Government contracting has made many politically connected insiders wealthy. From the Obama administration’s energy handouts to current contracting with the Trump administration, it seems as if the government contracting gravy train is still infecting the D.C. Swamp.
This is not a new problem. Back during the Reagan administration in 1986, the New York Times reported, “Disclosures about the Defense Department paying hundreds of dollars for a hammer and hundreds more for a toilet seat have infuriated President Reagan.”
Reagan set up the Grace Commission in 1982 to root out government waste and it found $424 billion could be saved in three years if the waste and inefficiency in government contracting was rooted out. Congress took no action to fix the problem and we still have the same issues today with government waste, fraud and abuse. Crony government contracting is big business contributing to the growing national debt.
During the Obama administration, a solar panel company named Solyndra took advantage of stimulus program energy handouts that lead to a massive loss for U.S taxpayers. The company was set up during the Bush years in 2005 and won a big government guaranteed loans in 2009 in the wake of President Barack Obama’s stimulus bonanza. In 2010, Obama visited the facility to highlight the success of his alternative energy programs. When the company ran out of cash, the administration gave an additional $75 million to prop up the failing company. In 2011, the company shut down and cost the taxpayers hundreds of millions.
Today, the Department of Defense seems to be falling into the same trap with a massive outlay to Amazon Web Services to manage all the cloud computing of the Pentagon. Jeff Bezos has become a darling of insiders in Washington, and he seems to be everywhere from owning the Washington Post to running a space exploration company to running one of the biggest monopolies in the world — Amazon.
Amazon has positioned itself to gather up all the cloud computing of the whole federal government. Bloomberg on March 7 reported: “The Pentagon opened a winner-take-all competition Wednesday for a multibillion-dollar cloud services contract, dismaying Microsoft Corp., International Business Machines Corp. and industry groups representing rivals such as Oracle Corp., which worry the move will favor Amazon.com Inc.”
Critics argue that a “winner-take-all” contract is a mistake because it will make it easier for hackers to get into the system and worry that the fix is in to award this giant contract to Amazon.
One piece of evidence that the process to award a contract is a problem is that an Amazon partner already received a sweetheart deal with the Pentagon. The Washington Post reported June 1: “Government auditors have ruled that the Pentagon ‘did not properly exercise authority granted to it’ when it awarded a $950 million cloud-computing contract to Rean Cloud, a Virginia-based start-up that migrates legacy computer systems to the cloud and advertises itself as an Amazon Web Services partner.”
History seems to be repeating itself with government contracts being given, not on the basis of merit, but on the basis of who has the best lobbyists.
The contract was given as part of a non-competitive procurement process that is supposed to allow agencies rapidly to scale up contracts outside the traditional bidding process. The auditor provided some transparency to an opaque process that led the Department of Defense to scale back the initial massive contract from just under $1 billion to a relatively meager $65 million. Many saw this awarding of a contract to an Amazon partner as evidence that the fix was in for Amazon to get an even bigger contract worth tens of billions over the next 10 years for all the cloud computing of the Defense Department.
Jeff Bezos, the founder of Amazon and the wealthiest person on the planet, is well connected to the Pentagon. The Washingtonian magazine reported on April 22 that at a recent event in D.C., Bezos “mingled Defense Secretary James Mattis, who, the Pentagon has acknowledged, receives individual advice from Bezos from time to time. Mattis’ regulatory sway over Bezos’ rocket company, Blue Origin — which plans to pursue national-security launch contracts — was important enough for Bezos to host him in Seattle last year.”
Reports indicate that Amazon has loaded up with lobbyists and may relocate Amazon’s headquarters to be closer to the D.C. swamp.
Despite promises to drain the swamp, much work still needs to be done to curtail friendly government contracting to avoid a further increase of the national debt and the functional equivalent of the $436 hammer and $640 toilet seat being awarded to Amazon. Let’s not allow the super wealthy political insiders to get even more wealthy off the taxpayer dime.