Reports Show Systematic Failures by Government in Managing Contracts, Spending

January 22, 2020 Updated: January 23, 2020
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News Analysis

WASHINGTON—Official Washington is consumed this week with the Senate impeachment trial of President Donald Trump, but the wheels of government continue to turn, spending trillions of tax dollars and making many of the same management mistakes over and over again, according to reports of federal investigators.

Nearly a quarter of the $4.3 trillion the federal government will spend in 2020 will go, via contracts issued by departments and agencies, to buying everything from advanced airplanes and ammunition, fruits and vegetables, office furniture and paint, computers and processors, and on and on.

Billions more will be paid to contractors and subcontractors in benefit programs such as Medicare and Medicaid.

An Epoch Times review of inspector general (IG) and Government Accountability Office (GAO) reports suggests that federal bureaucrats have much to learn about how to manage contracts and benefits programs more effectively and efficiently, to avoid mistakes such as paying somebody who shouldn’t be paid.

Defined by GAO as “any payment that should not have been made or that was made in an incorrect amount,” improper payments have long been a huge problem across a wide span of federal activities. Such payments are one ailment among many that fester under the broader label of government procurement.

“Since 2003, when certain agencies were required by statute to begin reporting improper payments, cumulative improper payment estimates have totaled about $1.4 trillion,” GAO said in its most recent government-wide summary of the problem.

“For fiscal year 2017, federal entities estimated about $141 billion in improper payments—composed of estimates for 90 programs across 21 agencies. This total was down from about $144 billion for fiscal year 2016, but up from about $137 billion for fiscal year 2015. Medicare programs, Medicaid, and the Earned Income Tax Credit (EITC) account for about 74 percent of this total,” GAO said. The Department of the Treasury administers the EITC.

The Treasury Department estimated the loss from improper payments in 2018 at $151 billion and described the problem as “government-wide.”

The Department of Health & Human Services IG’s 2011 report on top management challenges, for example, noted that the department’s improper payments under Medicare and Medicaid exceeded $70 billion. The report recommended multiple corrective actions.

Eight years later, when the department issued its 2019 top management challenges report, the improper payments under Medicare and Medicaid exceeded $90 billion annually. Many of the recommended corrective actions either remained undone or were incomplete.

But there was good news in one area—improper payments in Medicare’s Fee-for-Service area accounted for $31.6 billion, or 37 percent of the total, but that was down from $36.2 billion in 2017.

Improper payments are also a longstanding problem in the Department of Education’s (DoED) college student loan program. In its 2016 top management challenges report, the department’s IG listed improper payments at the top of the list.

The IG said, “In May 2015, we reported that the department did not comply with the Improper Payments Elimination and Recovery Act of 2010. … We have identified concerns in numerous areas relating to improper payments, including the completeness, accuracy, and reliability of improper payment estimates and methodologies and improper payments involving grantees.”

Four years later, improper payments still topped the list of management challenges, according to the DoED IG’s 2020 assessment, with $6.1 billion in improper payments in the Pell and Direct Loan programs.

Trump administration officials are actively seeking new ideas to fix such problems, according to an official who requested anonymity after participating in one such recent meeting.

Good news on government waste and fraud, however, remains rare.

Taxpayers Protection Alliance President David Williams told The Epoch Times on Jan. 22, “The federal government agencies never seem to learn from past mistakes or listen to their own internal watchdogs, like the inspectors general. With the amount of contracts given by federal agencies, they should be experts in not only identifying, but eliminating waste, fraud, and abuse.”

Williams said, “Solyndra [the now-bankrupt solar company] should have been a cautionary tale for the Department of Energy, yet DOE continues to fund solar projects like the Crescent Dunes project in Nevada that has gone belly up.”

Williams was referring to the huge solar energy project that Bloomberg reported earlier this month is “mired in litigation and accusations of mismanagement at Crescent Dunes, where taxpayers remain on the hook for $737 million in loan guarantees.”

Change happens at a glacial pace in Washington, Citizens Against Government Waste (CAGW) President Tom Schatz told The Epoch Times on Jan. 22, although he sees hopeful signs in several Trump initiatives.

“The president has done a lot to reduce regulations for a lot of things,” said Schatz, whose group’s origins were in the Reagan-era Grace Commission.

“The environmental rules they just came out with, for example, are intended to speed things up, so I think some of those changes will help over time; it’s not going to happen in a day,” Schatz said. “This administration, more than others, has looked at it and said, ‘Look, this should be operating more like a private business would operate.’”

Contact Mark Tapscott at Mark.Tapscott@epochtimes.nyc