Contracts used mechanism normally reserved for experimental weapons

The Defense Department’s June award followed a $67.6 million contract Alvarez & Marsal Federal received in December, bringing the firm’s military spending under Trump’s second term to nearly $350 million — about five times the combined total Alvarez & Marsal entities had received from all U.S. agencies in the two decades before Trump returned to office, according to federal spending data reviewed by ProPublica. Both contracts have been for work connected to Pentagon offices where Kollitides is the head or has a senior role.

ProPublica characterized Kollitides as a “powerbroker” among Wall Street executives brought into the Pentagon during Trump’s second term, with a broad mandate to improve procurement of weapons and critical minerals. The outlet also reported that the consulting work has benefited what it described as his “old friends in the private sector,” citing the procurement records.

Both contracts were signed under what is called an Other Transaction Agreement, or OTA, which allows agencies to bypass regular federal contracting rules on public disclosure and oversight. Congress first authorized the Defense Department to use the contracting method in the 1980s to fund breakthrough technologies without publicly disclosing much about the work. The Pentagon has increasingly turned to OTA contracts over the last decade to quickly fund a broader range of one-time costs, including prototype weapons and urgent production needs, even as government auditors have lamented OTAs as a “blank sheet of paper” arrangement with little oversight or accountability. A&M has never claimed to do that kind of work. The sheer size of the A&M contract stunned contracting experts, who told ProPublica that using that mechanism for consulting is extraordinary because the Pentagon routinely buys such services through competitive bidding, and contractors commonly publish their hourly rates in advance of solicitations.

At $281,089,206.65, the contract for Kollitides’ Business Operators for National Defense office — known as BOND — is among the largest OTAs funded through the Defense Department’s main support division in the last decade, records show, alongside projects for top-secret semiconductors and underwater drones. Documents reviewed by ProPublica show A&M has already been paid about $31 million; contracting experts told the outlet that the firm is likely not guaranteed the full amount and that contracts of this kind typically span several years. ProPublica reported that the deals remain “shrouded in secrecy” because they were signed under the OTA mechanism, and that they have begun sending “unprecedented sums of taxpayer money” to a company that boasts helping government agencies create a “customer-centric culture.” According to company documents and federal filings reviewed by the outlet, the consulting firm is “deeply intertwined” with the private-equity firm where Kollitides was a partner for almost 10 years; the two entities “tag-team investment deals and share back-office support.”

Documents reviewed by ProPublica also show that by late last year, A&M had begun helping to vet possible loan deals for the Office of Strategic Capital, the Pentagon lending unit then run in part by Kollitides. The full scope of work A&M has provided under the contracts is unclear.

The Alvarez & Marsal consulting business did not answer ProPublica’s questions, including how it became aware of the possibility that it could seek the $281 million no-bid contract and what services it is providing to Kollitides’ Pentagon team. In a statement, the consulting firm said: “We are proud to serve clients across all industries, and all levels of government. The common denominator is always the same: we help solve difficult problems.” The Wall Street Journal on Thursday reported the existence of some of the Alvarez & Marsal contracting.

Kollitides’ path to the Pentagon and his expanding portfolio

Kollitides came to the Pentagon through Deputy Defense Secretary Steve Feinberg, a billionaire private-equity executive whose firm Cerberus first hired Kollitides more than two decades ago. Then a rising private-equity star who had graduated from Columbia Business School, Kollitides moved up the ranks at Cerberus, taking the reins of its aerospace, defense and government groups. In 2012, Kollitides was named chief executive of a Cerberus company combining Remington, the nation’s oldest gun maker, with more than a dozen other firearms and parts companies — a restructuring that eliminated hundreds of jobs from New York to Georgia to Montana. After three years with the Cerberus-owned gunmaker, Kollitides left and became a partner at Alvarez & Marsal Capital, an offshoot of A&M consulting, whose co-founder also had long-standing business ties to Feinberg.

Some former business associates said they were not surprised that Kollitides jumped at the chance to rejoin Feinberg at the Pentagon; the two share a love for firearms and defense industry investments, and they have both described their work addressing the military’s most vexing supply-chain issues as a patriotic calling. “Americans need us at the Pentagon and our civilians and our contractors to do better,” Feinberg said last year. “We can’t fail, we can’t make excuses, we must succeed.”

