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Contractors use shell games to hide owners, cheat taxpayers
- jessaustin 7y agoDoD doesn't use the resources it receives wisely. Therefore, it should receive fewer resources. Unfortunately, what will happen instead is that DoD will only buy from giant firms on an "approved" list, which is exactly what those giant firms have paid their lobbyists to bring about.
- _jal 7y agoIt appears to be effectively impossible to even audit the Pentagon. When they tried, it cost $400M and less than 25% if the sub-audits received passing grades. Here's the friendly spin: https://www.defensenews.com/pentagon/2018/11/15/heres-what-the-pentagons-first-ever-audit-found/ https://www.defensenews.com/pentagon/2018/11/15/heres-what-t...
- ChrisLomont 7y ago"The Pentagon’s first-ever audit discovered major flaws in how it handles IT processes and challenges with its internal tracking databases, but did not discover any major cases of fraud or abuse." The $400M covers 2.7T of assets, and, as the article lists, is less than 1/30th of one percent of the budget audited. So it's not as inefficient an audit as listing a number without context implies.
- _jal 7y agoAgain, I chose that article because it is about the best possible lipstick that can be put on that pig. The audit was a farce. From another article, "In fiscal year 2015, for example, Congress appropriated $122 billion for the US Army. Yet DoD financial records for the Army’s 2015 budget included a whopping $6.5 trillion (yes, trillion) in plugs. Most of these plugs “lack[ed] supporting documentation, [...]” “Because of the plugs, there is no auditable way to track Pentagon funding and spending,” explains Asif Khan of the Government Accountability Office" https://www.thenation.com/article/pentagon-audit-budget-fraud/ https://www.thenation.com/article/pentagon-audit-budget-frau...
- ChrisLomont 7y agoI'd believe the former article, since the quote you posted from the latter is far beyond any yearly budget even mathematically possible. You quoted "Yet DoD financial records for the Army’s 2015 budget included a whopping $6.5 trillion (yes, trillion) in plugs." The entire US annual federal budget is on order of 4 trillion. So that number alone is fearmongering. Total DoD annual budget is around $700B. Army is a fraction of that. A significant amount of the money is simply paying the 2.8 million DoD employees, another decent portion is benefits to retirees, another is equipment maintenance and purchases , and none of these are places you can simply lose all or much of the money - employees notice when they don't get paychecks. So the 6.5 trillion in a single year plugs is either nonsense or seriously misreported in the latter article. Another way to see it - the article says Congress allocated $122B on 2015 for Army. At that rate Army would take 60+ years to have 6.5T in funny money floating around, and that only if it was not paying anyone for anything else, and that requires them to get 122B a year for the past 60 years, which they did not (60 years ago total DoD budget budget was ~50B, Army was a small fraction of that). Thus it's easy to see the article is some mix of lying, ignorance, miscounting, multiple counting, or other nonsense. It's mathematically impossible for Army to have misplaced or hidden or defrauded that much money. Care to explain their math while tying it down to actual budget numbers?
- phonon 7y agoI'm guessing those were positive and negative fudge factors. Most cancelled out, but the end result is the footnote level corrections are larger in absolute magnitude than the underlying budget, making it very difficult to parse (imagine if you had so much monkey patching nothing of the original code base remained).
- jessaustin 7y agoIf you will believe DoD, and we'll understand if you won't, you'll find the $6.5T figure on page "i" of this document. [0] (click through soon, because they take down these embarrassing reports all the time!) Of course the gigantic figure is nonsense, but that indicts DoD accounting rather than the journalists who've noticed its shabby nature. By producing meaningless numbers, the accountants have completely obscured what's really going on, in violation of Article I, Section 9 of the Constitution. [0] https://media.defense.gov/2016/Jul/26/2001714261/-1/-1/1/DODIG-2016-113.pdf https://media.defense.gov/2016/Jul/26/2001714261/-1/-1/1/DOD...
- rdtsc 7y ago> ... abusing programs intended for small businesses owned by “service-disabled veterans, women, minorities, or economically and socially disadvantaged individuals;” Yap, saw that while bidding on projects. So and so would find some relative or friend who matches one or more of those categories and then claim they were the owner on paper to get the contract. Some schemes were running for 20 some years. For instance case 30 running since 1999, awarded $52M. In case 18, they received over $200M. That's a lot of money wasted. But good thing they were caught, surely they will receive harsh sentences? > POGO determined is likely a recent case involving a Kansas City, Missouri-area construction company owner who was sentenced to 18 months in prison. No, not really. Just 1.5 years after stealing $13.7 million. There are more instances that are shady but harder to track, such as the government entity writing the specs to match exactly one company's product. Let's just say by a company owned by their college buddy. So on paper they may be lots of bids, but surprise, only this one company ends up matching up.
