense outlays as a percentage of GDP and in constant FY2017 dollars. The percentage is lower than in the Cold War. The constant-dollar figure for 2025 is the highest of the years listed.
Evidence: Exhibit 343
| Fiscal year | Percent of GDP | Constant FY2017 dollars (billions) |
|---|---|---|
| 1953 | 13.8 | 591.3 |
| 1960 | 9.0 | 416.0 |
| 1968 | 9.1 | 581.0 |
| 1986 | 6.0 | 579.5 |
| 1989 | 5.5 | 595.6 |
| 2000 | 2.9 | 452.2 |
| 2019 | 3.2 | 656.2 |
| 2025 | 3.0 | 697.2 |
OMB publishes both series. The share of GDP measures the size of defense spending relative to the economy, and the constant-dollar series measures the volume of spending. The table reports both.
Exhibit 343 · Budget data table
Historical Tables, Table 6.1 Composition of Outlays 1940-2031 (FY2027 edition)
National defense outlays as a percentage of GDP: 9.0 (1960), 5.5 (1989), 3.0 (2025); constant FY2017 dollars 416.0, 595.6 and 697.2 billion.
- Source
- Office of Management and Budget
- Date
- April 2026
- Grade
- Primary record
- Document
- https://www.whitehouse.gov/wp-content/uploads/2026/04/hist06z1_fy2027.xlsx
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
1.3 Five companies
The Congressional Research Service reported that five companies received 30 percent of Department of Defense contract obligations in fiscal year 2024, out of $445 billion: Lockheed Martin, RTX, Boeing, Northrop Grumman and General Dynamics.
The Congressional Research Service defense primer of 6 February 2026 reports that DoD obligated $445 billion on contracts in fiscal year 2024, more than all other agencies combined ($310 billion). The five companies' shares were Lockheed Martin 11 percent ($50.7 billion), RTX 6 percent ($24.8 billion), Boeing 5 percent ($23.2 billion), Northrop Grumman 4 percent ($18.6 billion) and General Dynamics 4 percent ($15.6 billion).
Evidence: Exhibit 338, Exhibit 340, Exhibit 339
The primer's May 2024 edition used fiscal year 2022 data. Its Table 1 listed the five companies at about $122.5 billion of $415 billion, which is about 30 percent. That is the 30 percent figure in the abstract.
This project checked the figure against the USAspending.gov API on 9 November 2026. It queried DoD contract awards (award types A to D) for fiscal years 2019 to 2025, took the top 400 recipients per year, and rolled recipients up to five parent companies by name. Joint ventures were excluded from every parent to avoid double counting. The top-five share ranged from 27.4 percent to 36.6 percent.
| Fiscal year | DoD total ($ billions) | Top five ($ billions) | Share |
|---|---|---|---|
| 2019 | 407.9 | 133.6 | 32.8% |
| 2020 | 452.2 | 165.4 | 36.6% |
| 2021 | 422.9 | 116.0 | 27.4% |
| 2022 | 444.8 | 124.0 | 27.9% |
| 2023 | 505.6 | 171.3 | 33.9% |
| 2024 | 492.3 | 144.5 | 29.3% |
| 2025 | 541.8 | 183.3 | 33.8% |
The USAspending figures are net obligations by action date, including deobligations, and the roll-up depends on name matching. The roll-up uses the same five parents in every year, and their order changed. Lockheed Martin ranked first every year. Huntington Ingalls ranked below all five, with $4.6 billion to $9.1 billion a year. The roll-up and CRS agree within about one point for fiscal year 2024 (29.3 and 30 percent), although CRS uses SAM.gov data and a different base.
William Hartung's 2021 paper for the Costs of War project at Brown University states that "Pentagon spending has totaled over $14 trillion, one-third to one-half of which went to defense contractors." It gives the source of the range as DoD's budget estimates and CRS, and it reports that one-quarter to one-third of all Pentagon contracts in recent years went to five major weapons contractors. The paper is a project paper and has not been peer reviewed.
Exhibit 338 · CRS report
Defense Primer: Department of Defense Contractors (IF10600)
received 30% of departmental contract obligations
FY2024 DoD contract obligations $445 billion; five companies received 30 percent. The earlier May 2024 edition (FY2022 data) listed the same five at about $122.5 billion of $415 billion, about 30 percent.
