The GSA, federal junkets and perspective

posted at 9:42 pm on April 24, 2012 by Dustin Siggins

Over the last two weeks, the importance of a $820,000 junket put on by the General Services Administration (GSA) in Las Vegas has dominated the politician and pundit worlds. The spending spree has resulted in an investigation from Congress, the release of several federal employees and recriminations from both parties. Unfortunately, it has also allowed Congress and many pundits to act as though being tough on the GSA is the equivalent of good governance, something that when faced with the facts is laughably false.

Don’t misunderstand – the GSA and other federal agencies should be held accountable for this and other unethical abuses of the public’s money. As The Heritage Foundation’s Morning Bell outlined on April 19, and again on April 23, this is only one of many publicly egregious wastes of taxpayer money in the bureaucracies in D.C. But when it comes down to it, $820,000 is not even a drop in the bucket of fraud/waste/abuse/duplicity. Here are some of the other, more easily ignored abuses:

First off is simple abuse that is acceptable for the well-connected politician but disgraceful and/or illegal for anyone else – small change, but ultimately emblematic of the systemic corruption in the federal government. Case in point is how former Representative Anthony Weiner (D-NY) gets a pension and other benefits for the rest of his life, despite resigning in disgrace. President Obama, following in the footsteps of his predecessors, is almost certainly using taxpayer dollars for campaign trips – illegal, but obviously acceptable under both parties. Senator David Vitter (R-LA) was busted for solicitation, but never spent time in jail. He will get a pension and other monetary benefits, same as Weiner.

Antithetical to many conservatives is looking hard at unproductive defense spending. However, the Defense Department is rife with abuse. For example, last October a report by Senator Bernie Sanders (I-VT) outlined how major defense contractors who paid civil fines or settled for amounts of $1 million or greater still received over $500 billion in contracts in the last 10 years. Another report, this one from The Commission Wartime Contracting, estimated that between $31 billion and $60 billion had been lost to poor oversight and/or fraud in Iraq and Afghanistan during our time in those nations.

Outside of fraud, simple inefficiencies abound in the Defense Department. This Forbes piece notes that approximately $100 billion had been spent on weapons programs that were either never used or eventually canceled – all after significant investments. In an informal conversation with a friend who is a military auditor, I was told that a number of contractors take a contract and take a percentage off the top. They then subcontract to another company, which takes a percentage off the top. This subcontractor then subcontracts to another company, and takes a percentage off the top. Finally, several levels down, the contract actually gets fulfilled.

Duplication of federal programs is something that has come to light in the last 15 months. A pair of Government Accountability Office (GAO) reports in 2011 and 2012 found, according to Senator Tom Coburn (R-OK), “hundreds of billions” of dollars in duplication in the federal government. ABC News reported that the GAO found many programs were not tested for actually accomplishing their stated goals, and the same applied to a number of tax loopholes, credits, etc. (Several aspects of the 2012 report can be found at the first link, including examples of duplication and the report’s Executive Summary.) Here are some of the juicier parts of ABC’s article:

  • GAO found the Department of Defense could save up to $460 million every year by undertaking a “broader restructuring” of its military health care system.
  • The military came in for special scrutiny: over $10 billion on defense-wide business systems every year; $49 billion in military and veterans health services; and at least $76 billion since 2005 in urgent processing systems for the military.
  • Fifty-eight billion dollars at the Department of Transportation [was spent] for over 100 separate surface transportation programs.
  • [A]lmost $1 trillion in government-wide tax expenditures listed by the Treasury Department, some of which the GAO found “may be ineffective at achieving their social or economic purposes.”
  • [T]he government has neglected to investigate numerous programs, making the expenditure of some funds not only redundant but wasteful. For instance, only five of 47 job training and employment programs surveyed by the GAO had been studied to evaluate whether outcomes were the result of the program itself or another cause altogether.
  • “Little is known about the effectiveness of most programs,” the watchdog observed.
  • That point also applies to domestic food assistance, where “little is known about the effectiveness of [11 of the 18 programs] because they have not been well studied,” the GAO said. In fiscal year 2008, for example, the government spent $62.5 billion on those 18 programs.

