Buried among last week’s headlines—that included a nation embarrassing spat between the President and the Speaker of the House over what day our President could address a joint session of Congress and The People—was this gem found among other reports on Thursday Page 3 of the Wall Street Journal (Nathan Hodge, 9/1/11):
The Commission on Wartime Contracting in Iraq and Afghanistan, established by Congress in 2008, unveiled a final report Wednesday that represents the most comprehensive assessment to date of how the U.S. government has managed the more than $206 billion it is projected to spend on contracting in both wars through the end of fiscal 2011.
The findings, first reported by the Wall Street Journal in July, point to what the panel describes as a pattern of waste, fraud and abuse that has cost taxpayers dearly and at times undermined U.S. foreign-policy objectives.
The report includes a copy of an extortion letter sent by Afghan insurgents to a contractor working on a U.S. government-funded construction project in Afghanistan. It also details many instances of projects the panel says were poorly conceived, badly executed and, in the long-term, impossible to sustain without more U.S. or foreign funds.
The commission’s findings were based on hearings in Washington, staff research and a series of fact-finding trips to both Iraq and Afghanistan.
Michael Thibault, one of the bipartisan panel’s co-chairs, said the commission found wasteful spending amounted to between 10% and 20% of total contract and grant spending. Fraud, he added, has ranged between 5% and 9% of contract totals.
Let’s extract a few of the more choice words from this excerpt:
Waste. Fraud. Abuse. Poorly conceived. Badly executed. Cost the taxpayers dearly.
I haven’t heard one person mention this in conversation. Other than in perfunctory reports, I’ve heard no outrage or rebellion. According to the Final Report to Congress, Transforming Wartime Contracting (August 2011) Executive Summary Page 5: “The Commission’s conservative estimate of waste and fraud ranges from $31 billion to $60 billion based on contract spending from FY 2002 projected through the end of FY 2011.” That’s not less than $30 billion—and possibly twice that much—of our money spent on stuff that it didn’t have to be spent on, for the same outcome. If you paid tax last year, some of that was your money. Willing to let that sail on? I’m not.
I still have wrenching memories from the 1980s of the government audit that revealed we were paying $500 for toilet seats. It was shocking, and never meant to have a command performance. I also know that profiteering in our nation is illegal, but perhaps we don’t have the resources to investigate and prosecute those kinds of abuses any longer. Legal fees are expensive—no sense throwing bad money after bad, right?
I also know that much of the money we use to pay these invoices is borrowed. Not only are we getting fleeced on value, we are paying interest on it to boot, and interest on the interest, because I can’t see a way the accumulated balance gets paid down in our lifetime. If a CEO allows his company to send our government a bill that smacks of fraud or abuse, I really do wonder what he is thinking when he sings the national anthem and stares at the flag in his hometown stadium. If the law and his conscience don’t get him, is he still a patriot as long as he sings the Star Spangled Banner in or out of key? He is not.
For a few thoughtful milliseconds, I want you to pretend you are responsible for 0.01% of that amount in your job ($20.6 million) and it is reported in your hometown newspaper that the public company you work for wasted that money on nothing whatsoever. Your boss calls you in and the conversation goes something like this:
Boss: It’s good to see you today.
You: Thank you, boss. Always good to be called into your office.
Boss: Hey, I need to ask you something. Seems the local newspaper—that printed thing in the machines by the gas station that take quarters—says we lit up $26 million of our shareholders’ money with a blazing torch and got nothing for it. The CEO can’t believe that’s true, and traced it back to our department. So a quick question—did it happen?
You: Well, to be honest, yes, it did, boss.
Boss: I appreciate your candor. Can you tell me why?
You: Not really. I guess I screwed up. I’ll try to do better. None of us are perfect, right?
Boss: Right, none of us are perfect. Some of us don’t watch money closely enough. Some of us make poor hiring decisions. It happens.
You: Am I in trouble, boss?
Boss: Trouble, for absent-mindedly destroying $26 million of Other People’s Money? I shouldn’t think so. You didn’t take any of it, did you?
You: Not a chance, boss. You know I would never do that.
Boss: Know is a pretty strong summation, but I am confident enough it can’t be proven. Hey, another question. When your counterpart at the company where we burned this money sent you the contract, is it possible he committed any possible act of deception?
You: Deception, gee, that’s a hard one. You know, I don’t really know. The thing about fraud is, if it’s committed well, you don’t even know it occurred. So how would I know?
Boss: Exactly, if you are duped, the other fellow is in the wrong. You had no reason not to trust him, so how could it be your fault?
You: So I still have a job, boss?
Boss: As do I. Our investigation is complete. I will report as much to the CEO.
You: Gosh, I felt really bad when I came in here. You are such a supportive boss. I feel so much better,
Boss: As do I, we are in this together. Do try to be more careful with Other People’s Money where you can. And always remember, candor is your friend.
You: Thank you, boss. You’re the best!
For an abundance of clarity, that wouldn’t fly in any legitimate enterprise.
From time to time, you may hear the expression OPM, as in Other People’s Money, as if somehow that is different from your money. If you treat Other People’s Money differently from how you would treat your own money, there is something wrong with you for allowing yourself the permission to do that, and there is something wrong with them for empowering you to do it.
Whenever you are in control of a business budget, you are being trusted to manage OPM. There is only one way I know how to do that: treat it as if it is your own. Nothing else can be justified, nothing else can be defended. Ask yourself on every allocation that can be tracked back to you: if this were my money, would I say yes? If the answer is honestly yes, you are acting in the best interests of those to whom the money belongs. If the answer is no, then ask yourself why you are saying yes, before someone else does. Your boss is likely to be a lot less understanding than the one depicted above, unless of course he is part of the problem— in which case, get out quickly! Life is much too short to be part of anything you cannot proudly explain.