Contractors use shell games to hide owners, cheat taxpayers
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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
Also, money is just money.
Plus the hero-worship of soldiers, even those that spend a career washing dishes in Texas, has made any criticism politically untenable.
Tech companies pay taxes, too.
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.
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).
They don't even have to go to that much trouble. There's a whole ecosystem of 8(a) companies set up to take advantage of these contracts and then subcontract the work out to ineligible companies. They usually walk the halls to find the contract, handle some paperwork, provide the corporate history/legitimacy and take a bit off the top. And what you get is some tiny shop winning multi-million dollar contracts allocated for disadvantaged businesses, then turning around and farming out the work to Northrup-Grumman or SAIC or some other tradition, giant defense/government contractor (whom they usually have already worked out arrangements).
http://smallgovcon.com/statutes-and-regulations/limitations-...
I think about NYS and Guy Brown, which is a certified MWBE/WOSB but just orders from Staples with added markup. They'll win procurement contracts because of the MWBE/WOSB scoring alone.
ASRC Federal Subsidiary Leadership - https://www.asrcfederal.com/about
From what I understand, the federal government sets aside contracts for small businesses owned by certain disadvantaged classes (disabled veterans, women, Alaska Natives, etc). But apparently ASRC is able to continually spin off wholly-owned subsidiaries that are considered Alaska Native-owned small businesses, even if the overall ASRC is too big to qualify for those set-aside contracts.
Today ASRC is the most successful of the Alaska Native corporations, but along the way has basically become an evil oil company mixed with an evil government contracting company. But hey, they give each of their Inupiat shareholders a multi-thousand dollar dividend every year, so they seem to be a necessary evil.
Notably, ASRC just quit the Alaska Federation of Natives, basically because the AFN acknowledges a climate emergency but ASRC just wants to keep drilling for more oil.
I've also noticed ASRC contains a fair amount of what might be seen as nepotism elsewhere. The CEO's family and the chairman's family are certainly well represented in the company's ranks. But on the other hand there aren't a whole lot of employers in the North Slope so maybe that's just to be expected.
I did some work for them about 10 years ago and the setup seemed pretty gross at the time (although the people i actually worked with were great).
Apparently when the Alaska Native Corporations were set up, folks were aware of what a terrible failure the Indian Reservation system had been in the lower 48 and knew they had to do something different. And as far as I can tell, Alaska Natives have a much higher opinion of their native corporations than American Indians do of their reservations. So I dunno ... it's a gross corporation, like many others around the world, but it's a gross corporation that belongs to, and works on behalf of a population that could easily just be victims of said corporations. At least they've got one deep-pocketed organization in their corner.
Mixed feelings about the board too. I wonder how many other multi-billion dollar companies have a board member without a college degree? ASRC has several! On the other hand, 4 board members are female and there are a wide range of ages too, so their democratic board selection might yield a good diversity of experience and outlook.
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.
When I worked as a contractor, a few times I was full of righteous fury and ran my mouth to colleagues about their work. In hindsight, I'm convinced they absolutely believed they worked hard and delivered a high quality product, that what I was complaining about was a reasonable compromise. And, frankly, when I left for the private sector, it was a bit of a shock to learn that I really hadn't been working as hard or as well as I thought.
Instead, I'd frame it as incentives over time. There have to be outside pressures to keep everyone honest. In the private sector, they have to compete with other companies, and indeed you see similar problems in firms or departments that are insulated from competition.
In contracting, you've got a negative feedback loop: as contractors underdeliver, the clients scale back their expectations. As those expectations scale back, the contractors relax hiring to meet them. This has led to the population of contract workers stagnating to where it's well behind the private sector.
Having done interviews of contract workers trying to transition out, they are frequently technically way more junior than they should be for the years of experience. And I think the companies trying to attract better people have a hard time when the candidates aren't impressed with the teams.
Most of my jobs have lasted 1-2 years. I get fed up and leave for another company working on a different program - thinking that the next one will be different.
Small firms that are still trying to prove themselves and grow are usually the best to work for. Because they no-shit need to deliver and keep customers happy. As they get larger (and merge, etc.), defense firms all seem to resemble each other. Benefits get cut, pay gets stagnant, and standards for hiring start to slip. Eventually they become a butts-in-seats shop like the huge firms with names everyone knows. Time to move on.
I've tried interviewing in the private sector (usually all of my job hunts every couple of years begin with a string of failed interviews in the private sector, and end with me just taking another job in the industry), never managed to get an offer, but if I walk into a defense industry interview, I can land an offer well over 50% of the time. Some contractors have thrown offers at me after a single 30 minute phone interview (tip: never accept those).
Another part of the issue is the defense industry is definitely a bubble and you kind of get trapped after a while. If I'm desperate and need a new job, I have a list of contacts I can reach out to and easily get another contracting gig. In the private sector, I don't know anyone and I'd be trying to get in through the front door.
"You mean I actually have to APPLY for a new one? I can't just walk into the recruiters office and pick from a list of 3 letter agencies looking for XYZ role?"