- lowercased 7y agohave been in the contractor side of this, and have had a couple of contracts written with me in mind, but... one had a twist. Used to do tech training. Had a syllabus up on our website - "onsite training with topics X, Y and Z". A school put out an RFQ on this, and essentially used our syllabus (basically word for word). We'd talked on the phone - they wanted us to come there and do the training (relatively niche at the time). Someone else submitted a bid using our syllabus and "won" - they were local, and so didn't have to include travel costs, and were 'cheaper'. They didn't have our material, but... were the "lowest bidder" so had to be chosen. I've also had a couple projects 'single sourced' to me via govt purchasing process, and it always raises some eyebrows, but I'm generally the only contractor who would be qualified (because... I wrote the system years ago, it's very niche, not much budget, old tech, and no political will to pay to move it to something modern).
- bluGill 7y agoThis is why the low and high bid are automatically thrown out, and then the remaining bidders are investigated for ability to actually deliver. For real world contracts change orders are where the real money is - that is places where your specification is wrong for some reason not known in advance and you will need to pay for the fix. The low bidders are experts in figuring out how meet the letter of the specs while building something that doesn't make sense (By spec the toilet drains pipes won't connect to the toilet, we can fix that for only $$$). A more reasonable contractor will see that and make the obvious fixes while for no extra charge, but not the low bidder - this makes the low bidder more expensive.
- vsareto 7y agoI wonder how many of these schemes will be used when CMMC certification is required by DOD.
- intpx 7y agoThe govt can't even adequately audit the classified side of the house, why would they do any better with the unclass?
- dsfyu404ed 7y agoBecause the public can see their crappy audits and complain enough that some congressman sees an opportunity to clean that crap up so he can put "saved billions of dollars by rooting out waste" in his re-election TV ad and peddle to a special interest group (the people who want to minimize government waste). At least that's how the theory goes. You need people to actually care instead of just shrugging and saying "well that's government, nothing you can do about it" like they do for my state government (though I have lived in other states where the general populace did not seem to take government waste for granted like that).
- joncrane 7y agoJust want to chime in and say the vast majority of people working on government contracts fall into two categories: 1. Hard working folks trying to do the right thing (approx 20-50% of the people) 2. People who are coasting and nominally meet whatever requirement for the position (some combination of experience and certification usually) who can barely get the job done, but they are friendly and don't cause trouble (by getting in the way of the people who actually DO get something done) so no one bothers them and they get to collect a paycheck. (50-80%) Many from category one turn into category 2 as time goes by, because #2 is actually the optimal strategy. Most companies also tolerate #2 because the client isn't complaining and they are making their cut on the person's hourly rate. So everyone's more or less happy and life goes on. Also note that the distribution of people doesn't significantly vary based on whether the employer is SDVOSB/WOSB/whatever. However, the largest companies (like Accenture) do tend to have a higher proportion of #2s, but also a higher proportion of extremely charismatic "relationship managers" who flatter, gladhand, and overall stroke the client representative's egos and fantasies to cover up for it. The government contracting business has plenty of well-meaning, hard working professionals in it. But there's also a lot of not so much waste, fraud, and abuse, but "skating by" going on as well. The main reason is due to the obstreperous rules, bureaucracy, stagnation, and old tech, the jobs pay above market AND tend to provide excellent work/life balance. Source: I've been a gov't employee, then worked in contracting, went to private sector, now back in contracting. I'd like to think I'm in category 1, and I have many, many days when I am extremely jealous of my colleagues in category 2, who make just as much money as I do but do about 20% of the work. One last edit: I find it funny that one SDVOSB owner was considered "Service Disabled" because he tore his ACL playing football for Navy. But I'm a little bit in the "don't hate the player, hate the game" camp on that one. I'd start a company, too, in that position. Doesn't mean I'm doing shitty work, just means it's easier to award me the work. They are two different things.
- rjkennedy98 7y agoI did government contracting work straight out of college. I don't know anyone competent who stayed working with the government. It is almost impossible to underestimate the amount of waste, bureaucracy, and BS you have to deal with on a day to day basis. Anyone competent with an ounce of integrity can't stand it. Literally in the private sector I do in a week what would be 3 months work in government.
- papeda 7y agoIt bugs me that so much more public and media ire is directed toward tech companies than defense contractors when the latter industry is of comparable size, way more opaque, and dominated by very very old companies [1] with excellent lobbying. I understand that people have far less personal interaction with defense contractors. But hey, it’s your tax dollars. [1] https://en.m.wikipedia.org/wiki/List_of_defense_contractors https://en.m.wikipedia.org/wiki/List_of_defense_contractors
- gowld 7y agoPresident Eisenhower raised the issue, and after 50 years we've surrendered. Big tech is a right we haven't fully lost yet. Also, money is just money.