- Source
- Congressional Research Service
- Date
- 6 February 2026
- Quoted from
- p. 1, Contractors as Entities
- Grade
- Primary record
- Document
- https://www.congress.gov/crs_external_products/IF/PDF/IF10600/IF10600.19.pdf
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
Exhibit 340 · Dataset query
USAspending query: DoD contract obligations by recipient, FY2019 to FY2025
Source: USAspending.gov API (U.S. Department of the Treasury), endpoint spending_by_category/recipient, run 9 November 2026. Query: POST with awarding toptier agency Department of Defense, award type codes A to D (contracts), fiscal-year periods FY2019 to FY2025, top 400 recipients per year. The DoD total per year comes from the awarding_agency endpoint with identical filters; the FY2024 total of $492.33 billion matches the agency obligations endpoint. The project rolled recipients up to five parent companies by name pattern (Lockheed Martin including Sikorsky; RTX including Raytheon, Pratt & Whitney and Collins; Boeing; General Dynamics including Electric Boat, Bath Iron Works, NASSCO and GDLS; Northrop Grumman). Joint ventures (such as Javelin, Bell Boeing and Boeing Sikorsky) were excluded from all parents to avoid double counting, so the roll-up is approximate. Figures are net obligations by action date, including deobligations. The top-five share of DoD contract obligations was 27.4 to 36.6 percent across the seven years. The shares are the project's computation from returned rows, not figures the dataset returns directly.
- Source
- U.S. Department of the Treasury (USAspending.gov API)
- Date
- 2026-11-09
- Grade
- Reported
- Document
- https://api.usaspending.gov/api/v2/search/spending_by_category/recipient/
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- The CRS figure for FY2024 uses SAM.gov data and a different base; the two agree within about one point.
1.4 The price check
Congress required contractors to submit and certify cost or pricing data for negotiated prime contracts expected to exceed $100,000 in 1962. Section 811 of the FY2018 National Defense Authorization Act raised the threshold for contracts awarded on or after 1 July 2018. GAO gives the new figure as $2 million, and the current FAR provision states $2.5 million. GAO reported in 2022 that DoD and NASA had not formally analyzed the effect of the increase.
Public Law 87-653 was signed on 10 September 1962. It added a section 2306(f) to Title 10 that required certified cost or pricing data "prior to the award of any negotiated prime contract under this title where the price is expected to exceed $100,000." The requirement was later codified and renamed the Truthful Cost or Pricing Data statute.
Evidence: Exhibit 328, Exhibit 329, Exhibit 330
Mechanism: The study not run
The current FAR provision, 15.403-4(a)(1), sets the threshold at "$950,000 for prime contracts awarded before July 1, 2018, and $2.5 million for prime contracts awarded on or after July 1, 2018." GAO reported that Section 811 of the fiscal year 2018 National Defense Authorization Act raised the threshold from $750,000 to $2 million effective 1 July 2018. GAO also reported in April 2022 that DoD and NASA had not formally analyzed the effect of the change.
Contracts below the threshold carry no certified cost or pricing data. The DoD Inspector General told the House Oversight Committee in January 2022 that from 1 January 2017 through 30 June 2019 DoD awarded TransDigm 5,113 contracts valued at $569 million, and that "more than 95 percent of the contracts ... were below the TINA threshold."
Exhibit 328 · Statute
Public Law 87-653 (76 Stat. 528)
Prior to the award of any negotiated prime contract under this title where the price is expected to exceed $100,000;
Added the requirement that contractors submit and certify cost or pricing data for negotiated prime contracts expected to exceed $100,000; later codified and renamed the Truthful Cost or Pricing Data statute.
- Source
- United States Congress
- Date
- 10 September 1962
- Quoted from
- 76 Stat. 528, new section 2306(f)(1)
- Grade
- Primary record
- Document
- https://www.govinfo.gov/content/pkg/STATUTE-76/pdf/STATUTE-76-Pg528.pdf
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
Exhibit 329 · Regulation
FAR 15.403-4 Requiring certified cost or pricing data
The threshold for obtaining certified cost or pricing data is $950,000 for prime contracts awarded before July 1, 2018, and $2.5 million for prime contracts awarded on or after July 1, 2018.
Sets the threshold for certified cost or pricing data.
