Contractor Has to Pay for Hiring Blackwater
It’s nice to see the good guys win as promised. In Wednesday’s hearing on government contractor waste, fraud and abuse the House Committee on Oversight and Government Reform heard how the Army is reducing payments to KBR (Kellog, Brown & Roote) by $19.6 Million, thanks to the investigative persistence of the chair, Rep. Henry Waxman. KBR had violated its contractual prohibition against subcontracting for armed security transportation in Iraq by employing Blackwater (which had made a hefty profit). The committee’s website features a video clip from the hearing. This updates my diary on the subject last month.
DHS Mismanages Multi-Billion Dollar Contracts
Yesterday the committee’s hearing focused on Homeland Security’s mismanagement of two contracts, the Coast Guard’s $24 Billion Deepwater program and the Secure Border Initiative(“SBInet”), a $30 Billion contract with Boeing. In both cases virtually everything is being outsourced, from design to oversight.
The most ambitious element of the Coast Guard’s Deepwater program, the new 425-foot National Security Cutter, was assessed by the Navy for its vulnerability to fatigue. The Navy report concluded that the ship would not last its full 30-year lifespan. Rep. Waxman stated:
What happened next raises many questions. The Deepwater Office transmitted an edited version of the Navy report to the Commandant of the Coast Guard. The briefing slides given to the Commandant were nearly identical to the slides prepared by the Navy, with one critical exception: all of the Navy’s bottom line conclusions about the ship’s problems had been deleted.
This was done just months before the Coast Guard extended the contract.
Homeland Security made the same “mistakes” with the SBInet contract.
Drug Manufacturer Fraud Unchecked; Government Purchases in Chaos
In today’s hearing the committee examined the impact on federal programs such as Medicare of the wasteful or abusive pricing policies of pharmaceutical companies. They heard of drug manufacturer fraud costing Medicaid billions, and how only a few U.S. Attorneys offices are seriously involved — mainly in Philadelphia and Boston.
Support from investigative agencies is skimpy. The active support of the Attorney General and his deputy are not in evidence. The drug manufacturer defendants are aware of these deficiencies and many of them appear to be trying to run out the clock on the Justice Department attorneys.
One of the witnesses, a director of the Johns Hopkins Center for Hospital Finance and Management, delivered his review of the problems when the government purchases drugs. He found that in some government programs, e.g., the Medicare Part D program, the government agencies in charge have no idea what they are paying for the drugs. This includes the HHS Secretary, the GAO, CBO, and so forth. Before you can negotiate a price, you have to know what you are currently paying.
Apparently the military and the VA pay the least: their respective heads negotiate the prices. Consumers Union and other organizations have attempted to estimate the prices paid and found that the VA pays maybe half as much as Part D plans for the same commonly prescribed drugs.
Big Insurers, Big Profits for Medicare Drugs
The committee will be delving into the enrichment of the middle-men under the Medicare drug program. It has requested prescription drug pricing information, including profits and administrative costs associated with Medicare Part D coverage, from from twelve Medicare insurers such as Aetna, Wellpoint, and Kaiser Permanente.
Government agencies, beware: if you’ve been too generous with the public purse, too accepting of shoddy work, the light of Waxman’s committee will find you. If they could force the return of the salaries of those Republicans who did zip for all the years they abdicated their responsibilities, they’d do it. At least they’re putting the layabouts to shame — and saving us a fat nickel, to boot.
