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The GSA, Federal Junkets and Perspective

posted at 1:51 pm on April 24, 2012 by

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.

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After hurricaine Katrina the Gov’t added a clause to the contracting regs regarding “excessive pass through” – A contractor passing a subcontract down with no value added is not allowed to charge fee, or overhead expenses.

I’ve been in DOD work for years. If we hire a sub, we are REQUIRED to pay their fee out of our fee.

HawtGas on April 24, 2012 at 2:18 PM

DoD has definite problems, and could waste a lot less money – and there are companies who try to rip-off the government when they can – but some of the details you specified are the direct result of government mandates. Subcontracting to small companies is mandated on the order of 23% of the total value of a contract to a large company. And that 23% MUST go to some combination of minority owned, woman owned, HUD zone, and/or disabled veteran owned small companies. And while, as you indicated, each company down the line gets a profit margin, the total cost still must be within a certain amount – that means the small companies are forced to bid cheap and take a lower profit margin in order to get the work. I could go on with much more as a DoD contractor for 25 years – with many years in management and business development.

dentarthurdent on April 24, 2012 at 6:28 PM

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

I will say though, as a current DoD contractor, we could not get away with something like what GSA did. We have to justify ALL travel expenses prior to and after any trip, and expenses MUST be within specified ceilings for food and hotel costs at the destination.

I find it amusing that GSA apparently did not stay within the published GSA rates for per diem (hotel and food) – that they publish for the rest of the government.

dentarthurdent on April 24, 2012 at 6:36 PM

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.

dentarthurdent on April 24, 2012 at 6:44 PM

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