- Source
- Federal Acquisition Regulatory Council (FAC 2026-01)
- Date
- 2026-03-13
- Quoted from
- FAR 15.403-4(a)(1)
- Grade
- Primary record
- Document
- https://www.acquisition.gov/far/15.403-4
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
Exhibit 330 · GAO report
Federal Contracting: Implementation of Changes to Cost or Pricing Data Requirements (GAO-22-105307)
During this review, DOD and NASA officials told GAO they have not formally analyzed the effects of section 811.
Section 811 of the FY2018 NDAA raised the certified cost or pricing data threshold from $750,000 to $2 million, effective 1 July 2018; DoD and NASA had not formally analyzed the effect.
- Source
- U.S. Government Accountability Office
- Date
- April 2022
- Quoted from
- GAO-22-105307 product page, Highlights, 'What GAO Found'
- Grade
- Primary record
- Document
- https://www.gao.gov/products/gao-22-105307
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Summary of the report's findings; no wording is quoted.
1.5 One supplier, two audits
The DoD Inspector General testified to the House Oversight Committee that its audits found TransDigm earned $16.1 million in excess profit on 46 spare parts in a 2019 report and $20.8 million on 105 of 107 spare parts in a second audit report (DODIG-2022-043), and that TransDigm refused to share cost data on 25 of 27 contracts in the second audit.
The DoD Inspector General issued two audit reports on TransDigm Group's spare-parts pricing, DODIG-2019-060 and DODIG-2022-043. The wording below comes from the Inspector General's statements in House hearing records, and the finding is graded reported.
Evidence: Exhibit 332, Exhibit 331, Exhibit 333, Exhibit 334
At the 15 May 2019 hearing, the Inspector General's representatives described the first audit. "In total, we determined that for these 46 parts, which cost the DOD $26.2 million, TransDigm earned $16.1 million in excess profit." The statement added that "TransDigm was not obligated by law to provide that data and it refused to do so in response to 15 of the 16 requests."
At the 19 January 2022 hearing, Deputy Inspector General Theresa Hull described the second audit. She stated: "we determined that for these 107 spare parts, which cost the DoD $38.3 million, TransDigm earned $20.8 million in excess profit on 105 spare parts." The auditors used 15 percent as a reasonable profit, "the highest profit percentage identified in the FAR for various contract types." Hull stated that TransDigm "refused to share cost data DoD contracting officers requested for 25 out of 27 contracts." Profit on the parts ranged from 2.8 percent to over 3,850 percent of cost.
On 18 April 2022 the House Oversight Committee reported that TransDigm had repaid the $16.1 million after the 2019 hearing. The same release quoted DoD as stating that "TransDigm has not repaid DOD a single dollar or indicated that it intends to do so" on the $20.8 million.
TransDigm's chief executive, Kevin Stein, answered the 2022 audit in his testimony. He said "the IG arbitrarily excluded nearly $10 million in Federal taxes that we paid and interest paid by us." He said the report "creates a 15-percent profit limit for fixed-price contracts. This limit does not exist in law or policy," and that "on average, DOD received a 25-percent discount to the commercial price of those parts." He quoted the report's own sentence: "We are not stating that 15 percent should be used as a benchmark when negotiating firm-fixed-priced contracts."
In the 2019 hearing Stein stated: "About seven to eight percent of our sales represent U.S. Government aftermarket sales." He also described the Inspector General's finding as, in his words, "that TransDigm did nothing illegal in its pricing." Hull's 2022 statement says the 2019 audit noted that contracting officers had followed FAR procedures and that prices were fair and reasonable at award, and that the Inspector General applied cost analysis after the fact.
Exhibit 331 · Congressional testimony
Statement of Theresa S. Hull, Deputy Inspector General, on the audit of TransDigm (DODIG-2022-043)
we determined that for these 107 spare parts, which cost the DoD $38.3 million, TransDigm earned $20.8 million in excess profit on 105 spare parts.
IG summary of its audit: 107 parts, 153 contracts, $38.3 million cost to DoD, $20.8 million excess profit above a 15 percent benchmark on 105 parts; TransDigm refused cost data on 25 of 27 requests.
- Source
- DoD Office of Inspector General
- Date
- 19 January 2022
- Quoted from
- p. 8
- Grade
- Reported
- Document
- https://oversightdemocrats.house.gov/sites/evo-subsites/democrats-oversight.house.gov/files/Hull%20Testimony.pdf
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Testimony in a House hearing record, not the Inspector General's report.