- jessaustin 7y agoThe only reason Eisenhower was allowed to say the little he did say was that he had already surrendered. He stood by while Korean War funding metastasized into "the military-industrial complex". If anyone could have stopped it, it was a reelected President and five-star general war hero. Ike DGAF. BTW he was also the moron who let CIA off the leash, to the world's continuing sorrow. Just this week another chicken has come home to roost.
- catalogia 7y agoI don't think animosity is a zero sum game. Tech companies being hated doesn't mean there is less hate to be allocated to defense contractors, nor would defense contractors receiving more hate take the heat off the tech industry.
- sombremesa 7y agoThere's a finite number of journalists and a finite amount of energy that can be spent on writing exposés and critical editorials.
- someguydave 7y ago
- RALaBarge 7y agoIn other news today, water is wet
- munk-a 7y agoIt's hilarious that this issue hurting the US is entirely and wholly made by the US. The various ridiculous ways you can mask corporate ownership in the US all come straight out of the mass of company control, ownership and revenue disbursement that have evolved over time - it also hits common folk too, but it's amusing that the DoD gets hit by it so hard.
- morninglight 7y agoSpeaking of taxes, has anyone been able to download the instructions for the Federal 1040 form? the website is: https://www.irs.gov/forms-instructions https://www.irs.gov/forms-instructions but the downloadable "Instructions for Form 1040" pdf is for tax year 2018. Can anyone find the download for tax year 2019?
- junar 7y agoThe final version is not released (and the filing window doesn't open until Jan 27). There is a draft version of the 1040 instructions, but beware that things may change, if, for example, new legislation is passed. https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf
- morninglight 7y agoThanks so much for the information! My 2018 copy of the 1040ES for estimated tax payments states. "You don’t have to make the payment due January 15, 2020, if you file your 2019 tax return by January 31, 2020, and pay the entire balance due with your return." So, if the window doesn't open until Jan 27, it looks like I'll be making the Jan 15 estimated payment. I'm surprised that window doesn't open until Jan 31.
- morninglight 7y agoSpeaking of taxes, has anyone been able to download the instructions for the Federal 1040 form? The website is: https://www.irs.gov/forms-instructions https://www.irs.gov/forms-instructions But the downloadable "Instructions for Form 1040" pdf is still for tax year 2018. Can anyone find the download for tax year 2019?
- PeterisP 7y agoThe whole problem is caused by ridiculous policies such as explicit advantages for "small businesses owned by “service-disabled veterans, women, minorities, or economically and socially disadvantaged individuals". It's obvious why they're passed (and would be nearly impossible to repeal), because it's a useful PR trick that sounds good and attractive to the voters. However, that's bullshit - it does not matter by whom the business is 'owned' (because actual control and benefit does not map cleanly to legal ownership), if you want to subsidize a particular group of people, well, just give them an appropriate amount cash directly, or give advantages to the particular “service-disabled veterans, women, minorities, or economically and socially disadvantaged individuals" themselves, but you definitely should have the businesses still compete based on proper merits instead of legalizing advantages for ticking arbitrary boxes, which only invites abuse such as described in this article.
- exabrial 7y agoThis is why I oppose nearly all forms of tax: we need to dry up the pool of "free money". I truly feel everyone has the capacity to be enormously generous. However, when we're forcefully removing 33%+ of their labor, it's hard for someone to be generous when they're literally being robbed under threat of physical violence to their body.
- yesenadam 7y agoSo..the whole idea of governments disgusts you? (Not a trick question! I Was An Anarchist for a lil while, as a teen, until I went to an anarchist conference) Anytime anyone in a state with a government obeys any law, you could talk like that. Obey the road speed limit? Omg, your speed is literally being crippled under threat of physical violence to your body.
- Psyladine 7y ago>I Was An Anarchist for a lil while, as a teen, until I went to an anarchist conference Disillusioned with disillusionment?
- yesenadam 7y agoDisillusionment? It seemed everyone there was very naïve and optimistic. Grungy teens that had read a few philosophy/politics books. There was one very impressive guy there, a christian anarchist pacifist – probably the only christian there. I googled "christian anarchist pacifist" just now and found this very sensible article, which answers your question, and explains better than I could what we were thinking, and what I came to think. https://geezmagazine.org/magazine/article/a-dash-of-cold-water-for-christian-anarchism https://geezmagazine.org/magazine/article/a-dash-of-cold-wat...