Raytheon Awarded $49 Million DoD Contract Weeks After Former Board Member Lloyd Austin Confirmed as Defense Secretary
Secretary of Defense Lloyd Austin stands to profit from a new Department of Defense contract with arms contractor Raytheon, even after he promised to divest from Raytheon holdings he acquired as a civilian.
A new $49 million contract was awarded to Raytheon last week, just weeks after the company’s former board member Lloyd Austin was confirmed as the new Secretary of Defense. The contract is for engines for VTOL (vertical take-off and landing) aircraft.
Austin joined the board of Raytheon Technologies in 2016, the same year he retired from the armed forces. As of 2020, his disclosed Raytheon stock and compensation holdings amount to more than $1.4 million, and it’s likely he’ll sell his Raytheon shares at an inflated price due to the latest contract while in office as Secretary of Defense.
Austin had pledged to liquidate his Raytheon holdings “as soon as practicable but not later than 90 days after my confirmation,” with progressive senator Elizabeth Warren only voting for him after he made the pledge. Austin has also promised to recuse himself from any decisions involving Raytheon for a full year following his confirmation. The Raytheon contract was awarded less than twenty days after his confirmation on January 22nd.
It’s unclear why Austin didn’t sell his Raytheon holdings before being nominated as the Secretary of Defense, or why he didn’t liquidate them immediately upon confirmation. A Raytheon corporate policy that prevents former board members from quickly selling stock could’ve been conceivably waived in a case where a board member becomes a Department of Defense official, and the board member’s holdings create a conflict of interest with their governmental duties.
The Department of Defense could’ve delayed implementation of the Raytheon contract until the 90 days Austin apparently needed to liquidate the stock. Austin’s proximity to the powerful military-industrial complex contractor was problematic enough to begin with, even without green-lighting pending big-money contracts for the company.
This appears demonstrably inappropriate, and it’s unclear why the Department of Defense didn’t take account of Austin’s proximity to Raytheon when green-lighting the contract.