Exhibit 333 · Hearing record
Price Gouging in Military Contracts: New Inspector General Report Exposes Excess Profit Obtained by TransDigm Group (Hearing, Serial No. 117-60)
This limit does not exist in law or policy.
Includes TransDigm CEO Kevin Stein's response to the IG audit: objects to the 15 percent standard, the exclusion of taxes and interest, and the IG's treatment of commercial pricing.
- Source
- House Committee on Oversight and Reform
- Date
- 19 January 2022
- Quoted from
- Statement of Kevin Stein, Ph.D.
- Grade
- Reported
- Document
- https://www.govinfo.gov/content/pkg/CHRG-117hhrg46681/html/CHRG-117hhrg46681.htm
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Testimony by TransDigm's chief executive, recorded in a House hearing record. It states the company's position on the Inspector General's findings and is cited as the company's response.
Exhibit 332 · Hearing record
DOD Inspector General Report on Excess Profits by TransDigm Group, Inc. (Hearing, Serial No. 116-22)
In total, we determined that for these 46 parts, which cost the DOD $26.2 million, TransDigm earned $16.1 million in excess profit.
Testimony of the DoD IG on DODIG-2019-060 ($16.1 million excess profit on 46 of 47 parts) and of TransDigm's CEO and chairman.
- Source
- House Committee on Oversight and Reform
- Date
- 15 May 2019
- Quoted from
- Statement of Theresa S. Hull
- Grade
- Reported
- Document
- https://www.govinfo.gov/content/pkg/CHRG-116hhrg36511/html/CHRG-116hhrg36511.htm
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Testimony in a House hearing record, not the Inspector General's report. The record also carries TransDigm's testimony.
Exhibit 334 · Committee press release
Chairwoman Maloney and Senator Grassley call on TransDigm to repay millions
TransDigm has not repaid DOD a single dollar or indicated that it intends to do so.
Reports that TransDigm repaid the $16.1 million after the 2019 hearing and that DoD stated TransDigm had not repaid the $20.8 million.
- Source
- House Committee on Oversight and Reform
- Date
- 18 April 2022
- Quoted from
- Paragraph 1 (quoting DoD)
- Grade
- Reported
- Document
- https://oversightdemocrats.house.gov/news/press-releases/chairwoman-maloney-and-senator-grassley-call-on-transdigm-to-repay-millions-it
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- A committee press release relaying DoD's statement and the committee's account of TransDigm's repayment.
1.6 Programs that cost more and arrive later
GAO's July 2026 weapon systems assessment found that 46 of 72 major defense acquisition programs with cost data reported cost increases totaling $122.08 billion, and that the average time to deliver a capability rose to over 12 years.
The assessment is GAO's 24th annual review of the Department of Defense's major weapon programs. It covers a portfolio of 104 programs that GAO states exceeds $2.4 trillion. Sixteen programs reported cost decreases totaling $47.3 billion.
Evidence: Exhibit 335, Exhibit 336
GAO's 2025 assessment reported that combined total cost estimates for 30 major programs increased by $49.3 billion, and that the Sentinel program accounted for more than $36 billion of the increase. These are cost estimates for the whole life of each program. They measure what the government expects to pay.
Exhibit 335 · GAO report
Weapon Systems Annual Assessment: Requiring Mature Technologies Could Enable Shift to Rapid Delivery (GAO-26-108457)
Among the 72 MDAPs for which cost data was available, over half of the programs (46 of 72) reported cost increases totaling $122.08 billion.
24th annual assessment: portfolio of 104 programs exceeds $2.4 trillion; 46 of 72 MDAPs reported cost increases of $122.08 billion; average delivery time over 12 years.
- Source
- U.S. Government Accountability Office
- Date
- July 2026
- Quoted from
- p. 14
- Grade
- Primary record
- Document
- https://www.gao.gov/products/gao-26-108457
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
Exhibit 336 · GAO report
Weapon Systems Annual Assessment (GAO-25-107569)
Combined total cost estimates increased by $49.3 billion
Combined total cost estimates for 30 MDAPs rose $49.3 billion (8.3 percent) in a year; Sentinel accounted for over $36 billion.
- Source
- U.S. Government Accountability Office
- Date
- June 2025
- Quoted from
- Highlights / assessment text
- Grade
- Primary record
- Document
- https://www.gao.gov/products/gao-25-107569
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
DoD estimates the F-35 will cost over $2 trillion to buy, operate and sustain, including about $1.58 trillion for sustainment, which rose 44 percent from 2018 to 2023. GAO reported in 2026 that the F-35 mission capable rate fell from 67 to 44 percent between fiscal years 2021 and 2025.
