January 25, 2018 1:54PM

WAPA: The Federal Scandal You’ve Never Heard Of

It is hard to keep track of all the waste, corruption, and mismanagement propagated by government agencies in recent years, including the DOD, PTO, VA, and others.

In researching my new study on the federal Power Marketing Administrations (PMAs), I ran across a story of federal failure that the national media has overlooked.

One of the PMAs, the Western Area Power Administration (WAPA), has been racked by scandal in recent years. WAPA is an agency of 1,450 workers within the Department of Energy.

Investigations found that WAPA employees have been using government credit cards for millions of dollars of personal spending on items such as guns, car parts, and sports equipment. ABC News reported “outlandish spending” by WAPA employees, and Sen. John McCain of Arizona charged the agency with “widespread waste and mismanagement.”

When whistleblowers inside WAPA raised concerns, they were subjected to threats from agency managers to keep quiet. WAPA has apparently accumulated a large slush fund of unobligated revenues, which has helped to facilitate the wasteful and illegal spending.

The Arizona Republic had a nice summary of the scandal last year. Here are some excerpts:

The receipts just didn’t make sense: Employees at a federal power agency in Phoenix were using U.S. government purchase cards to buy millions of dollars’ worth of items from sporting good stores like Bass Pro Shop or Cabela's, and from specialty auto shops. Ammunition. Scopes for assault rifles. Engine superchargers. Radar detectors.

The merchandise had nothing to do with electrical grids or transmission lines.

Nate Elam, former assistant regional manager at the Western Area Power Administration office in Phoenix, shakes his head remembering his shock reviewing receipts submitted by his employees in 2014. Then he mentions something even more alarming: Instead of aggressively going after corruption, Elam alleges, WAPA's bosses slow-walked the investigation, retaliated against those who uncovered fraud, and failed to protect them from threats.

“You see stuff everywhere,” said Elam, a 14-year federal employee who once worked for the U.S. Attorney’s Office. "But I’d never seen the corruption — or the lack of wanting to do anything about it — like I did in the Department of Energy.”

Keith Cloud, WAPA's chief of security who worked with Elam to expose credit-card abuse, said the situation was harrowing due to a gun culture within the agency. As some employees began making threats and using intimidation tactics, Cloud said, administrators delayed protective measures and held almost no one accountable.

“We asked them to look into all of this," Cloud said. "What’s appalling to me is, I cannot protect my staff because they just won’t do anything.”

… Cloud and Elam said the embezzlement reflects a larger problem at the federal agency — one that ultimately hurts consumers. They contend waste and mismanagement are obscured and ignored in part because WAPA has built up a $767 million reserve known as the “unobligated balance.”

… Instead of doing a full sweep to change the culture, internal critics said, the agency tried to bury its scandal. Nearly all the perpetrators went unpunished, along with supervisors who failed to prevent or detect the scams. And, according to a second audit, problems continued. From December 2014 through October 2015, investigators identified more than 11,600 potentially fraudulent transactions. One employee picked up 2,000 rounds of ammunition for a .308 rifle. Others tricked out government and personal vehicles with fancy wheels and elevated suspension systems. Receipts disappeared. So did the merchandise.

McCain and Sen. Jeff Flake have introduced legislation to increase transparency at the agency. But, as I discuss in my new Cato report, privatization would be a more durable reform for WAPA and the other PMAs. It would create incentives to avoid such waste in the first place, and it would focus managers on reducing costs and improving performance.