Still get emails every day looking for an architect, or windows engineer, or TS/SCI cleared helpdesk technician. Don't let your clearance expire, folks.
I think overall the government contracting experiment has failed. I saw my fair share of corruption and ineptitude on the side of the contractors who did everything they could to stall out projects, under deliver or embed themselves hard so that the government was forced to keep using their horrific product.
I think there's just too much incentive for contractors to cheat the system that it results in poor quality software. The people I met were fantastic engineers and smart workers, but management would hold people back or actively engaged in efforts to sabotage developers because getting work done actually meant less profits for them.
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.
Here's the friendly spin:
https://www.defensenews.com/pentagon/2018/11/15/heres-what-t...
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.
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-frau...
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?
[0] https://media.defense.gov/2016/Jul/26/2001714261/-1/-1/1/DOD...
It also tracks the source of these "estimates", noting that they are not what your article implies.
Turns out it is double counting and adding future liabilities.
https://www.metabunk.org/threads/debunked-missing-21-trillio...
Seems the 6.5T must have evaporated. As expected.
This is why using simple smell tests to raise suspicion is worth noting.
https://media.defense.gov/2019/Jan/08/2002077454/-1/-1/1/UND...
Frankly you seem to be arguing with straw men. Why is that? Do you have any professional experience with accounting? Have you ever produced a balance sheet? Have you ever read one?
It doesn't as I linked. It's derived from a (quote) "non-statistical sample" and is full of double billing. I pointed this out with sources. This number is not from tallying items on books - it's from taking not statistically controlled sample and extrapolating, using poor methodology (as pointed out in the links I provided). This is basic stats and arithmetic.
When X money comes from gov to dept A, goes on a book, then goes to dept B, goes on a book, this is not 2X dollars. This is how they get such ridiculous numbers by not balancing books. This is pointed out in enough well sources internet places besides what I posted that it's not worth digging it up more.
Coincidentally, the DoD recently completed it's second complete audit [1] in late 2019, even later than the 2018 one I posted above. Again, they found "No evidence of fraud". If you search that gov site, you'll find documents in depth about the audit(s).
I get that you want to stick to a clearly incorrect audit from 2016 for your narrative of incompetence and fraud, but when I've provided 2 annual audits that show otherwise, it's clear you're holding onto a belief over fact.
[1] https://www.defense.gov/Newsroom/Releases/Release/Article/20...
So your first link in this thread, which is a press release, and your second link, which is a Dave Lindoff opinion piece, are valid, but linking a .gov release with a link to the actual audit means this thread has run it's course? That's intellectually dishonest.
>not even including USArmy which is what we were talking about.
The linked audit clearly states Army. Look at the audit page. Search the word "Army". First (and only) Army link goes to the Army section of the audit. Since you didn't even look, I'll post the Army section for you [1].
This has become completely dishonest. You're not even looking at the audits from the DoD, including the one you care about, to update your world view.
>You refuse to acknowledge that unjustified adjustments have overwhelmed the rest of the books.
I admit they did in 2016. The 2018 and 2019 audits no longer have that result. Do you acknowledge subsequent audits resolved the discrepancies and found no evidence of fraud?
This reminds me of an economics joke.
A professor and a student are walking across campus. The student points to the ground and says, "Look! a $20 bill!" Without looking, the professor says, "Nonsense! If there were, someone would have picked it up."
> Care to explain their math while tying it down to actual budget numbers?
Since you don't seem to sully your assumptions with facts, no, I don't care to. You can stop reading here and just keep on being right all the time.
If anyone reading along is confused, here's some copy-paste from the article that could have saved the parent poster time and mockery:
Among the laundering tactics the Pentagon uses: So-called “one-year money”—funds that Congress intends to be spent in a single fiscal year—gets shifted into a pool of five-year money. This maneuver exploits the fact that federal law does not require the return of unspent “five-year money” during that five-year allocation period.
The phony numbers are referred to inside the Pentagon as “plugs,” as in plugging a hole, said current and former officials. “Nippering,” a reference to a sharp-nosed tool used to snip off bits of wire or metal, is Pentagon slang for shifting money from its congressionally authorized purpose to a different purpose. Such nippering can be repeated multiple times “until the funds become virtually untraceable,” says one Pentagon-budgeting veteran who insisted on anonymity in order to keep his job as a lobbyist at the Pentagon."
[...] In other words, there were no ledger entries or receipts to back up how that $6.5 trillion supposedly was spent. Indeed, more than 16,000 records that might reveal either the source or the destination of some of that $6.5 trillion had been “removed,” the inspector general’s office reported.
Army has received far less than that in total money in their entire history, which is very easy to check.
So which is incorrect? The article? Or every other place you can check historical US federal budgets?
>no, I don't care to.
I suspected as much. It's trivial to check this number is nonsense.
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.
but the downloadable "Instructions for Form 1040" pdf is for tax year 2018. Can anyone find the download for tax year 2019?
There is a draft version of the 1040 instructions, but beware that things may change, if, for example, new legislation is passed.
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.
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).