GAO's 2024 report gave the acquisition cost as about $442 billion and the sustainment cost as the other $1.58 trillion, up from about $1.1 trillion in 2018. GAO's June 2026 report states sustainment costs for the United States "estimated at $1.6 trillion for the life of the program to 2088, as of 2024." The same report found that the Global Support Solution Reset requires an estimated $13.7 billion more than previously planned through fiscal year 2031.
Evidence: Exhibit 337, Exhibit 346
Lockheed Martin is the prime contractor for the F-35 and ranked first in DoD contract obligations in every year of the roll-up in section 1.3. The GAO reports document costs and readiness. They do not state how much of the sustainment estimate becomes contractor profit.
Exhibit 337 · GAO report
F-35 Sustainment: Costs Continue to Rise While Planned Use and Availability Have Decreased (GAO-24-106703)
DOD estimates the F-35 program will cost over $2 trillion to buy, operate, and sustain over its lifetime.
DoD estimates over $2 trillion to buy, operate and sustain the F-35; sustainment estimate rose 44 percent from 2018 to 2023.
- Source
- U.S. Government Accountability Office
- Date
- 15 April 2024
- Quoted from
- p. 2
- Grade
- Primary record
- Document
- https://www.gao.gov/products/gao-24-106703
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Further quotation: “The F-35 fleet’s overall availability has trended downward considerably over the past 5 years, and none of the variants are meeting availability goals” (Key Takeaways, PDF p. 2). Page 1: 'DOD operates and sustains about 630 F-35 aircraft and plans to procure about 2,500 total by the mid-2040s.' Key Takeaways also state that since 2014 GAO had made 43 recommendations and that 30 (about 70 percent) remained unimplemented. Report date 15 April 2024. Read from a Wayback capture of gao.gov/assets/gao-24-106703.pdf.
Exhibit 346 · GAO report
F-35 Sustainment: Actions Needed to Ensure Updated Strategy Improves Persistent Readiness Challenges (GAO-26-108113)
sustainment costs for the United States estimated at $1.6 trillion for the life of the program to 2088, as of 2024.
U.S. F-35 sustainment costs estimated at $1.6 trillion to 2088 as of 2024; mission capable rate fell from 67 to 44 percent FY2021-FY2025; $13.7 billion more needed through FY2031.
- Source
- U.S. Government Accountability Office
- Date
- June 2026
- Quoted from
- Letter, p. 1
- Grade
- Primary record
- Document
- https://www.gao.gov/products/gao-26-108113
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Further quotation: “To achieve GSS Reset goals, JPO estimated in October 2025 that the U.S. military services will need to increase funding for F-35 sustainment by roughly $13.7 billion over previously planned spending from fiscal year 2026 to fiscal year 2031.” (Printed p. 13 (PDF p. 18)). Report dated June 2026. JPO is the F-35 Joint Program Office; GSS Reset is its Global Support Solution Reset. Same page: about 50 percent ($7.3 billion) for additional spare parts and material, about $3.1 billion for procurement including depot activations, about $3.3 billion for operation and maintenance. Letter, PDF p. 2: 'DOD operates and sustains over 800 U.S. F-35s and plans to buy about 1,700 more aircraft by the mid-2040s.' Read from a Wayback capture.
1.7 What contractors earn and return
DoD's April 2023 Contract Finance Study found that defense contractors outperformed commercial counterparts on 8 of 9 key financial metrics while profit margins were somewhat lower, and that cash paid to shareholders rose 73 percent in 2010-2019 compared with 2000-2009 while the share of spending on independent research and development declined.
The study was produced by the Office of the Under Secretary of Defense for Acquisition and Sustainment. It states: "In aggregate, the defense industry is financially healthy, and its financial health has improved over time." It also reports: "Although profit margins are somewhat lower than commercial counterparts, the gap is more than offset by lower asset and investment requirements for defense contractors."
Evidence: Exhibit 344, Exhibit 345
The study also reports that, despite improving margins and cash generation in 2010-2019 compared with 2000-2009, the share of contractor spending on independent research and development and capital expenditures declined while cash paid to shareholders in dividends and share repurchases increased by 73 percent. The report marks that sentence "(UT)".
