Along with many of you, I find myself cheering Elon Musk and his outstanding work with DOGE. Having lived in DC for 5 years, I was aware of USAID. I saw the building on my many walks through the city, but like the rest of us, I am amazed at the extent of the grift taking place inside. In this piece, I discuss a perhaps less obvious taxpayer abuse, but one that pervades all federal departments.
The Prompt Payment Act (PPA, 5 CFR Part 1315), first passed in 1982 during the Reagan administration, requires United States government agencies to pay for goods and services in a timely fashion. Not doing so forces contractors and manufacturers to provide Uncle Sam with what are essentially interest-free loans by stringing them along. “Clean claims” for payment (that is, invoices that are properly presented and undisputed) must be paid within 45 days of initial receipt. Failure to do so results in penalty payments to the vendor. Now, there are exceptions, as always, but the Act covers the vast majority of goods and services the federal government procures.
Sounds reasonable, right? How could anyone argue that businesses selling goods to the Fed or working for the Fed are not entitled to get paid without undue delay? Well, the bugaboo is in that terminology: “clean claim.” This is where things can get a bit gray.
Image by Freepik.
I speak of this reflecting on my 40-year career as a research scientist in a federal laboratory, where I routinely obtained goods and services as part of my official duties. I have written previously about how the Federal Acquisition Regulations would become sand in the crankcase in this regard.
By the time I retired, the PPA provisions we dealt with were not merely obstructive but contrived to make government agencies into dupes. Understand that I am discussing not the small purchases (fasteners, fittings, and common hardware from Home Depot) that we bought on a bankcard but the major purchase of expensive and sophisticated instrumentation.
When I joined the staff in 1981, the process was reasonably smooth. The administrators charged with PPA implementation (whom I affectionately called “glorified clerks”) generally helped ensure that goods and services were, in fact, received, were satisfactory, and were properly paid for.
However, over time, their mission devolved from a partnership with the scientific staff to a much more adversarial relationship. Ultimately, the administrative folks saw their role, first and foremost, as avoiding questions (or heaven forfend, an audit) by the Department level counsel or worse, the inspector general. Elon Musk expressed this when he said that the major goal of such middle managers is “complaint minimization.”
Let’s start with a hypothetical example of the PPA’s proper function (i.e., the good old days). A scientific instrument costing, say, $100K is ordered and delivered to our facility. So far, so good.
The manufacturer’s installation technician would be scheduled, and he/she would have to arrange for travel to our lab. All this takes time. The tech might not arrive for 3 weeks or more, and it would often take a week to complete set-up and installation. If the device did not perform as expected, a critical part or circuit board might require replacement, taking another week or so. That’s fine, too. S@$t happens, and I always had plenty of work to do anyway.
Then, after six or eight weeks, I’d have a functional instrument up and running and ready for work. Hooray! I would inform those clerks to pay the invoice, and the warranty period for the device would begin. Withholding payment and warranty until the instrument operated properly was an incentive for all parties; I needed a functional instrument, and the manufacturer wanted to get paid! Perfectly sane process!
As you might imagine, however, nothing remains sane in the federal government. Beginning in the mid-1990s, upon taking delivery of a major, costly research device, the clerks would subject staff to a daily badgering:
“You have to authorize payment of the invoice to comply with the PPA.”
“But it won’t be installed for another month.”
“You took delivery, didn’t you?”
“Yeah, but so what? It is still in its crates. They need to install it and test it.”
“You got it, you need to pay for it, or we violate the PPA.”
Blah, blah, blah…
At that point, all that mattered to the glorified clerks was avoiding inquiries from those above them. It simply did not matter that the equipment was not yet functional. It did not matter that paying for the equipment before installation and testing robbed us (and you, the taxpayer) of any leverage to get the equipment up and running! It simply did not matter that the warranty period on the equipment would begin (sometimes months) before the damn thing was even working! The clerks did not want to explain this to their bosses, even though it was their job to do so.
As a concrete example, back in 2006, I was working on rocket kerosene formulated for multiple-use rocket engines pioneered by SpaceX. To enable multiple use of engines, low sulfur versions of the fuel had to be made and the properties characterized.
That’s where I came in: property and composition measurement. Without getting too detailed, I bought an expensive instrument to help with this endeavor. It was a sophisticated and finicky device that was added to an existing instrument.
In concept, it was a good design, and there were many already in labs nationwide. And, it actually worked on occasion, to the (marginal) benefit of the space program. But in all honesty, it was a disappointment that never lived up to the specifications.
We required many service calls during the warranty period, the technician arriving with a Pelican case filled with spare parts. I wanted nothing more than to tell the manufacturer to get this thing out of my lab!
So, why didn’t I do that? Because my agency had already paid the invoice the day the thing arrived in its crate! The clerks knew I would balk about authorizing payment until (if-and-when) I was satisfied, and if that meant until hell froze over, so be it.
So, they hoodwinked a secretary into granting authorization, deceptively claiming that my reluctance would result in a penalty payment being assessed. In fairness, she genuinely thought she was doing the right thing. But legally, that authorization meant the U.S. government was satisfied with the device.
This is not an isolated case; it happens all the time. So, although I have been retired for five years, this “boat anchor” is still taking up room in the lab, and will remain until it “ages out” of the property inventory, at which time it will be sent to a recycler (who will send it to a landfill).
I recall recounting this sorry episode to the agency director during one of his visits. He listened with his face betraying no emotion or opinion. He looked down at his notepad, looked back at me, and said, “Tom, we work for idiots!”
Jesus Christ is King
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