Sunday, March 22, 2009

Fraudian Slips

In the previous post, I explained how unrealistic it is to expect federal workers to act as effective insurance against waste and fraud in the expenditure of government -- i.e. taxpayer -- funds. It is simply not in the nature of federal workers -- more specifically contract monitors -- to be concerned about "saving" money or putting it to optimum use. Plus, we have a factor which has never been discussed with regard to the repeated confrontations between Congress and "big business" -- namely that money intimidates, by which I mean that when a Congressman with a six-figure income is talking to a business executive with a eight- or nine-figure income, you have an automatically unequal power relationship -- and believe me, it is felt -- intensely -- by both parties. As far as the executive is concerned, the Congressman is a "face" -- a pretty boy -- an airhead -- an empty suit -- a con artist, who, basically, knows nothing about anything except how to win elections. And to the Congressman, the executive is that which he will never be -- someone who entered the rough-and-tumble of the marketplace and managed to dominate, and conquer, and grow rich as a result. So all of these "hearings" look like an old newsreel with a swarm of pygmies gathered around the Great White Hunter -- no one is in any doubt as to who the dominant person in the room is, and who will win the encounter.

Similarly, when a federal employee who is assigned to monitor a contract encounters the alpha-male (or alpha-female) high rollers who are in charge of the company that won the bid, they inevitably feel out of their element and "above their pay grade", as Obama would say. So they tend to defer, and tiptoe, and walk on eggs, not because they have no actual power in the situation -- because they do, according to regulation -- but because there is an older, more archaic form of intimidation going on, and no amount of "training" of the humble federal employee (who, likely as not, got the job in the first place because he wasn't cut out to survive in the world of competition) is going to make it go away. And, heaven forbid, should it ever come time to "discipline" the contractor for some sort of infraction -- most commonly a failure to "deliver", or the delivery of a manifestly inferior product -- the humble federal employee is certainly not going to go out and meet Goliath single-handed. He's going to call in his own boss, and their boss, and all the heavy artillery the agency can muster, and the chances are that the effort will be derailed because at some point "someone who knows someone" will get in the loop and wonder, out loud, what all the fuss is about, and doesn't the humble federal employee have anything better to do with their time, plus the end of the rating period is coming up, and... well, you can fill in the rest, I'm sure. So even in the rare case where the person monitoring the contract is serious about his duties, there is seldom anything that can be done in cases of contractor malfeasance. And in the more typical case, where the contract monitor is your average faceless clock-puncher, the issue won't ever even come up. The contractor could rape the clock-puncher's grandmother and put it on YouTube, and it would hardly create a stir; this is how passive and non-boat rocking these people are.

Now, the situation I've just described typifies the more common sort of government contract, in which there are fairly tangible "deliverables" -- of goods and services -- expected as the outcome. In other words, a firm receives taxpayers' money and is supposed to provide something in return -- and not just something vague and intangible, but actual "stuff" -- either "widgets" or some activity that makes a visible difference, like cleaning restrooms. And you would think all government contracts were like that -- or should be. But read on. The two major exceptions, as per my observations over the years, are: (1) "consulting"; and (2) "earmarks", and I will deal with each of these in turn.

Now, your typical "consulting" contract does not _appear_ to differ significantly from a standard "service" contract -- i.e., a certain level of effort is required which produces results which can be judged satisfactory or not. But unlike more tangible services like cleaning restrooms, your typical consulting contract requirement basically boils down to what one of my old bosses called "does stuff". And the "stuff" that is done is seldom anything that can be subjected to any tangible or operational criteria. What you're basically paying the person to do is think, and talk, and perhaps write. And their thinking, talking, and writing is supposed to be roughly relevant to a given area of concern... but even these "areas of concern" tend to be a bit on the nebulous side. So consultants will be hired to perform all sorts of Dilbert-esque jobs like "aiding mission operationalization"... "leveraging digitization efficiencies"... "juxtaposing cost tradeoffs against short, medium, and long term unfunded requirements"... and so on. Can anyone out there tell me what criteria they would use to determine if a person ever succeeded in doing any of these things? And remember, they weren't hired to actually do it -- only to think about it, and offer advice, insight, and input. So imagine the situation the poor federal schlump is in when he's assigned to "monitor" one of these consulting contracts -- and you can be sure that the "consultant" is another one of those alpha types who drives a Jaguar and is easy to pick out in a meeting because he's the only one wearing tailored clothing (vs. the fed guy who is wearing stuff bought off the overstock rack at Marshall's).

I would say, overall, that "consulting" is the easiest, most seamless way by which money is moved from the taxpayers to the parasite class -- easier than the government employee's own paycheck, in fact, because it's much more difficult to get an actual "in-house" government job than work as a consultant. Is it any accident that, whenever a government official at any level (federal, state, local) is accused of corruption and diverting money to their cronies, said cronies almost invariably were paid for "consulting"? In fact, it's amazing that any of these cases ever come to court, because there is no one out there who can, conclusively, define the difference between a fraudulent consulting job and a legitimate one.