The study states that "profit policy per se was not significantly assessed" and concludes that the Department "does not find a need to modify its weighted guidelines structured methodology of arriving at objective profit positions for negotiation."
Exhibit 344 · Agency study
Department of Defense Contract Finance Study Report
In 8 of 9 key financial metrics, defense contractors out-performed commercial counterparts.
Finds the defense industry financially healthy; contractors outperformed commercial counterparts on 8 of 9 financial metrics while margins are somewhat lower; reports cash paid to shareholders rose 73 percent in 2010-2019 versus 2000-2009 while the IR&D share declined.
- Source
- Office of the Under Secretary of Defense for Acquisition and Sustainment, Defense Pricing and Contracting
- Date
- April 2023
- Quoted from
- p. 18
- Grade
- Primary record
- Document
- https://www.acq.osd.mil/asda/dpc/pcf/docs/finance-study/FINAL%20-%20Defense%20Contract%20Finance%20Study%20Report%204.6.23.pdf
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
An earlier GAO review reached a different conclusion from DoD's own profit study of its day. DoD's study had concluded that since 1970 defense profitability was roughly comparable to commercial profitability except in 1980-83. In December 1986 GAO reported that "the use of conventional methodology results in the conclusion that during the entire period the profitability of defense business was substantially greater than commercial business." GAO took no position on what defense profits should be. It is the most recent GAO study of defense profit levels cited here, and it is forty years old.
Exhibit 345 · GAO report
Government Contracting: Assessment of the Study of Defense Contractor Profitability (GAO/NSIAD-87-50)
GAO found that the use of conventional methodology results in the conclusion that during the entire period the profitability of defense business was substantially greater than commercial business.
GAO review of DoD's DFAIR profit study; concludes by conventional methodology defense profitability was substantially greater than commercial across the period examined since 1970 and takes no position on what profits should be.
- Source
- U.S. General Accounting Office
- Date
- 23 December 1986
- Quoted from
- Executive Summary, Results in Brief, p. 2 (OCR text)
- Grade
- Primary record
- Document
- https://www.gao.gov/assets/nsiad-87-50.pdf
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
In fiscal years 2021 to 2025 Lockheed Martin, RTX and Northrop Grumman each paid more in share repurchases and dividends than they reported spending on company-funded research and development, in company-wide figures that include commercial work.
The figures come from the companies' own annual reports to the SEC, in billions of dollars, summed by this project for fiscal years 2021 to 2025. Boeing is excluded because it had no tagged buybacks after 2019 and reported net losses in fiscal years 2019 to 2024. General Dynamics is excluded because its research spending is not tagged in the data.
Evidence: Exhibit 341
| Company | Buybacks | Dividends | Total returned | Company-funded R&D |
|---|---|---|---|---|
| Lockheed Martin | 24.7 | 15.2 | 39.9 | 8.3 |
| RTX | 18.5 | 16.1 | 34.6 | 14.0 |
| Northrop Grumman | 10.8 | 5.6 | 16.4 | 5.7 |
RTX's total includes a single-year buyback of $12.87 billion in fiscal year 2023. The figures cover each company's commercial and government work, and RTX and Boeing have large commercial businesses. The data do not separate defense from commercial cash flows, and the table does not show what a defense-only comparison would find. DoD's 2023 study reports, for the industry as a whole, a 73 percent rise in shareholder payouts and a falling research share between 2000-2009 and 2010-2019.
Exhibit 341 · Dataset query
SEC XBRL company facts for Lockheed Martin, RTX, Boeing, General Dynamics, Northrop Grumman
Source: SEC data.sec.gov XBRL company facts for Lockheed Martin (CIK 936468), RTX (101829), Boeing (12927), General Dynamics (40533) and Northrop Grumman (1133421), fetched 9 November 2026. Facts: share repurchases, dividends paid and company-funded research and development from annual 10-K filings, FY2018 to FY2025. Figures are company-wide, including commercial work. FY2021 to FY2025 totals in billions of dollars (buybacks, dividends, R&D): Lockheed Martin 24.7, 15.2, 8.3; RTX 18.5, 16.1, 14.0; Northrop Grumman 10.8, 5.6, 5.7; General Dynamics 5.6, 7.2, R&D not tagged; Boeing none tagged, 0.3, 15.9. Five-year totals are the project's arithmetic over the annual facts.