Of course, no critique of the federal government’s spending habits is complete without highlighting simple stupidity. In fiscal year 2011, improper payments totaled $115 billion in, over three percent of the federal budget. According to a press release from Rep. Todd Platts (R-PA): “An improper payment could be an incorrect payment, an over- or under- payment, and could include a payment to an ineligible recipient, a payment for an ineligible service, a duplicate payment or a payment for a service not received.” Medicare and Medicaid represented over half of these improper payments; in Fiscal Year 2010 alone Medicare cost the taxpayers $48 billion in improper payments.

To be fair, $115 billion is less than what was spent on improper payments in fiscal year 2010… but the $115 billion did not account for many agencies that simply fail to report improper payments. According to Platts: “Although not all agencies are required to report improper payment estimates, some agencies that are required to report do not do so.  The most significant agency failing to report is the U.S. Department of Defense (DOD), although both the Government Accountability Office (GAO) and the DOD – Office of Inspector General has found that the DOD is at a high risk for improper payments.

The simple fact of the matter is that while Congress and much of the media focuses on the President’s unnecessary and wasteful $52 million gas manipulation task force, or the GSA’s junket, hundreds of billions of dollars are slipping through the system. Perhaps Congress should focus on stopping these abuses of the taxpayer dollars, instead of intentionally misdirecting the attention of the American people to what amounts to literally cents on the dollar of the “fraud, waste, abuse and stupidity” (to quote Senator Coburn) so prevalent in our ever-growing, ever-expensive federal government.

 

 

Dustin Siggins is an associate producer with The Laura Ingraham Show and co-author with William Beach of The Heritage Foundation on a forthcoming book about the national debt. The opinions expressed are his own.

This post was promoted from GreenRoom to HotAir.com.
To see the comments on the original post, look here.


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Party on!

KOOLAID2 on April 24, 2012 at 9:44 PM

They are in trouble only because they got caught!

KOOLAID2 on April 24, 2012 at 9:44 PM

White House sets the corporate culture for the rest of the employees.

KOOLAID2 on April 24, 2012 at 9:45 PM

Oh wait! They wouldn’t know about corporate culture!

KOOLAID2 on April 24, 2012 at 9:46 PM

Never mind!

KOOLAID2 on April 24, 2012 at 9:46 PM

Government Squander Assets….

Electrongod on April 24, 2012 at 9:47 PM

Ok…that’s enough!

KOOLAID2 on April 24, 2012 at 9:47 PM

Couldn’t let you get any more in a row…

You know who I am talking about :)

Electrongod on April 24, 2012 at 9:47 PM

Government Squander Assets….

Electrongod on April 24, 2012 at 9:47 PM

…I felt you breathing down my back!

KOOLAID2 on April 24, 2012 at 9:48 PM

I’m going to run back and get the trolls now!

KOOLAID2 on April 24, 2012 at 9:49 PM

I’m going to run back and get the trolls now!

KOOLAID2 on April 24, 2012 at 9:49 PM

Get the troll to come on this thread and try to defend the GSA…

Good for a laugh.

Electrongod on April 24, 2012 at 9:50 PM

I’m going to run back and get the trolls now!

KOOLAID2 on April 24, 2012 at 9:49 PM

…(I think they work for the GSA)

KOOLAID2 on April 24, 2012 at 9:51 PM

KOOLAID2 on April 24, 2012 at 9:51 PM

Some of them are far to stupid even for the GSA. They’d get caught the first time.

chemman on April 24, 2012 at 9:54 PM

Get the troll to come on this thread and try to defend the GSA…

Good for a laugh.

Electrongod on April 24, 2012 at 9:50 PM

…(I think they work for the GSA)

KOOLAID2 on April 24, 2012 at 9:51 PM

…alright!…breathing down my back is one thing…GET OUT OF MY HEAD!

KOOLAID2 on April 24, 2012 at 9:54 PM

…alright!…breathing down my back is one thing…GET OUT OF MY HEAD!

