The military procurement horror tales of the early 1980s —
immortalized by the $435 claw hammer, the $640 toilet seat and $7,600
coffee makers — have returned, say investigators, thanks to Vice
President Al Gore’s “Reinventing Government” campaign.
When President Ronald Reagan first heard of the outrageous
overcharging on ABC’s 20/20, which exposed the labyrinthine military
purchasing bureaucracy that allowed $1,118.26 to be paid for a spare
plastic cap for a navigator’s stool on a B-52 bomber (worth about two
cents), he demanded answers from Secretary of Defense Casper Weinberger.
Weinberger promised Reagan he would determine the malefactors and
punish them, but instead he appeared on Capitol Hill and defended the
shocking prices. Outraged, Washington Post cartoonist Herblock lampooned
Weinberger by drawing a toilet seat around his neck. The seat remained
around his neck as long as Weinberger remained in office.
Shortly after Gore took office as vice president in 1993, he began
his campaign to “reinvent” government, frequently appearing on the David
Letterman and other television talk shows, smashing ash trays to show
how ludicrous government regulations could be. Government rules
specified how many shards were allowable when the ashtray disintegrated.
Fed up with bureaucrats and overly burdensome red tape, the public
and the media basically gave Gore a wide berth and accepted what he said
at face value. However, some were worried over Gore’s proposal to pare
back auditors and basically pay bills on good faith.
The Pentagon, which faced the bulk of the criticism over shoddy
buying practices and poor fiscal controls, was therefore amenable to
embracing Gore’s cuts of oversight, dubbing its new program “Acquisition
The Department of Defense inaugurated a system (sometimes called “Pay
and Chase”), in which every bill that came in was paid, no matter how
apparently inflated or otherwise suspicious, and later chased down if
necessary in an attempt to retrieve the overpayment. The Defense
Accounting Finance Service writes $22 billion in checks every month.
Air Force fiscal expert Ernest Fitzgerald and veteran Capitol Hill
investigator Charles Murphy, both working for Sen. Charles Grassley,
R-Iowa, on a study of Air Force billing practices, recently examined 200
items selected for them by the Air Force. They discovered that not a
single one had been properly invoiced. This, they say, results in
- Take the case of Mark Krenik, a Pentagon fiscal oversight
officer, who created a phony company and then billed himself $504,000.
He had to repay the money, but was not sentenced to prison. Probation
only, and a $495 fine. He told the federal judge that he did it because
everyone else in his section was doing to the same, but he was not
required to name names.
- Sgt. Robbie Miller, who was stationed at the Wright-Patterson Air
Force Base in Dayton, Ohio, was convicted and sent to prison for
stealing $1 million in a deal similar to Krenik’s. Miller would not
have been caught had he not been involved in two adulterous affairs with
female co-workers in the middle of his swindle. The second woman didn’t
entirely trust Miller and compiled a detailed file, which she turned
over to criminal investigators. Agents say they swooped down on Miller
as he was hauling garbage bags of evidence out of the office to burn it.
Fitzgerald says that even in the “bad old days of the early
1980s,” the Air Force would prosecute someone who engaged in a
conspiracy to defraud vendors, made false entries in financial ledgers
or turned in fake accounts. “But now the brass doesn’t think it’s worth
the trouble,” Fitzgerald said. Contractors were billing $300 a night
hotel rooms, private jet flights, meals at five-star restaurants and bar
bills to the government.
Air Force non-commissioned officers like Miller, who handle giant
accounts at Dayton, call any vendor account that is less than $100,000
“budget dust” and say it’s not worth the time or effort trying to
recover. Fitzgerald and Murphy also uncovered many instances of
Pentagon checks being sent to deceased persons.
According to the Project On Government Oversight, the Defense
Criminal Investigative Agency used to get hundreds of criminal case
referrals each year. Now it only gets a handful.
“Drastically cutting oversight personnel blinds the government in its
oversight of tens of billions of dollars of contracts each year,” said
Danielle Brian, executive director of POGO.
Another phrase used to describe fraud is “bucket billing.” This is
for really big stuff. It means, according to Fitzgerald, that you have
the money, but don’t have any particular program to which to allocate
it, so you stick it willy-nilly in places where it’s hard for overworked
auditors to discover. “Straight Pay” means you pay a contractor for
doing no work.
“Each time you pull one of these shenanigans, it’s a lot of work.
Your boss and his dog have to change their books,” Fitzgerald said.
“Fast Track” — the Pentagon’s favorite phrase for what amounts to
lax fiscal controls — is part and parcel of the streamlined government
Gore has promoted, but it generally means that no cost controls are in
effect, say investigators. In fact, a Department of Defense inspector
general’s report issued in Jan. 1999 stated that there was between two
and three trillion dollars in “unsupported accounting adjustments” on
the books. That doesn’t mean all that money has been stolen or wasted
— it just means nobody knows for sure where it is.
At a time when both George W. Bush and Al Gore are talking about
beefing up the military, and bemoaning reports that some units are
incapable of being deployed because of a chronic lack of spare parts, it
now appears that some of those spare parts have been drastically
The Pentagon is paying 618 percent more for its spare parts than it
should, according to the inspector general’s report, titled “Commercial
Spare Parts Purchased on a Corporate Contract.” It cited a $24.72 spare
part that the government bought from Boeing for $403.39 — a markup of
1,532 percent. Another contractor charged $76 for 57-cent screws.
“The problem is that by going so far in reducing oversight, ‘the
reformers’ have thrown the baby out with the bathwater, resulting in
cases of 618 percent overpricing again,” Brian said.
Most responsible for the return to gold-plated military toilet seats,
she said, is “Al Gore and his ‘Reinventing Government’ program.”