Over the last year, Feinberg has continued to heap responsibility on Kollitides: naming him his co-chief of staff and senior adviser; vice chairman of the Office of Strategic Capital’s investment committee; and director of two other new offices, the Economic Defense Unit and the Business Operators for National Defense, or BOND — the office with the $281 million no-bid contract.

Kollitides has posted partisan content on social media, decrying the “Democrat Party,” warning of the ills of socialism and posting that “the government cannot give to anybody anything that the government does not first take from somebody else.”

There is widespread bipartisan agreement that the Pentagon’s procurement systems are in need of radical reform and that private-sector know-how could help the country better secure supply lines and accelerate the development of new weapons to ensure the military is prepared to fight future wars, according to ProPublica.

Days after Feinberg named him the head of BOND, granting Kollitides deep visibility into weapons production rates of U.S. military contractors, Kollitides took a seat on the board of D. Boral Acquisition I, an offshore shell company whose affiliate D. Boral Capital has partnered with defense-related businesses. Bloomberg Government first reported the filing in July, and that Kollitides stepped down from the position at the end of September.

Kollitides’ biography in the filing described his current roles at the Pentagon, then added that “he is also a Senior Advisor” to Alvarez & Marsal Capital and that he previously was a partner and co-head of one of the firm’s funds. The A&M entity that Kollitides is described as still advising in the filing is essentially the private-equity partner of the sprawling Alvarez & Marsal firm that includes A&M Federal, which is now providing consulting services for his offices at the Pentagon. Though the private-equity and consulting businesses are distinct, they work together, share back-office staff for human resources and tech support, and have overlapping ownership, according to company documents. The private-equity arm describes itself as having a “strategic relationship” with the consulting side of A&M. The firm boosts its investment decision-making by working with the consulting firm’s thousands of employees around the globe to assess particular companies, and after the fund takes a stake in a company, it deploys the consulting arm’s employees to improve that firm’s operations and make the company more valuable. The fund’s success hinges on the consulting firm’s.

Ethics questions and Pentagon response

His employment status allowing him to hold any of those roles at the Pentagon is somewhat of a mystery. Unlike Feinberg, who was confirmed to his post by the Senate, Kollitides was reportedly first brought onto the federal government last year as a special government employee, or SGE, a designation that allows someone to work in government for no more than 130 days a year. Kollitides seemingly exceeded that cap several months ago. But in the Pentagon’s email system, Kollitides’ name now carries an abbreviation signifying he has been designated an HQE, or highly qualified expert. His employment classification, which the Pentagon confirmed, is designed to hire people who bring “enlightened thinking and innovation” to Defense Department roles that can last up to six years. That distinction brings a unique benefit for Kollitides: financial disclosures filed by HQEs are generally confidential, while those of high-ranking SGEs are often subject to release once a person fills a government role for more than 60 days. It’s unclear if Pentagon ethics officials granted Kollitides a waiver to keep any disclosures confidential. ProPublica requested Kollitides’ financial disclosure forms in August, and the Pentagon has not yet responded.

Whether Kollitides violated government ethics rules hinges on details that he and the Pentagon have declined to provide.

Kollitides was still working with A&M Capital when the deals were signed. It’s unclear if he will benefit financially from the windfall of military spending on A&M consulting. Ethics experts told ProPublica it’s generally illegal for executive-branch officials to play a role in awarding contracts that would have a direct impact on their own finances, unless they were granted a waiver.

“It looks way too cozy to be legitimate. I think taxpayers should be appalled,” said Virginia Canter, a former federal government ethics lawyer. “There are a million consulting firms in D.C. and New York. Why would you sole source this contract? They’re not sending replacement parts for a ship that is sinking.”

After ProPublica sent questions to the Pentagon, Kollitides and both A&M entities, A&M Capital said Kollitides had just stopped working there days earlier. In a statement, A&M Capital said it is a “separately capitalized and separately managed firm from the Alvarez & Marsal consulting business” and that its “management and employees have no involvement in the day-to-day operations of the consulting business, and vice versa.” The firm said that none of Kollitides’ work for it related to the “defense industry, the Department of War or Mr. Kollitides’ government service.”