KOOLAID2 on April 24, 2012 at 9:54 PM

Ahhh…

I took your comment that you were going back to the Open Thread and “Get” some trolls… :)

Electrongod on April 24, 2012 at 9:56 PM

Hey you dirty unwashed peasants, don’t you all know that partying on taxpayer dime is a human right ? And NO, we peasants don’t have that right because we have to work and pay taxes to be excoriated by those who live off us

burrata on April 24, 2012 at 9:59 PM

If my understanding of DoD accounting is correct (someone help me out if I’m wrong), it promotes waste. If a unit is given $1 million to use over the fiscal year and they only use $800,000 the other $200,000 goes back to the DoD and then the unit only gets $800,000 the next fiscal year, even though prices may increase or other unforeseen costs may present themselves. So, in an effort to get the $1 million again there is a mad spending spree the last couple of months to spend that $200,000 on things neither wanted or needed. Of course the last couple months of the FY always means rationiong out toilet paper because there are 10 flat panel TV’s they some colonel just absolutely had to have.

Russ86 on April 24, 2012 at 9:59 PM

Hey you dirty unwashed peasants, don’t you all know that partying on taxpayer dime is a human right ?

burrata on April 24, 2012 at 9:59 PM

I am sure that Sandra Fluck is being briefed on this….right now.

Because what’s good about having free contraceptives if you don’t have any customers…

Electrongod on April 24, 2012 at 10:03 PM

Because what’s good about having free contraceptives if you don’t have any customers…

Electrongod on April 24, 2012 at 10:03 PM

No….wait….
I was talking about the Secret Service scandal….

Geeze…

Too many scandals..

Electrongod on April 24, 2012 at 10:04 PM

Hey!…DBare…angryazz…and Upyerassideways…there’s a new thread about your partying next door! *whistles*…Come on over!

KOOLAID2 on April 24, 2012 at 10:01 PM

………….\I DID!/……^^^^^^^^^^^^^

Ahhh…

I took your comment that you were going back to the Open Thread and “Get” some trolls… :)

Electrongod on April 24, 2012 at 9:56 PM

KOOLAID2 on April 24, 2012 at 10:06 PM

•GAO found the Department of Defense could save up to $460 million every year by undertaking a “broader restructuring” of its military health care system.

Mr. Siggins,

Do you even have a clue what this comment says? I’m guessing not. Those who served in the military through retirement were promised that healthcare would be part of the benefits from not getting a better salary while serving. Now the DoD is engaged in “broader restructuring” which is essentially taxing the hell out of non-medicare retirees to pay for Tricare. This is in no way related to the waste found in junkets, GSA conventions, or Secret Service parties. How dare you suggest that caring for those who served a career in the military are undeserving of the medical care they were promised when they joined! Filthy bastard.

Happy Nomad on April 24, 2012 at 10:07 PM

So much of what DOD spends is “fraud/waste/abuse/duplicity”. See pretty much all of DOD spending in Iraq and Afcrapistan as almost all of it is at least one of the four. Duplicity is probably number uno.

VorDaj on April 24, 2012 at 10:11 PM

Senator David Vitter (R-LA) was busted for solicitation, but never spent time in jail.

Not excusing Vitter’s behavior, which really sucks, but the statute of limitations had run out at the time he was caught.

kakypat on April 24, 2012 at 10:14 PM

This is in no way related to the waste found in junkets, GSA conventions, or Secret Service parties. How dare you suggest that caring for those who served a career in the military are undeserving of the medical care they were promised when they joined! Filthy bastard.

Happy Nomad on April 24, 2012 at 10:07 PM

I totally agree with this statement.

kakypat on April 24, 2012 at 10:17 PM

I was talking about the Secret Service scandal….

Geeze…

Too many scandals..

Electrongod on April 24, 2012 at 10:04 PM

So say hello to the ” whistleblower” SS agent :
http://www.insideedition.com/news/8068/secret-service-whistleblower-is-female-agent.aspx

She’s 46-year-old special agent Paula Reid.

It was Reid who discovered at least 11 agents had brought prostitutes back to their hotel in Cartagena just days before the president arrived in Colombia for an international summit.

Her intervention in Colombia is winning praise from Congress.

