The Taxpayers’ Alliance has published a new study examining a sample of 240 government capital projects in Britain, including weapons systems, highway projects, computer upgrades, health care spending, and other items. The results mirror the serious cost overrun problems we have in the U.S. federal government.
Benjamin Franklin said: “In this world nothing can be said to be certain, except death and taxes.” I would add a third certainty: cost overruns at the Pentagon. The Government Accountability Office recently reported that the Pentagon’s space program is facing multi-billion dollar cost overruns and multi-year delays.
The Department of Defense’s Defense Contract Audit Agency is responsible for performing all contract audits at the department. Unfortunately, the agency seems to have developed an excessively cozy relationship with the contractors that it is supposed to be overseeing. That is bad news for taxpayers because of the massive size of DoD’s contracting activities.
In 1798, President John Adams signed a law that required the owners of American ships to withhold 20 cents a month for each crewman’s pay and to forward the money to customs offices in various ports. Customs officers were required to forward the money to the secretary of the Treasury, who would use the money to pay the hospital bills of ailing sailors. The funding also supported a network of marine hospitals.
Summarizing a new Government Accountability Office study, the Washington Post reports that "the cost of building and operating the controversial U.S. ballistic missile sites in Europe could substantially exceed the original estimate of more than $4 billion."
Wow, a bipartisan effort to actually do something about government waste. From the Washington Post today:
A bill to end cost overruns in major weapons systems would create a powerful new Pentagon position — director of independent cost assessments — to review cost analyses and estimates, separately from the military branch requesting the program.
Those reviews, unlike in the current process, would take place at key points in the acquisition process before a weapons program can proceed, according to legislation sponsored by Sen. Carl M. Levin (D-Mich.) and Sen. John McCain (R-Ariz.)
This seems like a step forward, but cost overruns are a big problem across the entire federal government, not just at the Pentagon. Federal financial management of energy, highway, and computer projects has been appalling, for example. I’ve written about this here and elsewhere.
The government needs to buy weapons, and so we should try to improve the Pentagon process as best we can. However, the federal government does not need to buy highways, airports, air traffic control computers and many other things that have chronic cost overruns. Those items should be privatized.
Federal cost-cutting should be a central focus of the next president. One effort that should be bipartisan is overhauling the government’s out-of-control procurement system. Federal contractors routinely get away with outrageous cost overruns at taxpayer expense. From today’s Wall Street Journal:
More evidence that when the government says a project will cost $1, taxpayers will end up paying $2 or more.
The Washington Post notes that Congress is considering further funding of a Navy ship program: ”The congressional action followed months of delays as costs ballooned. The cost for the initial two ships was estimated at about $220 million each but now appear to cost up to double that.”
The August 13 Time cover story on Katrina begins:
The most important thing to remember about the drowning of New Orleans is that it wasn’t a natural disaster. It was a man-made disaster, created by lousy engineering, misplaced priorities and pork-barrel politics.