Sunday, October 23, 2005

 

Ripping off The Government; Ripping off The Taxpayers

A couple of articles today about overcharging the government on defense and Homeland Security contracts. I guess it shouldn’t come as a surprise, once again, that this goes on. The thing is it’s so blatant.

I suppose it’s just free-market economics doing it’s free-market thing with a little help from it’s friends in the federal government. If I was a cynic, I'd say there was something not quite right about this.

You have to admit, $20 for a plastic ice-cube tray is amazing.

Pentagon purchases: Millions in markups


By Lauren Markoe and Seth Borenstein
Knight Ridder Newspapers
WASHINGTON — The Pentagon paid $20 each for plastic ice-cube trays that once cost 85 cents. A supplier was paid more than $81 each for coffee makers that for years were purchased from the manufacturer for $29.
That's because instead of receiving competitive bids or buying directly from manufacturers as it once did, the Pentagon now uses middlemen who set prices. It's the equivalent of shopping for weekly groceries at a convenience store.
And the practice is costing taxpayers 20 percent more than the old system, an investigation found.
The higher prices are the result of a Defense Department purchasing program called prime vendor, which favors a handful of firms. The program, run by the Defense Logistics Agency (DLA), is based on a military procurement strategy to speed delivery of supplies such as bananas and bolts to troops in the field.
Military bases still have the option of seeking competitive bids, but the Pentagon encourages them to use the prime-vendor system. At the DLA's main purchasing center in Philadelphia, prime-vendor sales increased from $2.3 billion in 2002 to $7.4 billion in the fiscal year that ended Sept. 30.

washingtonpost.com

Contractor Accused Of Overbilling U.S.
Technology Company Hired After 9/11 Charged Too Much for Labor, Audit Says
By Robert O'Harrow Jr. and Scott Higham
Washington Post Staff Writers
Sunday, October 23, 2005; A01

Federal auditors say the prime contractor on a $1 billion technology contract to improve the nation's transportation security system overbilled taxpayers for as much as 171,000 hours' worth of labor and overtime by charging up to $131 an hour for employees who were paid less than half that amount.
Three years ago, the Transportation Security Administration hired Unisys Corp. to create a state-of-the-art computer network linking thousands of federal employees at hundreds of airports to the TSA's high-tech security centers.
The project is costing more than double the anticipated amount per month, and the network is far from complete -- nearly half of the nation's airports have yet to be upgraded. Government officials said last week that the initial $1 billion contract ceiling was only a starting point for the project, which they recently said could end up costing $3 billion.
Procurement specialists said the Unisys contract illustrates the pitfalls of relying on corporations to manage ambitious homeland security contracts with little oversight from a thinly stretched federal procurement force. Since the Sept. 11, 2001, terrorist attacks, several projects have experienced similar problems with cost and performance, including efforts to hire federal airline passenger screeners and to place bomb detectors and radiation monitors at airports and seaports.

In two reviews conducted last year, federal auditors found that Unisys charged higher per-hour labor rates than were justified for lower-level employees, according to copies of the audits obtained by The Washington Post. For example, Unisys billed taxpayers $131.12 an hour for a technical writer who should have made no more than $46.43 an hour. The extra money was generally not passed along to the employees but was kept by the company.

Last spring, the auditors referred findings of "suspected irregularity" to the Office of the Inspector General at the Homeland Security Department, which includes the TSA, according to copies of the audits and referral.
washingtonpost.com

Contractor Accused Of Overbilling U.S.
Technology Company Hired After 9/11 Charged Too Much for Labor, Audit Says
By Robert O'Harrow Jr. and Scott Higham
Washington Post Staff Writers
Sunday, October 23, 2005; A01

Federal auditors say the prime contractor on a $1 billion technology contract to improve the nation's transportation security system overbilled taxpayers for as much as 171,000 hours' worth of labor and overtime by charging up to $131 an hour for employees who were paid less than half that amount.