Senator Susan Collins said, “She acted decisively, appropriately.”

Paula Reid told The Washington Post, “I am confident that as an agency we’ll determine exactly what happened and take appropriate action, despite this current challenge facing the Secret Service.”

Here’s what we know about her: She’s single. She’s been an agent for 22 years. She heads the Miami bureau. She once sued the Secret Service for racial discrimination.

(emphasis added)

burrata on April 24, 2012 at 10:19 PM

As Hank Johnson said…

“They were executing ‘WTM’ in a ‘VC’..

“Wasting Taxpayers Money in a Vegas Conference”

Electrongod on April 24, 2012 at 10:21 PM

burrata on April 24, 2012 at 10:19 PM

That just goes to show you…….it takes a woman to clean house properly. ;o)

Disclaimer…I am a woman.

kakypat on April 24, 2012 at 10:22 PM

Outside of fraud, simple inefficiencies abound in the Defense Department. This Forbes piece notes that approximately $100 billion had been spent on weapons programs that were either never used or eventually canceled – all after significant investments.

I am absolutely sure there are a myriad of ways to save money in the DoD, but it is not the Pentagon’s fault when a weapons systems which is pushed by the politicians (both executive and legislative) and then cancelled by the next set of politicians. Or programs are restructured or stretched in Congressional budgeting out to save money in the short-term but cost more overall. Or how about useless weapons or systems that DoD doesn’t even want, but which are made in an important district, so they buy them as quid pro quo to be allowed to procure some other system that they actually want?

Talk about using contractors who have been fined in the past? Say you want a new jet plane – your choices are Boeing and Lockheed. That’s it. In the early 1980s there were six or so companies that could do it – not any more.

holdfast on April 24, 2012 at 10:25 PM

That just goes to show you…….it takes a woman to clean house properly. ;o)

So how do you, an admitted woman, explain Nancy Pelosi who was going to clean the swamp of corruption in DC? ;)

Happy Nomad on April 24, 2012 at 10:26 PM

Before anyone gets on the high and mighty about waste in the DoD, I’d hope they’d take a minute and understand that it is Congress who sets the details for all those spending programs.

Congress has the final oversight on ALL DoD spending, and therein lies the problem.

Anyone else remember the $600 toilet seat? I do, because it was part of the bathroom on the P-3 Orion which I flew on. It cost $600 because Lockheed didn’t work with small fiberglass moldings, and Congress refused to allow Lockheed to subcontract that section out. As a result, Lockheed had to set up an assembly area and fabricate the whole seat and mouldings for mounting it to, rather than have a local fiberglass maker produce the darned thing.

If my understanding of DoD accounting is correct (someone help me out if I’m wrong), it promotes waste. If a unit is given $1 million to use over the fiscal year and they only use $800,000 the other $200,000 goes back to the DoD and then the unit only gets $800,000 the next fiscal year, even though prices may increase or other unforeseen costs may present themselves. So, in an effort to get the $1 million again there is a mad spending spree the last couple of months to spend that $200,000 on things neither wanted or needed. Of course the last couple months of the FY always means rationiong out toilet paper because there are 10 flat panel TV’s they some colonel just absolutely had to have.

Russ86 on April 24, 2012 at 9:59 PM

Yup. If my squadron didn’t use all it’s flight hours, or use up it’s entire expendable stores budget, fuel budget, etc, we were forced to use the lesser amount the next fiscal quarter. Units were punished for trying to save money.

But again, it all goes back to Congress, which sets the rules for how the game is played.

TKindred on April 24, 2012 at 10:27 PM

Islamic Nation Building in Iraq and Afcrapistan = The Multi-trillion Dollar Bridge To Nowhere.

VorDaj on April 24, 2012 at 10:36 PM

If my squadron didn’t use all it’s flight hours, or use up it’s entire expendable stores budget, fuel budget, etc, we were forced to use the lesser amount the next fiscal quarter. Units were punished for trying to save money.

TKindred on April 24, 2012 at 10:27 PM

It goes beyond that. How does the DoD practice fiscal sanity under the current system?

