Report: Wasteful Government Spending at All-Time High
By Justin Rood
ABC News - Wednesday 27 June 2007

The U.S. government has committed to spend a record-high $1.1 trillion with companies holding government contracts "plagued by waste, fraud, abuse or mismanagement," according to a new report by the House Oversight and Government Reform Committee.

The report blames the rise in bad spending on a sharp increase in noncompetitive contracting and a general increase in the use of private companies to perform government functions. More than $200 billion in taxpayer money was spent on projects for which only one or a handful of companies submitted bids, the committee found.

That figure has more than tripled since 2000, according to the report, and now comprises more than half of all government spending outside of entitlement programs like Medicare, Medicaid and Social Security.
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Costs Skyrocket As DHS Runs Up No-Bid Contracts
By Robert O'Harrow Jr.
The Washington Post - Thursday 28 June 2007
$2 million security project balloons to $124 million.

The project started in 2003 with a $2 million contract to help the new Department of Homeland Security quickly get an intelligence operation up and running.

Over the next year, the cost of the no-bid arrangement with consultant Booz Allen Hamilton soared by millions of dollars per month, as the firm provided analysts, administrators and other contract employees to the department's Information Analysis and Infrastructure Protection offices.

By December 2004, payments to Booz Allen had exceeded $30 million - 15 times the contract's original value. When department lawyers examined the deal, they found it was "grossly beyond the scope" of the original contract, and they said the arrangement violated government procurement rules. The lawyers advised the department to immediately stop making payments through the contract and allow other companies to compete for the work.

But the competition did not take place for more than a year. During that time, the payments to Booz Allen more than doubled again under a second no-bid arrangement, to $73 million, according to internal documents, e-mail and interviews.

The arrangements with the McLean consulting firm, one of the nation's largest government contractors, illustrate a transformation in the way the federal government often gets its work done: by relying on private, sometimes costly consultants to fill staffing shortfalls in federal agencies.

A review of memos, e-mail and other contracting documents obtained by The Washington Post show that in a rush to meet congressional mandates to establish the information analysis and infrastructure protection offices, agency officials routinely waived rules designed to protect taxpayer money. As the project progressed, the department became so dependent on Booz Allen that it lost the flexibility for a time to seek out other contractors or hire federal employees who might do the job for less.

The average annual cost of a contract employee is $250,000, almost twice that of a federal employee, according to an estimate recently cited by the Senate Select Committee on Intelligence.