Three years ago, the Transportation Security Administration hired Unisys Corp. to create a state-of-the-art computer network linking thousands of federal employees at hundreds of airports to the TSA's high-tech security centers.

The project is costing more than double the anticipated amount per month, and the network is far from complete -- nearly half of the nation's airports have yet to be upgraded. Government officials said last week that the initial $1 billion contract ceiling was only a starting point for the project, which they recently said could end up costing $3 billion.

Procurement specialists said the Unisys contract illustrates the pitfalls of relying on corporations to manage ambitious homeland security contracts with little oversight from a thinly stretched federal procurement force. Since the Sept. 11, 2001, terrorist attacks, several projects have experienced similar problems with cost and performance, including efforts to hire federal airline passenger screeners and to place bomb detectors and radiation monitors at airports and seaports.

In two reviews conducted last year, federal auditors found that Unisys charged higher per-hour labor rates than were justified for lower-level employees, according to copies of the audits obtained by The Washington Post. For example, Unisys billed taxpayers $131.12 an hour for a technical writer who should have made no more than $46.43 an hour. The extra money was generally not passed along to the employees but was kept by the company.

Last spring, the auditors referred findings of "suspected irregularity" to the Office of the Inspector General at the Homeland Security Department, which includes the TSA, according to copies of the audits and referral.



Pentagon purchases: Millions in markups

By Lauren Markoe and Seth Borenstein
Knight Ridder Newspapers
WASHINGTON — The Pentagon paid $20 each for plastic ice-cube trays that once cost 85 cents. A supplier was paid more than $81 each for coffee makers that for years were purchased from the manufacturer for $29.
That's because instead of receiving competitive bids or buying directly from manufacturers as it once did, the Pentagon now uses middlemen who set prices. It's the equivalent of shopping for weekly groceries at a convenience store.
And the practice is costing taxpayers 20 percent more than the old system, an investigation found.
The higher prices are the result of a Defense Department purchasing program called prime vendor, which favors a handful of firms. The program, run by the Defense Logistics Agency (DLA), is based on a military procurement strategy to speed delivery of supplies such as bananas and bolts to troops in the field.
Military bases still have the option of seeking competitive bids, but the Pentagon encourages them to use the prime-vendor system. At the DLA's main purchasing center in Philadelphia, prime-vendor sales increased from $2.3 billion in 2002 to $7.4 billion in the fiscal year that ended Sept. 30.

washingtonpost.com

Contractor Accused Of Overbilling U.S.
Technology Company Hired After 9/11 Charged Too Much for Labor, Audit Says
By Robert O'Harrow Jr. and Scott Higham
Washington Post Staff Writers
Sunday, October 23, 2005; A01

Federal auditors say the prime contractor on a $1 billion technology contract to improve the nation's transportation security system overbilled taxpayers for as much as 171,000 hours' worth of labor and overtime by charging up to $131 an hour for employees who were paid less than half that amount.

Three years ago, the Transportation Security Administration hired Unisys Corp. to create a state-of-the-art computer network linking thousands of federal employees at hundreds of airports to the TSA's high-tech security centers.

The project is costing more than double the anticipated amount per month, and the network is far from complete -- nearly half of the nation's airports have yet to be upgraded. Government officials said last week that the initial $1 billion contract ceiling was only a starting point for the project, which they recently said could end up costing $3 billion.

Procurement specialists said the Unisys contract illustrates the pitfalls of relying on corporations to manage ambitious homeland security contracts with little oversight from a thinly stretched federal procurement force. Since the Sept. 11, 2001, terrorist attacks, several projects have experienced similar problems with cost and performance, including efforts to hire federal airline passenger screeners and to place bomb detectors and radiation monitors at airports and seaports.

In two reviews conducted last year, federal auditors found that Unisys charged higher per-hour labor rates than were justified for lower-level employees, according to copies of the audits obtained by The Washington Post. For example, Unisys billed taxpayers $131.12 an hour for a technical writer who should have made no more than $46.43 an hour. The extra money was generally not passed along to the employees but was kept by the company.

Comments:
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