- Source
- U.S. Securities and Exchange Commission (data.sec.gov)
- Date
- 2026-11-09
- Grade
- Primary record
- Document
- https://data.sec.gov/api/xbrl/companyfacts/CIK0000936468.json
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Annual values are as tagged in the filings. Boeing and General Dynamics are left out of the comparison: Boeing reported no tagged buybacks after 2019 and net losses in FY2019 to FY2024, and General Dynamics' R&D is not tagged. Other company facts URLs follow the same pattern with the CIK padded to ten digits.
1.8 Lobbying
The original Lobbying Disclosure Act quarterly reports for 2019 to 2025, summed, show Lockheed Martin, RTX, Boeing, General Dynamics and Northrop Grumman together reporting $519.7 million in lobbying, between $68.9 million and $81.2 million a year, in company-wide figures for all issues.
This project's figures are sums of original quarterly Lobbying Disclosure Act reports whose client name matched each company, using the income field for outside firms and the expenses field for in-house lobbying. Amended filings are excluded, and the totals cover all issues. The five companies' reports are not limited to defense matters.
Evidence: Exhibit 342, Exhibit 339
| Company | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|
| Lockheed Martin | 15.2 | 15.1 | 16.7 | 15.8 | 15.9 | 14.0 | 17.7 |
| RTX (with Raytheon, United Technologies) | 20.1 | 15.3 | 17.6 | 13.2 | 14.2 | 16.0 | 15.8 |
| Boeing | 17.6 | 16.3 | 16.8 | 16.4 | 17.4 | 14.0 | 13.2 |
| General Dynamics | 13.3 | 13.9 | 14.1 | 14.6 | 15.3 | 15.6 | 17.3 |
| Northrop Grumman | 15.1 | 13.2 | 11.4 | 11.7 | 11.6 | 9.3 | 9.1 |
| Total | 81.2 | 73.8 | 76.7 | 71.7 | 74.3 | 68.9 | 73.0 |
The yearly totals are rounded, and the exact seven-year sum from the filings is $519.7 million. The RTX 2019 row includes filings under the name United Technologies. Hartung's 2021 paper states that weapons makers spent $2.5 billion on lobbying over two decades and cites the Center for Responsive Politics. No document cited here traces any change in law or contracting rules to these expenditures.
Exhibit 342 · Dataset query
Lobbying Disclosure Act query: quarterly reports naming five prime contractors, 2019 to 2025
Source: Lobbying Disclosure Act database, lda.gov API (the older lda.senate.gov address showed a maintenance page), run 9 November 2026. Query: filing_year for each of 2019 to 2025 and client_name substring (Lockheed Martin; Raytheon, RTX Corp and United Technologies; Boeing; General Dynamics; Northrop Grumman); original quarterly reports Q1 to Q4 only, so amended filings are excluded and superseded figures are not corrected. Amount is the income field (outside firms) or the expenses field (in-house). Figures are company-wide, all issues, not defense-only. The five companies sum to $519.7 million over 2019 to 2025, between $68.9 million and $81.2 million a year. The sums are the project's aggregation of filings matched by name.
- Source
- U.S. Congress (Lobbying Disclosure Act database, lda.gov)
- Date
- 2026-11-09
- Grade
- Reported
- Document
- https://lda.gov/api/v1/filings/
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- The RTX 2019 row includes United Technologies filings. Not done: sector-wide total, issue-code subset, lobbyist counts.
Exhibit 339 · Research paper
Profits of War: Corporate Beneficiaries of the Post-9/11 Pentagon Spending Surge
Pentagon spending has totaled over $14 trillion, one-third to one-half of which went to defense contractors.
Estimates one-third to one-half of more than $14 trillion in Pentagon spending since 2001 went to contractors, derived from the DoD Green Book and CRS; five firms received one-quarter to one-third of contracts; cites $2.5 billion lobbying (Center for Responsive Politics).
- Source
- William D. Hartung, Costs of War Project, Watson Institute, Brown University
- Date
- 13 September 2021
- Quoted from
- p. 2, Introduction
- Grade
- Reported
- Document
- https://costsofwar.watson.brown.edu/sites/default/files/papers/Profits-of-War_Hartung_Costs-of-War.pdf
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
- Note
- Project paper by a think-tank fellow, not peer reviewed. Footnote 2 derives the range from DoD's National Defense Budget Estimates for FY 2021 and CRS IF10600; this project did not re-derive it. The $2.5 billion lobbying figure cites the Center for Responsive Politics and was not re-derived.