Kollitides did not respond to questions about whether he played a role in A&M securing contracts to work for his office, but Deputy Pentagon Press Secretary Jacob Bliss replied on his behalf and the department’s. “The Department of War maintains a rigorous, multi-layered ethics framework that includes financial disclosure reviews, divestitures where appropriate, and screening to prevent conflicts of interest,” Bliss wrote in an email. Kollitides, he added, “is in full compliance with all ethical laws and regulations. Any claims otherwise are false.”

A Defense Department official separately told ProPublica that Kollitides “does not and has never had any investments or other financial relations with A&M consulting” and that he is “recused on any conflicted matters related to A&M Capital.” The official did not respond to specific questions about whether Kollitides was being compensated by A&M Capital when the contracts were signed, whether he played any role in the award decisions, or whether he sought or received a written exemption from ethics rules.

BOND and the politicized culture in Kollitides’ wing

The Pentagon has said little about the impact of BOND since Defense Secretary Pete Hegseth claimed in February that the new entity would revolutionize military purchasing. The defense secretary said that under the program, the military would embed former corporate executives, or, as he put it, “elite, private-sector patriots” to help optimize and accelerate the manufacturing of critical munitions. Hegseth said he thought the exercise would help the Pentagon increase resiliency in supply chains. “The era of managed decline is over,” he said.

In private recruitment materials for those executives, as well as for candidates to fill posts in other Kollitides-run units, the stakes and the mission for BOND were described in even starker terms: Neoliberalism and trade deals have left the U.S. as a country that “can no longer manufacture ships, munitions or planes in a timely manner.” The recruiting materials cast the job of fixing that systemic problem as part-time work: “Recently retired Fortune 100 executives spend five days per month solving public- and private-sector operational challenges,” read pages viewed by ProPublica.

Two people familiar with A&M’s work for BOND told ProPublica the firm’s consultants have accompanied former executives on trips to review work at Lockheed, Boeing, RTX and BAE Systems, among others. BAE acknowledged a visit by BOND representatives; Lockheed, Boeing, RTX and other companies contacted by ProPublica declined to comment or did not respond.

Not everyone, however, is welcome to participate. One former military officer who worked in the defense industry told ProPublica he was contacted by an outside recruiter for Kollitides’ new BOND office. The recruiter, he said, told him that all applicants would be asked who they voted for. The former military officer, who spoke on the condition of anonymity because he feared retribution, said he expressed discomfort with that line of questioning. He received an email shortly afterward from the recruiter telling him he was no longer under consideration. The Pentagon did not respond to questions about the officer’s account. “Getting more effective and efficient is not a political question,” the former officer said.

Earlier this year, ProPublica reported that the Office of Strategic Capital, a unit Kollitides helps lead, granted a $620 million loan to a small North Carolina startup linked to Donald Trump Jr. after a top aide to the president intervened on the company’s behalf. A group of Democratic lawmakers accused the office of “a staggering level of corruption and influence peddling.” The same Pentagon unit is now in the late stages of a $220 million loan to Unusual Machines, a Florida drone parts maker on whose advisory board Trump Jr. sits and in which he was granted a stake, a defense official told ProPublica. The Pentagon did not respond to questions about the advancing Unusual Machines loan or whether Trump Jr.’s connections were a factor.

Pentagon Press Secretary Kingsley Wilson, responding to the earlier Trump-linked loan, said “no company receives preferential treatment” and “political connections play absolutely no role in the Department’s funding decisions.” Current and former defense officials told ProPublica the wider spending pattern reflects a changed Pentagon under Trump, with what they described as a clubby and politicized culture taking hold in a wing of the building controlled by Kollitides and other former Wall Street executives recruited by Feinberg. The officials said the operation favors people and companies with close ties to the administration, and that under Kollitides and other OSC leaders, the lending unit now leans more heavily on personal networks to choose which companies receive funding and which consultants vet the deals — a departure from the open application process the unit used when it launched under the Biden administration.