The Cost of Doing Business

The Cost of Doing Business

May 10, 2006

The culture of corruption in Washington isn’t just limited to Congress — the Executive Branch also has engaged in some questionable practices. And with $315 billion spent annually on contracted goods and services, it is "the largest consumer of goods and services in the world." In Iraq and the Katrina-ravaged Gulf Coast, the last several years have seen an explosion in contract fraud, waste, abuse, and cronyism. The latest is Housing and Urban Development Secretary Alphonso Jackson, who is facing calls to resign after he admitted during a recent speech that he once canceled a government contract with a business because the CEO was critical of President Bush.

• Government contracts are now being given out on a partisan basis. During an April 28th speech, Secretary Jackson told of a conversation he had with a contractor with whom HUD had already decided to do business with. Apparently the contractor said “I have a problem with your president.” According to the Dallas Business Journal, Jackson thought to himself, “If you have a problem with the president, don’t tell the secretary." Jackson continued: “He didn’t get the contract. Why should I reward someone who doesn’t like the president?” Jackson’s conduct appears to be in violation of federal law. The Federal Acquisition Regulations (48 CFR 3.101-1) state that government business "shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none."
  
  
• Jackson’s tale of corruption is only the latest in a serious of scandals involving contracts. Corruption has reached the highest levels of the federal contracting process. Last September, David Safavian, who headed the federal procurement office in the Office of Management and Budget (OMB), became the first government official arrested in the investigation of disgraced lobbyist Jack Abramoff. A year earlier, a high-level Air Force procurement official, Darleen Druyun, went to prison for “trading favorable multibillion-dollar contracts for a top job with Boeing Co." In March, former Rep. Randy "Duke" Cunningham (R-CA) was sentenced to more than eight years in federal prison (the longest sentence ever given to a member of Congress) for accepting $2.4 million in bribes in exchange for lucrative defense contracts. And these instances are just where people were prosecuted — there are millions of dollars exchanged in questionable deals with companies like Halliburton.
  
  
• The corruption scandals come at a cost to the American people. The cost of corruption in our government costs the American people billions in wasted taxpayer dollars. But more than money, there is a safety cost. Often contracts awarded to cronies have ended up leading to shoddy work that has left holes in our national and homeland security and disrespected our armed forces. One example being in Iraq where Halliburton subsidiary KBR routinely served food rations to U.S. soldiers that were "outdated or expired as much as a year" (PDF) and provided filthy water for showering and washing clothes.