Skip to content
Ralph Nader > In the Public Interest > Bloated Government Contracts

Ever get the impression that just about every problem in our country has been studied to exhaustion. If you do, why not ask about what problem is rarely, if ever, studied?

Let’s select a problem that involves the spending of over $1100 per year per American adult. I’m referring to over $210 billion in taxpayer-funded federal contracts with private business and Universities every year. You know the kind. The leasing contracts that the Departments of Interior and Agriculture make with oil, gas, mining, timber, grazing and other agribusiness companies to exploit the resources on your federal lands onshore and offshore.

Or the technology transfer (the polite term for giveaways) contracts where the National Institutes of Health gift your taxpayer-financed medical research and development (such as cancer treatment drugs) to the pharmaceutical companies by way of ‘charge what they want monopoly patents.

Or the bloated military contracts between the Pentagon and the weapons manufacturers that have been regularly revised to suit the companies (called the “golden handshake”). Or the health insurance contracts that government agencies sign for their retirees.

Now from time to time, there are “exposes” of these boondoggles by Congress, the General Accounting Office, or the media. Most of the time, exposure is as effective as water off a duck’s back. Nothing happens, except for a rare prosecution now and them. The culprits duck, wait out the temporary editorial outrage and then it’s back to business as usual. There is a long historical record behind the phrase “beltway bandits” which describes many of these consulting firms that feed from the public trough.

Before President Bush left the White House, the Office of Management and Budget (OMB) issued a report documenting the fraud on taxpayers from the misbehavior of private contractors. Just last week, Clinton’s OMB said they were going to do something about this massive fleecing. Don’t hold your breath.

The problems with firms who contract with the government have deep roots. First, the government lawyers who negotiate and draft these agreements just follow orders. That means they sniff the political-power winds and become specialized clerks. As a result, these agreements are very often one-sided against the taxpayers and in favor of the big drug, defense, energy and timber giants.

For example, repeated public exposure and demands by some members of Congress for many years did not lead to any changes in the notorious timber leasing contracts on federal lands. Since the Fifties, two companies were able to olear out giant Sitka spruces and other trees 1n the ancient forests of the Tongass National Forest for the price of an Alaskan cheeseburger per 300 year old tree:’ Imagine a wondrous giant of nature, belonging to the citizenry, sold by your government for about $5 and exported as logs to Japan under your subsidy.

Third world countries which negotiate natural resource contracts with American companies demand a share of the revenues or profits far in excess of the pittances charged by our government. In the community of nations, Uncle Sam is seen in this regard as the #1 sucker and patsy.

So the situation is not just overt illegality that often is called waste, fraud and abuse. The harm done to these taxpayer assets are generically based in the way the contracts are drafted. What would be theft, for instance, is made legal. A company mining gold on Uncle Sam’s land in Nevada doesn’t pay for it. Because the law says the gold is free for the company to mine and sell.

No law school conducts any systematic research on government contracts. The scholarly literature generally onover $200 billion of these diverse contracts annual is almost nil. There is no central library or depositary for copies of these contracts.

Frequent seminars are conducted by firms to instruct companies how to get government contracts to their advantage. But there is no activity enlisting professions, citizen groups or students in learning just how one-sided these agreements are and how to improve them.

Of course, many businesses raise the hue and cry about how hard is to do business with the government and how much unnecessary red tape is involved. The government does often take a long time to pay. But then, as in the case of mineral royalties, the government gets paid too late and too little.

Although it sounds dull, government contracts need to have public review and appeal procedures. Taxpayers need to have legal standing to challenge these agreements. They need to be studied by impartial parties.

It is not just a matter of money. It is also a matter of health, safety, conservation, environment and consumer protection right down to the gouging $10,000 paid by a patient for drug treatments to a company that is selling her the drugs her tax dollars paid to get to market.