1.9 The case for the current system
The case for the current system
DoD's 2023 study finds contractor profit margins somewhat lower than commercial counterparts. Defense outlays were 3.0 percent of GDP in 2025, against 9.0 percent in 1960 and 5.5 percent in 1989. Cost-reimbursement contracts are restricted by regulation to cases where requirements or costs cannot be defined, and cost-plus-incentive-fee contracts are described as appropriate for development and test programs when a cost-reimbursement contract is necessary. TransDigm states that government aftermarket sales are 7 to 8 percent of its sales.
What the record adds
The same DoD study finds contractors outperformed commercial counterparts on 8 of 9 financial metrics and that payouts to shareholders rose 73 percent while the research share fell. Constant-dollar defense outlays in 2025 exceed those in 1960 and 1989. In the 2019 audit the Inspector General noted that contracting officers had followed FAR procedures at award, and it found the excess profit through cost analysis after the fact, as Hull's 2022 statement describes.
FAR 16.301-2 permits cost-reimbursement contracts only when circumstances do not allow the agency to define its requirements sufficiently for a fixed-price contract, or when uncertainties do not permit costs to be estimated accurately enough. FAR 16.405-1 states that a cost-plus-incentive-fee contract is appropriate for services or development and test programs when a cost-reimbursement contract is necessary. The 2023 DoD study states that the Department found no need to change its weighted-guidelines method for setting profit objectives.
Exhibit 347 · Regulation
FAR 16.301-2 Use
The contracting officer shall use cost-reimbursement contracts only when- (1) Circumstances do not allow the agency to define its requirements sufficiently to allow for a fixed-price type contract (see 7.105); or (2) Uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.
Limits cost-reimbursement contracts to cases where requirements cannot be defined well enough for a fixed-price contract or where costs cannot be estimated accurately enough to use one.
- Source
- Federal Acquisition Regulatory Council
- Date
- Current text, accessed 9 November 2026
- Quoted from
- FAR 16.301-2(a)
- Grade
- Primary record
- Document
- https://www.acquisition.gov/far/16.301-2
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
Exhibit 348 · Regulation
FAR 16.405-1 Cost-plus-incentive-fee contracts
A cost-plus-incentive-fee contract is appropriate for services or development and test programs when-
Describes when a cost-plus-incentive-fee contract is appropriate, including development and test programs where a cost-reimbursement contract is necessary.
- Source
- Federal Acquisition Regulatory Council
- Date
- Current text, accessed 9 November 2026
- Quoted from
- FAR 16.405-1(b)(1)
- Grade
- Primary record
- Document
- https://www.acquisition.gov/far/16.405-1
- Accessed
- 2026-11-09
- Cited by
- Findings citing this exhibit
1.10 What the record does not contain
No GAO or Congressional Research Service study cited here tests whether contractor profits rise as a conflict lengthens. The nearest documents are DoD's 2023 Contract Finance Study, which found margins somewhat lower than commercial peers with higher payouts to shareholders, and GAO's 1986 review of defense profit levels. Those documents do not examine conflict length, and no causal conclusion about it follows from them.
The two Inspector General TransDigm audit reports are known through House hearing testimony.
Key findings
- Eisenhower described a permanent armaments industry and warned against its unwarranted influence in 1961 (1.1).
- Defense outlays are 3.0 percent of GDP, down from 9.0 percent in 1960, and higher in constant dollars than in 1960 or 1989 (1.2).
- Five companies received 30 percent of DoD contract obligations in fiscal year 2024 (1.3).
- The certified cost data threshold rose from $100,000 in 1962 to $2.5 million, and its 2018 increase was not formally analyzed (1.4).
- The Inspector General reported excess profit of $16.1 million and $20.8 million by one supplier in two audits, and the company disputed the method of the second (1.5).
- Weapon programs reported $122.08 billion in cost increases and a delivery time of over 12 years, and the F-35 sustainment estimate is $1.58 trillion (1.6, 1.7).
- DoD's 2023 study found margins somewhat lower than commercial peers and shareholder payouts up 73 percent (1.8).
- Three primes paid out more to shareholders than they spent on research (1.9).
- The five primes' lobbying reports sum to $519.7 million over seven years in this project's roll-up (1.10).