Waste and Fraud Problems? Cut the Investigators and It Will Disappear!

So, you have a 90-year-old federal agency that returns $87 for every dollar invested, recommended $50 billion in savings every year, writes over 1,000 reports to Congress every year and had 80 percent of its recommendations over the past five years instituted (at least on paper), all on a budget of half a billion dollars a year – peanuts compared to other government spending. You would think that this agency would get a big atta boy thanks and increased spending from the Congress to hire more staff and find more fraud and waste during these tight budget times.

No such luck. Both chairmen of the House and Senate Appropriations committees had suggested cutting the budget of the Government Accountability Office (GAO) enough to cut into the staff that goes out and investigates how the money is spent. It seems to be an odd situation where the Congress would cut its own agency that saves them money, but the clue is who is insisting on the cuts – the appropriators of the money. The cut GAO movement got started by House Appropriations Chairman Hal Rogers (R-Kentucky) who wants to cut 6.4 percent of the GAO budget, but the Senate Appropriations Chairman Ben Nelson (D-Nebraska) has gone one step further and recommended an even bigger cut, 7.6 percent, than the Republican chair.

The Appropriations Committees in Congress have always been a place to go to get government money for your pet project. Lobbyists swarm the place and spread their money around to make sure that they get their piece of the appropriations pie, and members of the committee are laden with campaign contributions, especially the chairmen. Both of the chairmen are being chastised by the penny pinchers in the Congress for these cuts, but Nelson is getting much of the blowback. But he has one of the most powerful money machines in the country, if not the world, and he will probably turn a blind eye to the few Congressional watchdogs who think that the GAO will continue to pay for itself many times over.

Nelson has also put in a new provision that the GAO has to make copious reports on how much time and money they spent on each audit report, even though their statistics show that they return $87 for each dollar they spend. Nelson would be more effective if he would insist on that type of reporting system in other areas of the government, especially the Department of Defense (DoD), which, as I illustrated in last week's column, can't pass a financial audit at all.

And that gives us a clue why these chairmen are doing this. Those pesky GAO reports, some initiated by Congress and others initiated internally, are embarrassing to members of Congress' pet projects. Life for these two chairmen would be much more pleasant if there weren't these reports around to show unpleasant truths about fraud and waste in their pet programs.

There is precedent for this seemingly illogical way (illogical if you really want to save money) to oversee government. During the Clinton administration, Vice President Al Gore was given the task of streamlining the government with his “Reinventing Government” task force. This task force did much good in making many areas of government more efficient. But when it came to the DoD, he grew timid and left the “streamlining” to the generals. The DoD bureaucracy and the Congressional beneficiaries were not about to cut into their favorite pork-laden weapon systems, so they decided to do major cuts to the audit and investigative arms of the DoD.

Many of the seasoned old timers of these DoD agencies took early retirement as the staff cuts took place, leaving young and inexperienced staffers who were ill prepared to take on the generals and behemoth companies like Lockheed. When you get rid of many of auditors and investigators, the DoD money flowed freely, uninhibited by embarrassing exposes of overruns or questioned costs, thus “streamlining” the system. The Project on Government Oversight (POGO) wrote an investigative report on this in 2001, but few in the system were concerned about DoD oversight. The Congress is now trying to replenish the amount of investigators and auditors in the DoD, but the institutional damage is done and the oversight people in the DoD are often too faint-hearted because they know that they are not valued.

The GAO is far from perfect. They also can be overly timid about reporting outrageous waste, and their reports can be overly wonky and bland as pabulum. I have used GAO reports over the years as a starting point for investigations and new columns. One of my first investigations on the technical failures of the M-1 tank was triggered by a GAO report in 1980, and the past two Solutions columns (here and here) have quoted their reports extensively. Members of Congress often request GAO investigations, which can take many months if not years, to wage war on a program they don't like or to pressure the GAO to show that a program that they do like doesn't have major problems. They then wave the results around at a hearing and the waste and fraud found in the reports is used as a political hammer with a one-day wonder story in the major papers before everyone moves on.