I can’t tell you the number of times that resources were parsimonious until the last few weeks of the fiscal year when we were expected to spend hundreds of thousands of dollars even though the appropriation rules make it nearly impossible to do so. And good stewardship was actually a penalty.

Happy Nomad on April 24, 2012 at 10:36 PM

But the same folks will continually bleat “give us more money!”

GarandFan on April 24, 2012 at 10:38 PM

It goes beyond that. How does the DoD practice fiscal sanity under the current system?

I can’t tell you the number of times that resources were parsimonious until the last few weeks of the fiscal year when we were expected to spend hundreds of thousands of dollars even though the appropriation rules make it nearly impossible to do so. And good stewardship was actually a penalty.

Happy Nomad on April 24, 2012 at 10:36 PM

Absolutely agree. What really killed me was how leadership was always encouraging folks to “conserve the taxpayer’s money” and other such things, but then we were forced to blow through all the budget before the FY ended. It made me sick, but there was nothing that any of us could do about it, because Congress was “keeper of the purse strings” and set the regs as to how things worked.

TKindred on April 24, 2012 at 10:41 PM

So how do you, an admitted woman, explain Nancy Pelosi who was going to clean the swamp of corruption in DC? ;)

Happy Nomad on April 24, 2012 at 10:26 PM

Pelosi is a female, which doesn’t necessarily mean that she is a woman too.
Women don’t kill babies.

burrata on April 24, 2012 at 11:02 PM

Why do we need to gain “perspective” on this crime?

Because it was committed by Liberals?

williamg on April 24, 2012 at 11:57 PM

No one in elected office should receive a pension. NO ONE.

From the Podunk dog catcher to the POTUS.

I would apply this to legislators and executives, not to civil service staffs and not to the Judiciary.

I don’t know if we would save a lot of money, but we’d save some and this alone would probably serve as a nice de facto term limits mechanism.

Jocon307 on April 25, 2012 at 1:06 AM

So, in an effort to get the $1 million again there is a mad spending spree the last couple of months to spend that $200,000 on things neither wanted or needed. O

Russ86 on April 24, 2012 at 9:59 PM

Actually, that is true across the government, not just DoD. Baseline budgeting has that affect and the consequences described.

This Forbes piece notes that approximately $100 billion had been spent on weapons programs that were either never used or eventually canceled – all after significant investments.

OK, first, using Forbes and the Huffington Post as sources probably doesn’t go very far in the credibility department, particularly for anything related to the military. Just sayin’

Yeah, this is also very frustrating to contractors who work like crazy to get a contract underway, deal with changing requirements and then loss of patience by the customer to have a contract canceled when things go wrong or for political reasons. One of the problems is that our society has become so risk averse, that even a single failure can cause contract cancellation. Another issue is the political changes of heart. One of the reasons the F-22 is so expensive, all of the non-recurring costs are sunk into a very complex system and it was finally on a path of sustainable production when the program was capped at a small number of fighters. The non-recurring costs then get spread over that very small number of systems and guess what, yeah, the cost per system is astronomical. If the whole production had been executed, that sunk cost would have been distributed over a larger number of units and thus been lower.

In an informal conversation with a friend who is a military auditor, I was told that a number of contractors take a contract and take a percentage off the top. They then subcontract to another company, which takes a percentage off the top. This subcontractor then subcontracts to another company, and takes a percentage off the top. Finally, several levels down, the contract actually gets fulfilled.

This is too much like the old “friend of a friend” story. The reality is that the defense industry is one of the most heavily regulated and audited industries in the country. The story related would only make sense if one is describing the subsystems of a larger system being integrated by the first contractor described. The DoD would not award a contract to someone who brings no value to a program. As an example, I can see how the story related might apply to a system’s integrator or developer who develops an airplane and subcontracts to an engine manufacturer who subcontracts to a specialty fabricator for turbine blades. However, each contractor and subcontractor brings value to the transaction and each needs a profit for the work performed. The blade manufacturer gets profit for what it manufactures, the engine manufacturer does charge profit on its oversight and coordination with the blade vendor. Likewise the airframe manufacturer will collect profit on the transactions with the engine manufacturer for the work in overseeing and coordinating those transactions.

