The Need for Better Stewardship over the Money Government Spends

This appeared on on October 2, 2014.

When a water main breaks in your town, what does the local government do? Other than responding to the break with the appropriate emergency services, the municipality works to replace the broken main. Companies are asked to bid for the job based on the cost of pipes, other materials and labor. Officials then award a contract that delivers the best work for the best price.

That’s the way procurement is supposed to work. However, this isn’t always the case, and too often the real culprit is poor oversight by elected officials.

The competitive bidding that most procurement regulations require aims to ensure that taxpayers are getting the best quality product or service at the lowest price, and it supports accountability in government. In some cases, however, there are services or products that can only be purchased from a single company. This “sole-source procurement” is usually done when the product or service is a specialty item and no other company can provide it at a reasonable price.

Both approaches to procurement have their place, but both are subject to unethical behavior, such as when department heads or government workers grease the skids for companies with which they have personal or professional relationships or when the competitive-bidding process is bypassed improperly.

The U.S. Attorney’s Office for the District of Columbia, for example, recently announced a $4.2 million settlement with the Washington Metropolitan Area Transit Authority to resolve alleged procurement-law violations involving the award of a $14 million contract to a Virginia company without competitive bidding.

And in January of this year, a public-works supervisor for Miami-Dade County was convicted of taking $13,000 worth of household appliances in exchange for using his influence to ensure that the department purchased the supplier’s lighting products. Worse, the employee who had held the same job before that supervisor had been charged with taking bribes from the same lighting company.

What the Miami-Dade case illustrates is a lack of oversight for a position with authority over the spending of taxpayer funds. The only way to curb this type of unethical behavior is for elected officials to look closely at the procurement process and hold department heads accountable for the choices that they and those they supervise make. As for sole-source contracting, it is important for elected officials to regularly reexamine such procurements to confirm that what is being purchased is indeed still hard to obtain or for some other reason cannot be subject to competitive bidding.

Most government employees are not susceptible to unethical procurement temptations even when there is relaxed oversight. But there will always be some who will be tempted to take advantage of a system that lacks the necessary safeguards and stewardship by elected officials.

It is estimated that government procurement on the local, state and federal levels accounts for $7 trillion in spending annually. When that much taxpayer money is on the line, elected officials must provide efficient procurement processes, but they also must exercise careful oversight. The right way to handle taxpayer money is diligently and carefully.