But the GAO reports are often a starting point to leverage a continuing investigation on a problem. I have worked directly with GAO investigators when they have been assigned to follow up on some of my exposes on DoD and health care fraud. With a few exceptions, I have been impressed with the staff investigators because there are some good people in the agency who really do want to root out waste and fraud. I have seen (and leaked) their draft reports, which can have strong language and tough conclusions. Draft GAO reports are hard to come by in this buttoned-down agency, but are gold to leak because then the upper levels of management are loathe to soften their language and recommendations once it is public. But, unfortunately, the final reports don't usually name the names of the companies and the individuals in the companies doing the fraud or harshly expose the protectors of the fraud and waste in the bureaucracy. Once these reports come through the executive editing process, they look like they have been through a Cuisinart, and the reports come out with gentle language while oozing government mush.

However, their blandness and timidity don't stop government watchdogs, reporters and cost-cutting members of Congress from grabbing reports as they come out. You use to have to get a list of new reports in the mail or trek down to the GAO (then known as the General Accounting Office) reports office to see new reports in their familiar blue covers. Now, the GAO will send you an email every day with lists of reports on subjects for which you ask. Many a desperate beat reporter on a slow news day has been saved by a GAO report on some mischief or inefficiency in government. The key, however, is to go beyond the GAO report to find even more problems by contacting sources or other means of reporting or investigating.

I have also witnessed GAO auditors briefing members of Congress or their staff before the report comes out. Some staffers blandly write notes and don't push the GAO to dig deeper, but some have been able to buck up and embolden the politically timid GAO investigators by making them more afraid of the wrath of the chairman of the committee than the bureaucracy and/or company on which they are reporting. The GAO can work and work well if they get the freedom to be bold despite their nervous supervisors and have protection of the committee against lobbyists and irate members of Congress who are getting their favorite ox gored by the investigation.

So, if the budget is cut and there is a reduction in staff, who will replace the loss of oversight? Don't count on the Congressional staffers. The oversight ability of the Congress has so atrophied over the years that there are few staffers and members of Congress who will drill down to get the truth and the staffers are often caged by the rhetoric of their political party. Winslow Wheeler, a former GAO staff member and Congressional staff member who now runs the Straus Military Reform Project for the Center for Defense Information, believes that even the most timid GAO investigator is better suited to root out fraud and waste than many of the Congressional committee staffers because these staffers have to do what they are told by their highly political bosses and are inundated by lobbyists, who are trying to negate or soften any bad news about their contractor clients.

There has been some blowback by members of Congress who use the GAO to try to cut waste. A letter has been sent by Sens. Tom Coburn (R-Oklahoma), John McCain (R-Arizona) , Claire McCaskill (D-Missouri) and Scott Brown (R-Massachusetts) to Senator Nelson to stop the cuts and to let the GAO continue to do its work. The Hill newspaper reports that these member of Congress are asking, “why the GAO budget is being 'slashed' while the Senate's official personnel and office expenses account is escaping 'with a shave of just 3.17 percent.'”

Sens. Joe Lieberman (I-Connecticut) and Susan Collins (R-Maine), chair and ranking member on the Homeland Security and Government Affairs committee, also sent a letter to get the funding restored. Lieberman and Collins are not known as consistent watchdogs in the Senate, so it is curious that they are also concerned about cutting GAO staff.

These members of Congress are starting toward the obvious logical solution to the GAO problem – stop the cuts and invest in GAO oversight that gives back much more than it takes. I have spent decades trying to get the average person to understand why the Congress acts illogically when it comes to oversight and often punishes the institutions that try to root out fraud. But the best explanation is that the Congress, the contractors and the government bureaucracy often don't want the bad news out because it messes with the flow of billions of government money.

Even if the Congress does reinstate the GAO's budget, it could go the next step by following up by withholding some of the money in programs where the GAO finds fraud and waste until the bureaucracy and the company that it is overseeing clean up their act. That has become much more difficult to do because of the lobbyist blowback. The Congress may have to show some political courage if they truly want government to work and start down a better path by restoring the money.

The notorious KBR LOGCAP contract to supply logistics to our troops in the Iraq and Afghanistan wars is awash in fraud and waste and has now topped over $40 billion with barely a whimper out of the Congress. Surely, they can restore the threatened cut of $50 million that could return much more back to the government if they can get past their illogical penny-wise, pound-foolish mentality.

If you have got a minute, maybe you would like to email Senator Nelson and tell them to restore the GAO cuts and invest in oversight instead of waste.