San Diego: US Navy Secretary Carlos Del Toro has a message for government contractors: Ask not what you can do for your shareholders, ask what you can do for your country.
Speaking at the West naval conference in San Diego, Del Toro, a former businessman, said that in a time of war abroad and political uncertainty at home, the US needs companies to deliver weapons, warships, aircraft and more on time, on budget and without excuses.
“You can’t be asking the American taxpayer to make even greater public investments while you continue, in some cases, to goose your stock prices through stock buybacks, deferring promised capital investments, and other accounting manoeuvres that, to some, seem to prioritise stock prices that drive executive compensation rather than making the needed, fundamental investments in the industrial base, in your own companies, at a time when our nation needs us to be at all-ahead flank,” he said.
“Through initiatives like the Taxpayer Advocacy Project, I have directed our contract community and the Office of General Counsel to ensure that we will leverage all legal means at our disposal to ensure that the American people are also getting what they paid for,” he added.
The message was delivered to a standing-room-only crowd teeming with some of the world’s largest defence contractors. Del Toro did not single out any one company. The defence industry in the aggregate is financially healthy, and that status has improved over time, according to a Pentagon contracting study published in April. Traditional defence firms outperform commercial counterparts in many key financial metrics, it found.
Shipbuilder HII this month reported revenue rose 13 percent to $3.2 billon in the fourth quarter of 2023 from the same period a year earlier, as operating income almost tripled to $312 million. General Dynamics said it earned $1 billion, or $3.64 per diluted share, on revenue of $11.7 billion, the highest quarterly EPS and revenue in company history.
Del Toro said the Navy would hold accountable contractors with poor performance, including through a “deep dive” investigation of the most chronic offenders. “We must endeavour to ensure that contracts with the Navy are delivered on time and on budget,” he said. “The global strategic situation demands it.”