In addition to the auditing and oversight, defense manufacturers are limited to the amount of profit they can charge on a contract. All elements of the contract are closely audited and the government requires contractors to provide detailed accounting for the costs of doing business. This would be like a civilian customer getting to audit the books of his mechanic to where he can see exactly what the mechanic pays for all goods and services that go into the repair of the customer’s car as well as the cost of the building, utilities and other overhead.

Part of the reason defense costs are so high is not because of lack of oversight or process, but rather because of the high level of oversight and process that requires the staffing and other costs to sustain the required record keeping and process management. Any contract over $20M must use full earned value management, this is a complex schedule and accounting oversight system that ties dollars to schedule progress. The degree of effort required for earned value management requires additional full time people to support that effort such that one has either a $19.99 million program or a $22 million program, there is nothing in between

AZfederalist on April 25, 2012 at 1:32 AM

AZfederalist on April 25, 2012 at 1:32 AM

I should add that earned value is not a base cost such that it seems inefficient at $20M, but, for example on a $100M contract it only makes it $102M. The effort required to sustain earned value scales with the size of the contract, so you need more people to support the process at higher values.

There are numerous other processes and regulations that were put in place by Congress to “curb abuse” and “stop waste” that actually cost more than they ever would have saved. The old saw about sparing no expense to save money is definitely applicable to government work

AZfederalist on April 25, 2012 at 1:38 AM

These guys are all “working stiff” level people in the GSA. How come they can enjoy parties like the rest of us can’t even dream of? Is it a pervasive attitude that they own us rather than are responsible to us?

{^_^}

herself on April 25, 2012 at 5:29 AM

At some point one has to weigh the advantage of learning all the things one does here at HotAir about the goings on in the inner workings of our vaunted public sector against the depression it engenders.

Cleombrotus on April 25, 2012 at 5:35 AM

And just to pile on: Is there any truth to the rumor that Rep. Chaka Fattah (D-Pa) (Is that even the real name of a real person?)
is proposing HR 4646, which will levy a 1% tax on ALL bank transactions?

Cleombrotus on April 25, 2012 at 6:13 AM

27 Trips, since July 2011, to Calif. (@ $32000 a pop)=$800,000+ taxpayers dollars FOR WHAT ???

Isn’t this some kind of government “waste fraud and abuse” all-time record ?

If these gubbamint employees need to be home so much (the sniveling excuse)—send them home permanently and find someone else !!

BigSven on April 25, 2012 at 7:44 AM

BigSven on April 25, 2012 at 7:44 AM

BigSven left out the “BIG SPENDING” offender’s name and position in the Obama administration’s lineup of dubious characters and assorted cronies.

Provide the name — and move to the head of the class ! :)

BigSven on April 25, 2012 at 7:54 AM

That would be, if memory serves me correctly, Nancy Pelosi.

Of course, Barbara Boxer is right up there too, with her trips home.

TKindred on April 25, 2012 at 9:08 AM

Mr. Siggins,

Do you even have a clue what this comment says? I’m guessing not. Those who served in the military through retirement were promised that healthcare would be part of the benefits from not getting a better salary while serving. Now the DoD is engaged in “broader restructuring” which is essentially taxing the hell out of non-medicare retirees to pay for Tricare. This is in no way related to the waste found in junkets, GSA conventions, or Secret Service parties. How dare you suggest that caring for those who served a career in the military are undeserving of the medical care they were promised when they joined! Filthy bastard.

Happy Nomad on April 24, 2012 at 10:07 PM

I agree with this totally. The restructuring is not what civilians think it is. This point always gets overlooked. There are bogus and questionable contracts that get approved in the military, but another poster was right when they said that it is CONGRESS that approves our budget. Leave my healthcare and other benefits alone…I’VE EARNED THEM!!! Go after where the real waste is!!!!

cappy718 on April 25, 2012 at 9:48 AM

That would be, if memory serves me correctly, Nancy Pelosi.
Of course, Barbara Boxer is right up there too, with her trips home.
TKindred on April 25, 2012 at 9:08 AM

Close but NO cigar ….this person is actually far better looking than either Pelosi or Boxer, but has the same ‘elitist aroma of entitlement,’ with no qualms about spending taxpayers money for his personal travel!

