Tag: government accountability

Cost Overruns at the National Archives

A new report from the Government Accountability Office finds that the National Archives and Records Administration’s Electronic Records Archive project is headed for major cost overruns. Initiated in 2001, the project was originally projected to cost $745 million but could end up costing $1.4 billion. The project’s development phase was supposed to be completed by September, but the GAO estimates that it won’t be completed until 2017.

The purpose of the Electronic Records Archive project is to create a digital system for gathering and storing government records that would be accessible to the public. In 2005, the National Archives selected Lockheed Martin to develop the system. Unfortunately, the GAO report makes it clear that the National Archives hasn’t been up to the task of properly overseeing the project.

The examples of shoddy management are too numerous to recount. For instance, the National Archives was supposed to follow a system for managing the project’s costs and progress called earned value management (EVM). However, the GAO found “anomalies” in the monthly reports submitted to the National Archives from Lockheed Martin that are crucial to EVM.

From the report:

  • Planned work was removed from the [performance measurement] baseline without also removing its corresponding budget. This is an inappropriate EVM practice and results in the appearance of favorable cost and schedule performance trends.
  • Work was shown as fully completed in one month’s report but, in subsequent reports, the same work was reported as less than 100 percent complete. For example, Increment 3 development work was reported as 100 percent complete in July 2009, but 2 months later, in September 2009, it was reported as 10 percent complete. In another example, program support activities for Increment 3 were reported as 100 percent complete in August 2009, but in the subsequent month as 49 percent complete.
  • Dollars were reported as spent in a given month, but no work was reported as scheduled or completed.

The GAO says that National Archives and Lockheed Martin officials “provided justifications for these anomalies…. However, these justifications were not always valid.”

Cost overruns in government are not anomalies. In fact, as a Cato essay on government cost overruns demonstrates, they occur all too frequently. The reason is simple:

People tend not to spend other people’s money as carefully as they spend their own. In governments, policymakers and administrators deal with large amounts of other people’s money, and so wasteful spending is a big problem…. Cost overruns are illustrative of the persistent failures of federal management and provide one justification to downsize the government.

$98 Billion in Improper Payments

The Obama administration and its allies in Congress want the federal government to expand its role in subsidizing health care. We are told that this expansion will restrain rising health care costs. But an OMB report yesterday that the government made $98 billion in improper payments last year – $55 billion of which came from Medicare and Medicaid – ought to raise suspicions about that claim.

According to Reuters, OMB Director Peter Orszag told reporters that the embarrassing figures from Medicare and Medicaid demonstrate the need for health care reform. I would concur if “reform” meant reducing the government’s role in health care. However, he means the opposite, which raises the question of how giving more money to an already waste-prone and bureaucratic federal health system can possibly make sense for the economy.

The administration has promised to cut down on improper payments with the aid of a new executive order. According to the Associated Press:

Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments. If an agency doesn’t meet targets for reducing error rates for two years in a row, the agency director and responsible official will have to directly report to OMB to explain the delinquency and new actions they will take.

Somehow I doubt this will amount to much of a deterrent. The AP also said the administration plans to impose penalties on government contractors who receive improper payments. But last month it was reported that “the Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.”

Democrat Tom Carper, chairman of the Senate subcommittee on federal financial management, seemed to partly understand the broader meaning of the improper payment estimates:

It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits…Unfortunately, these numbers may still be just the tip of the iceberg since they don’t even include estimates for several major programs, including the Medicare prescription drug plan.

Yes, Senator, which is precisely why bigger government – be it stimulus, bail outs, or health care reform – is an inferior option to letting the marketplace provide for our wants and needs.

Carper is also right about the $98 billion figure being the “tip of the iceberg.” As has been noted here before:

The Government Accountability Office estimates that the two major government health programs are currently losing a combined $50 billion annually to such payments. But that estimate probably low-balls the actual losses. Harvard’s Malcolm Sparrow, a top specialist in health care fraud, estimates that 20 percent of federal health program budgets are consumed by improper payments, which would be a staggering $150 billion a year for Medicare and Medicaid.

See this essay for more on fraud and abuse in government programs.

Public Schools Are the Future of Charter Schooling

For years we’ve been told that charter schools are the future of public schooling. The reverse is true.

The pattern in publicly funded education, both domestically and internationally, has always been one of increasing regulation over time, and of the triumph of producer interests over the interests of parents and children. Public schools in the late 1800s had considerably more autonomy than do most modern charter schools. Over time, public schools have come under the sway of centralized bureaucracies dominated by employee unions.

That same pattern is playing out in the charter school sector. As the Associated Press reports today, the American Federation of Teachers has just signed several more collective bargaining agreements for charter school teachers in New York City and Chicago. Meanwhile, federal education secretary Arne Duncan has been calling for more government “accountability” (read: “regulation”) for charters, singing from the union’s hymnal. From the AP:

AFT president Randi Weingarten said the administration’s push for more charter schools must come with stricter regulation.  “You can’t do one without the other,” Weingarten said.

Duncan struck the same tone Monday, saying that only high-quality charters should be allowed to operate.

If you want to know what charter schools will look like in a generation or so, just look at the public school status quo.