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Sen. Bernie Sanders challenges Pentagon official over defense contractor CEO pay

  • Sen. Bernie Sanders wants to know why so much of taxpayer money goes to the CEOs of defense companies.
  • The CEOs of the top five defense contractors in the U.S. earned a combined total of $96 million in compensation last year.
  • Lockheed Martin takes the lion's share of DoD funds with nearly 90 percent of revenue coming from the federal government.
Sen. Bernie Sanders, I-Vt.
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Sen. Bernie Sanders, I-Vt.

Nobody spends money on defense like the United States, and Sen. Bernie Sanders, I-Vt., wants to know why so much of taxpayer dollars are going to the CEOs of defense companies.

"I think the elephant in the room here is the relationship of the DoD to defense contractors. I think that's the area that needs the most research," Sanders said during a Senate Budget Committee hearing Wednesday on the Department of Defense's business operations.

The Pentagon requested one of the largest budgets in history with its recent proposal of $686 billion and an additional $30 billion for non-defense agencies including the Department of Energy, which maintains the country's nuclear weapons.

For perspective, the U.S. allocates more money to the military than the next 10 highest spending countries combined.

Sanders hit on two points during the session:

  • Roughly half of the Pentagon's budget goes directly to defense contractors.
  • The CEOs of the top five defense contractors in the U.S. earned a cumulative of $96 million in compensation last year.

As the Pentagon's top weapons supplier, Lockheed Martin takes the lion's share of DoD funds with nearly 90 percent of revenue coming from the federal government.

Essentially, Sanders said, "Lockheed Martin is a government agency, a private one, but a government agency virtually fully funded by U.S. government."

"Does it make sense that we pay the Secretary of Defense $200,000 or less and we give a contractor, who gets 92 percent of his revenue from the taxpayers of this country, $18 million in taxpayer money," Sanders asked Pentagon comptroller David Norquist.

Marillyn Hewson, chairman, president and chief executive officer of Lockheed Martin Corp.
Simon Dawson | Bloomberg | Getty Images
Marillyn Hewson, chairman, president and chief executive officer of Lockheed Martin Corp.

Marillyn Hewson, the CEO of Lockheed Martin, made nearly $20.6 million in 2016, according to Securities and Exchange Commission filings.

A representative for Lockheed Martin did not immediately respond to CNBC's request for comment on Sanders' remarks.

The Bethesda-based company is the prime contractor on several high valued DoD acquisitions, namely the F-35 fifth-generation fighter.

And while Norquist said he could not comment on how defense contractors pay their employees he said that taxpayers "should be paying for the service that we receive."

What's more, among all government agencies, the Pentagon has not yet been able to perform an agency-wide audit.

"It is essential that the Pentagon demonstrates that it is trustworthy and accountable with taxpayer dollars and that has not been the case," Sanders said.