Try again !

BigSven on April 25, 2012 at 10:56 AM

BigSven on April 25, 2012 at 10:56 AM

Leon Panetta – not sure about better looking though….

dentarthurdent on April 25, 2012 at 11:09 AM

The DoD would not award a contract to someone who brings no value to a program. As an example, I can see how the story related might apply to a system’s integrator or developer who develops an airplane and subcontracts to an engine manufacturer who subcontracts to a specialty fabricator for turbine blades. However, each contractor and subcontractor brings value to the transaction and each needs a profit for the work performed.
AZfederalist on April 25, 2012 at 1:32 AM

Mostly agree – but not entirely true. With the mandates for small business set-asides and flow-down, I have seen many contracts where small (minority, woman or disabled vet owned, or HUDzone) companies had to be subcontracted even if the large prime did not need them.
I also used to have a contract at USAF Academy when I was with a small (initially 8a – minority-owned) company. When we graduated from 8a, the Academy gave a new contract to a new 8a company and started taking work away from us. The new company charged the AF more and gave them less hours than we did – but Contracting was happy cuz they were meeting their 8a quotas.

dentarthurdent on April 25, 2012 at 11:16 AM

TKindred on April 24, 2012 at 10:27 PM

Another slant on the overpriced items from the Green Room thread:

The old stories about $400 hammers and $600 toilet seats – were the direct result of government contracting specifications and mandates on testing and certification to ensure any item DoD bought exactly met those specs in the contract. The hammer may have only cost $5, but the manhours required to do the required testing and documentation would add the other $395 to the overall cost.

dentarthurdent on April 24, 2012 at 6:31 PM

dentarthurdent on April 25, 2012 at 11:20 AM

Also from the Green Room thread yesterday:

approximately $100 billion had been spent on weapons programs that were either never used or eventually canceled – all after significant investments

And why did DoD buy these systems and never use them? Usually because Congress mandated that DoD buy them, even though DoD didn’t want them and often stated up front that they were useless. But Congress insisted on the pork spending, so DoD had to take the systems they didn’t want.
It all goes back to the politicians and pork barrel spending.

dentarthurdent on April 24, 2012 at 6:44 PM

dentarthurdent on April 25, 2012 at 11:23 AM

Leon Panetta – not sure about better looking though….

dentarthurdent on April 25, 2012 at 11:09 AM

BigSven is. And, BigSven’s not queer. :)

BigSven on April 25, 2012 at 11:29 AM

This is mostly just waste.

Has anyone looked into the ludicrous back-handers that are part and parcel of government contracting? They are absolutely illegal and ‘the way things are done in DC’.

CorporatePiggy on April 25, 2012 at 11:54 AM

In an informal conversation with a friend who is a military auditor, I was told that a number of contractors take a contract and take a percentage off the top. They then subcontract to another company, which takes a percentage off the top. This subcontractor then subcontracts to another company, and takes a percentage off the top. Finally, several levels down, the contract actually gets fulfilled.

1) To say his explanation is merely a simplication of a problem is slightly true but 99% false. Just as Oboobi saying he’s not responsible, nor can he do anything about rising gas prices. Only if you ignore his EO and policies. Another chuck of the blame then falls on Congress, i.e. McVain for being the 60th vote against ANWR drilling 4 years ago.

2) As a government civilian (likely GS-xx), your friend has a blatant axe to grind against contractors. I really think it’s a type of p**** envy. On matters of war/military, contractors have always been here (marched, fought and died with the soldiers) long before the first govt civilian ever stepped foot in his cubicle.

AZfederalist on April 25, 2012 at 1:32 AM

What he said. And here’s another piece of the puzzle.

There is no such thing as “take a contract and take a percentage off the top”. Whoever wins a contract with the govt is the Prime. Oftentimes, the Prime does not have all the skillsets, or is barred by regulations from doing it all, so the Prime has to subcontract it out.

