How Trump Is Helping Military Contractors Fleece Taxpayers

The military-industrial complex has probably never been in a better position to bleed taxpayers dry.

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By Lucy Dean Stockton, More Perfect Union

In recent years, the Pentagon has welcomed new contracting processes that pad military contractors’ profits — a trend that is now being turbocharged under President Donald Trump, and the military-industrial complex is thrilled.

Typically, when the government buys a product or service, it uses competitive contracts to ensure that taxpayers get a fair price. But in the last few decades, the Department of Defense — with the blessing of bipartisan lawmakers — has embraced alternative processes that let contractors circumvent many of the mandated regulations governing Federal Acquisition Regulations (FAR) contracts, like accounting standards, cost negotiations, and intellectual property rights limitations. This means that some agencies have been empowered to negotiate terms that look closer to normal business contracts, but often offer a worse deal for U.S. taxpayers.

“The Pentagon is increasingly relying on rapid acquisition pathways that subvert competition to acquire weapons,” Julia Gledhill, a research analyst at the Stimson Center, a Washington, D.C.-based nonprofit focused on global peace, told More Perfect Union. “Legislators have totally kneecapped the Pentagon’s ability to negotiate contracts with military contractors, meaning that both the military and taxpayers are being fleeced by these companies.”

These alternative contracting mechanisms, including “non-traditional contracting” and “Other Transaction Authority” (OTA) procurement, have vastly expanded over the last decade within agencies like the DOD and the Department of Homeland Security. This has corrupted a process that was originally designed to produce narrow contracts for innovative products into a major acquisition vehicle for basic procurement from well-established military contractors as well.

In 2025, these kinds of OTA contracts amounted to more than $18 billion in government spending. Across the board, it means that prototyping agreements have become much more common and expensive than basic procurement agreements.

“ The OTA is an existing vehicle that, if they expand it, it helps speed the money out the door.” Bill Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraft, told More Perfect Union. “It’s less record keeping, less scrutiny, and it’s the perfect vehicle for lining the pockets of both the old and the new contractors.”

In April 2025, Trump signaled that he would accelerate the shift towards rapid acquisition processes through an executive order to overhaul the DOD’s procurement process. The order specifically requested that the new processes “expedite acquisitions…including a first preference for commercial solutions and a general preference for Other Transactions Authority.”

And the military-industrial complex is loving it. On an April 23 earnings call, Lockheed Martin President Jim Taiclet called the Iran War and the Trump administration’s focus on “agility” in military contracting, “a golden opportunity right now based on who’s in government, their experience, their willingness to change the demand that they have for what we do and our partners in our industry do.”

“We can move the contracting system from this FAR cost — Federal Acquisition Regulation -based, cost-based Truth [in] Negotiation Act burden that we’ve all had — and move it more towards a commercial contracting system,” Taiclet told investors. Venture-backed investors, he said, “are helping us and the government get out of our traditions and into a more agile contracting scenario.”

Lockheed Martin has won nearly $50 billion in government contracts since 2008, more than 97 percent of which were with the Department of Defense. The last quarter of 2025 represented their biggest season of contracts ever. In 2024, they were the fourth-highest awarded OTA contract recipient with the Defense Department, just behind peer weapons manufacturer Northrop Grumman.

Last year, Lockheed Martin spent more than $15 million lobbying lawmakers, including on “acquisition policy,” among other issues.

Lockheed Martin did not respond to More Perfect Union’s request for comment.

Northrop Grumman executives echoed the excitement about the expansion of OTAs. On an April 22 earnings call, Northrop Grumman President Kathy Warden told investors that the company is “seeing more use of OTAs and other nontraditional contracting mechanisms.”

These contracts have been lucrative for the defense company and its subsidiaries, which won nearly $7 billion in total Defense Department contracts in 2025.

“I don’t see a desire by the department to push industry profitability down,” Warden told shareholders. “I see a real alignment here and an opportunity for us to work with the department to create better economics for industry and the government.”

Northrop Grumman spent more than $8 million lobbying on acquisition policy, including specific lobbying on Streamlining Procurement for Effective Execution and Delivery Act of 2025, which expands the use of OTAs in military procurement.

Northrop Grumman did not respond to a request for comment.

Other military contractors, like L3Harris Technologies, an American defense technology company, echoed this sentiment.

“I have to give the Department of War credit for their innovative approach to acquisition here,” L3Harris Technologies Chairman Christopher Kubasik told investors on an April 30 earnings call. “What is going on now has never been done in the history of our country, and they are going fast. We and the rest of the defense industrial base are keeping up with them to the best of our ability. I think it’s a once-in-a-lifetime opportunity.”

L3Harris Technologies won $318 million in OTA contracts last year, the 6th highest of any military contractor. They were awarded $7.6 billion in total government contracts last year.

Defense contractors’ profit margins already far outpace most other industries by as much as four times. While typical commercial industry profits sit around 6 percent, many military contractors see profits of at least 15 percent, paid almost entirely by U.S. taxpayers. Military contractors have received more than half of all Pentagon spending since 2020. And as the industry has grown more consolidated, the remaining companies are exercising even more power over the Pentagon.

The defense industry spends tens of millions of dollars lobbying the government each year. In 2025, the industry collectively spent a record-breaking $198 million to influence lawmakers on both sides of the aisle.

Last year, the Pentagon failed its financial audit for the eighth consecutive year, after auditors found significant accounting errors, missing information, and billions of dollars unaccounted for. It remains the only major U.S. federal agency that has never passed an audit.

“We’re experiencing one of the biggest military spending buildups in American history,” Gledhill said. “So you can imagine that a combination of a $1.5 trillion military budget and a less competitive, less accountable weapons acquisition process is really the perfect recipe for fleecing the American people in the name of weapons production and procurement.”

The use of OTAs may also become particularly useful for the DOD as it launches Trump’s Golden Dome Project, which the Congressional Budget Office estimated this week could cost up to $1.2 trillion over 20 years. The project, which is heavily reliant on satellites, would likely benefit from Trump’s Dec. 18, 2025 outer space-focused executive order in which he urged agencies to act with “a first preference for commercial solutions and a general preference for Other Transactions Authority or Space Act Agreements” to promote streamlined acquisitions.