Now that we've dispensed with consulting -- which comes closer to "middle class welfare" than anything else in the economy -- let's move on to "earmarks". (This, by the way, is a term that has been used in the government for decades -- it's only recently that it has appeared on the media radar.) I've already made the point that, ultimately, all government expenditures are local expenditures, so the distinction between "earmarks" and non-earmarks is an artificial one at that level. In other words, when it's all about jobs, and getting politicians re-elected, people on the local level don't care what it's called in Washington. No one actually receiving "earmark" money thinks of it as anything special -- it's just another program... just another teat on the gigantic sow called The Government. But the distinction is still useful if we're talking about the perspective of the poor bureaucrat who actually has to do the dirty deed -- i.e. monitor the contract -- and his chances of ever blowing the whistle on "waste and fraud".

First, imagine the scene in a typical government agency when the earmark "comes down" (this is the term that is commonly used). The first reaction is, "Oh shit, now we have to use some of our scarce funding to pay for some damn pet rock that some Congressman wants." And there is no appeal! So some part of the regular, i.e. at least semi-legitimate, program has to be cut... or, alternatively, the entire program has to be "salami sliced" (another common term) by reducing each element of it by, say, 10%, in order to fund the earmark. This is the most common case, and it happens when an "earmark" is applied to the regular agency budget -- oftentimes long after said budget is approved and the program is under way. But Senator Fatass wants his friend Billybob down in Butt Butt, Alabama, to get a waste disposal contract, and your money was just sitting there, so tough luck, sport. (Did you know there are people in the federal government whose main job is to look around and locate unspent or "low priority" money that is ripe for pillaging? Yep -- sad but true.) Alternatively, and not quite as grievously, an earmark will come down with money attached, in which case the only thing that comes out of the agency's hide is the labor hours spent monitoring the silly thing -- and the time spent deflecting blame when things go wrong (which is almost assured).

But in either case, the guy in the trenches -- i.e. Fred Schmuckler, Contract Monitor -- has a problem. If he tried to monitor the contract in the -- let's say -- anal-compulsive, Javert-esque fashion -- checking his watch to make certain each deliverable shows up no later than noon on the delivery date... well, first of all, someone's going to tell him to cool it. And secondly, the "deliverable" is likely to be so nebulous, and undefined, as to make the output of a standard consulting contract look like a pail of nails by comparison. Plus, he knows -- because he's been told -- that this is an "earmark", and that, therefore, "deliverables" don't matter -- in fact, they're a pain in the butt and we're glad the contract doesn't require any. What he's not told, in so many words, but what is well understood by all, is that the purpose of the contract is simply to get money into the hands of the contractor, courtesy of their Congressman or some other high official. Is it blatant cronyism or vote-buying? Goes without saying. Is it considered a "perk" of elected office -- that each elected official gets a certain amount of taxpayer money for their own private sandbox, no questions asked? Goes without saying. Is any accountability anticipated, or expected? Negatory. The idea is, the agency acts as the facilitator -- the "throughput" channel -- and their job is to hold their nose as it goes by, do the paperwork, sign the forms, and shut up. Oh, and pretend to be "monitoring" the whole thing, which brings us back to Fred Schmuckler. If he is not one of those dead souls who you can find wandering aimlessly through any government agency -- hanging out at the snack bar -- reading the paper in the rest room -- going grocery shopping during lunch hour -- he may occasionally feel the prick of conscience. After all, he is a man of integrity! And there are standards here, that are being violated! And he can just see the fat cats grinning from ear to ear as they receive checks that were "cut" based on receipts which _he signed_! Leavenworth awaits!! But no... this is not the kind of thing that would ever get anyone fired, or even mildly reprimanded. It's business as usual, government-style. Fred will go home that evening, less of a man -- and not at all a mensch -- but his future is secure, as long as he doesn't make waves. He is, after all, only a lowly servant of the Regime, a very small cog in a mighty apparatus, and nothing shady that ever happens can ever possibly be his fault.

So what is the point of all this? Only to point out that the so-called "stimulus package" is atypical in one main respect -- it's entirely made up of "earmarks", which means that not only does it all qualify as "waste and fraud", as I pointed out before, but it will all have the cachet of the traditional earmark, i.e. it will be invincible and untouchable, and woe unto the lowly bureaucrat who questions even one small part of it. Which makes this whole argument about "not enough federal workers to provide adequate oversight" an occasion for hilarity -- or weeping -- or both. When these "stimulus" items come marching down the pike, they will be treated like nuclear waste -- with a strictly hands-off policy. The agencies cursed with handling them will look the other way, lest they be turned to stone by the sight of the Medusa, and they will be allowed to pass unmolested. Eventually, checks will be written, and cashed, and some people will be richer, and the rest of us will be poorer, and if you expect anything more out of it than that, well... where'd you get that killer weed?

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