1) Even if the prime does absolutely nothing in fullfilling the contract, it is still responsible for the execution of the contract. Hence it must oversee the quality and progress of the work performed by the sub (rarely does it go more than 2 or 3 levels down). So there will always be a little of that program/project management fee. Aslo, the prime is the only one with a contractual relationship to the govt, and thus is the only one that can bill the govt. Depending on time lag etc, the Prime has to “handle” receivables and payables; for this you have several fees known as “burden” “cost of money” “G&A” etc. In all this activity, the govt is only dealing with one entity as the single point of contact – the Prime. If the sub gets screwed over by the prime, the sub’s only recourse is thru the courts. The sub can’t go to the govt to complain, again because the sub has signed no contract with the govt.

2) Why subcontract? A) to get at specific talents/skillsets, B) With certain criteria, Congress has mandated a certain percentage of the work MUST go to small contractors. Congress has even gone as far as to say for certain NAICS codes, a percent must go to a woman-owned business, or disabled-veteran owned business and so on. C) Then there are incentives, where by certain arrangements, Primes got up to a 10% plus up advantage over bid competitors. For example, the Mentor-Protege program or operating out of a HUDzone district. D) there are other scenarios that are a mix of the above etc, i.e. no less than 51% of the work must be performed by the small business etc.

3) If you’re an independent contractor with certain skillsets, a Prime and/or sub might add you to their team, but again, the Prime/Sub are responsible for your performance, even if you’re a sub of one. Now if this indie just came from a commercial contract at $200/hr and wants to do similar work on this govt contract, he can’t just charge any rate, he can only charge within established labor rates that have been vetted/approved by DCAA, GSA etc. Example, the Prime has an approved billing rate of $150 for a Project Manager labor category. When it subcontracts that position to the sub, the sub cannot charge more than that $140 (minus burden, G&A etc), unless that sub already has an approved billing rate, so let’s say the sub doesn’t have that rate, then the sub might agree to bill $125/hr. The Indie comes along and negotiates down from his standard rate of $200 and agrees to do it for $110/hr. Or if that is to low, the Prime & sub might agree to pass the indie directly to the Prime and the Prime gives the indie $125/hr and in turn gives up another position or two to the sub.

4) But one place where it does happen as described by the military auditor, is thanks to Congress, it has to be done this way because the contract is classified as a small-business set-aside.. This is where a contract value is relavively small $$ and competed only by small businesses, typically 8A. The prime that wins it might actually have nothing more than a home office. He in turns passes off the work to a larger company and cashes in his monthly “pass-thru cut”. His subcontractor, is typically a larger biz unable to compete directly and, in the interest of maintaining revenue stream will even write the entire proposal write-up/costing for that 1-man biz. In this scenario, the prime cut might be anywhere between 5% & 10% and the owner has no intent of growing his business, just rent-seeking. But, if Congress wants to deal with that sort of abuse, then they need to do it cautiously so as to not hurt the little guy that really does want to grow his biz. And in that sense, they shouldn’t bother, because as sure as the sun rises in the East, Congress will figure out a way to hurt the little guy.

There are bigger fish to fry regarding Federal waste, abuse and excessive spending, way beyond the military auditor’s stated concern. He should focus on doing his job and keeping contractors honest per FAR and contract T&C and not worry himself over how many levels of contractors it takes to do a job.

AH_C on April 25, 2012 at 3:48 PM

AH_C on April 25, 2012 at 3:48 PM

Agree with your dissertation except for para #4. For several years now, the small business prime who wins any small business set-aside contract MUST do 51% of the work (measured in contract $$) themselves (as you touched on at the end of para #2). The days of having a small business win a SBSA contract and have a large do all the work are over – and have been for a few years. In fact a small prime can’t even build a team with other smalls and evenly share the workload with those other smalls – the prime MUST do 51%.

dentarthurdent on April 25, 2012 at 4:08 PM

dentarthurdent on April 25, 2012 at 4:08 PM

thot as much, but wasn’t sure if 8A was the exception to the 51% rule on occassions. We graduated from 8A a few years ago and as just a small biz, all the RFP language I see now stipulate the 51% rule.

AH_C on April 26, 2012 at 9:56 AM