At Hearing, Trump’s Department of Defense Agrees with Warren That Holding Defense Contractors Accountable Is Vital for National Security

At Hearing, Trump's Department of Defense Agrees with Warren That Holding Defense Contractors Accountable Is Vital for National Security

Trump Assistant Secretary of Defense Calls DoD Paying Billions to Get Weapons Delayed and at Higher Costs "Brutal"

Warren: "Congress needs to ensure that contractors prioritize delivering on time and on budget, not just lining their own pockets."

Video of Exchange (YouTube)

Washington, D.C. - At a hearing of the Senate Armed Services Committee, U.S. Senator Elizabeth Warren (D-Mass.) secured an agreement from Assistant Secretary of Defense for Industrial Base Policy, Michael Cadenazzi, on working together towards cracking down on defense contractors' purchase of stock buybacks to prevent taxpayer dollars from going to waste.

The Government Accountability Office recently found that in 2024, the Department of Defense's (DoD) major weapons programs were on average 18 months behind schedule over the previous year and on track to cost $50 billion more than the year before.

"When you sign a contract, you expect to get what you paid for, at the price, and on the date that was spelled out in the contract. But not for DoD," said Senator Warren.

Despite delays and cost overruns in weapons systems, defense contractors such as Raytheon, General Dynamics, and Northrop Grumman have spent billions on stock buybacks and CEO payouts.

Last month, the Trump administration issued an Executive Order aimed at holding defense contractors accountable for their underperformance by restricting their use of buybacks and requiring the DOD to establish a review process. However, the EO has yet to have an impact. Major defense contractors have told their investors that they plan to continue paying dividends to shareholders.

Senator Warren questioned Mr. Cadenazzi about whether investing in stock buybacks while also failing to deliver weapons on time hurts U.S. national security. Mr. Cadenazzi testified that defense contractors' performance is unsatisfactory. "We think that the misalignment of capital and the unwillingness to invest first in warfighter performance, system performance, and delivery rates readiness is a more important thing relative to these other financial incentives," he affirmed.

"I don't say this often, but I think the Trump administration has hit the nail on the head on the problem here," said Senator Warren.

Senator Warren concluded the hearing by urging Congress to implement legislation to improve defense contractors' performance and ensure that delivering on their contracts remains a top priority rather than payouts to company CEOs and their shareholders.

"Congress needs to codify these tools to ensure that contractors prioritize delivering on time and on budget, not just lining their own pockets," said Senator Warren.

Senator Warren has fought to limit stock buybacks by giant companies that received taxpayer money. Last December, Senator Warren and Representative Chris Deluzio (D-Pa.) pressured Secretary of the Treasury Scott Bessent to follow through on his public statements by pushing defense companies to limit stock buybacks and increase research and development spending.

Transcript: Hearings to examine rebuilding American critical minerals supply chains.
Senate Armed Services Committee
February 24, 2026

Senator Elizabeth Warren: So, when you sign a contract, you expect to get what you paid for, at the price, and on the date that was spelled out in the contract. But not for DOD. When DoD signs contracts to buy equipment for hundreds of billions of dollars, giant defense contractors often deliver late, years late, and billions of dollars over budget. So, recently, the GAO found that in FY2024, DOD's major weapons programs were 18 months behind schedule and would cost $50 billion more than budgeted just the year before. $50 billion in one year. That is not an oops. That is two times what the federal government spent on child care that year. Now, General Dynamics Oiler Ship program, an extra billion dollars. Raytheon's Air and Missile Defense radar, another $6 billion. Northrop Grumman Sentinel Program, $36 billion over budget. And all are at least three years behind schedule. And now, DoD is ramping up investments in critical minerals, and you've got to worry, are we just going to see the same thing again?

So, Mr. Cadenazzi, you are the principal DoD advisor on industrial base policy. Does it help or hurt our national security when DoD signs a contract for the equipment it needs, and it actually gets it years later and for billions of dollars more?

Honorable Michael Cadenazzi: Senator, it's absolutely brutal when that happens, and I think everyone in the department agrees that the performance of the industrial base and our contractors that are delivering weapon systems has been unsatisfactory overall for an extended period of time, hence the aggressive effort we've been making to go ahead and focus on manufacturing and the DIB to make sure that we start to go ahead and get the outcomes which are expected for us to meet the requirements of the warfighter.

Senator Warren: Yeah, well, I got to say, "unsatisfactory" might be the understatement of the day. Look, if you bought something and then the company said, 'Pay us more, and we'll give it to you a year later,' you'd report them to the authorities. But defense contractors are a year late and over budget, and what happens? They rake in taxpayer dollars, and then they shell out billions of dollars to their shareholders and to their executives. So, in 2024, Raytheon General Dynamics and Northrop Grumman each spent $3 billion on stock buybacks and dividends. Their executives, you'll be happy to know, did just fine too. Raytheon's CEO earned $18 million, General Dynamics' CEO made $23 million, and Northrop Grumman's made $24 million.

So, Mr. Cadenazzi, does it help or hurt our national security when giant contractors spend billions of dollars on stock buybacks and CEO payouts at the same time that they are failing to deliver weapons on time and on budget?

Mr. Cadenazzi: Senator Warren, we agree that companies investing in share buybacks, dividends, and oversized executive compensation relative to their poor performance is a concern. We are not happy with it. Hence, the EO that came out regarding warfighter outcomes, hence our incredible focus on trying to drive improved outcomes from these companies going forward, and making it clear that we think that the misalignment of capital and the unwillingness to invest first in warfighter performance, system performance, and delivery rates readiness is a more important thing relative to these other financial incentives. We recognize that there are market expectations to meet, their first expectation needs to be delivering for the warfighter.

Senator Warren: Well, I appreciate this, but you know, we're just really reaching a point where enough is enough. A recent Trump administration Executive Order announced a plan to prohibit buybacks, dividends, and excessive compensation for companies that fail to deliver to our warfighters. It's a good start, but defense contractors are already bragging to their shareholders that they're not going to change. So, obviously, they're not very afraid of you at this point. When asked if Northrop Grumman would continue paying dividends, the CEO said, quote, "Yes, yes, 100% yes." Raytheon, which the President called out as a problem, said they, quote, "Remain committed to the dividend." So, let me just ask. I'm out of time here, so I can do this for the record.

Mr. Cadenazzi, would DoD benefit from changes in the law to give this executive order more teeth and show companies that we're actually serious?

Mr. Cadenazzi: Yes, Senator, we'd appreciate the opportunity to work with you and the committee on that issue.

Senator Warren: You know, I don't say this often, but I think the Trump administration has hit the nail on the head on the problem here. But Congress needs to codify these tools to ensure that contractors prioritize delivering on time and on budget, not just lining their own pockets.

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