GAO: Mismanagement has major consequences

It's not news that the federal government loses billions of dollars a year to fraud, waste, abuse, and poor accounting, but a new General Accounting Office compilation of the most serious problems underlines the magnitude of managerial challenges facing government executives.

House Budget Committee Chairman John Kasich, R-Ohio, asked GAO for a list of examples of Uncle Sam's biggest sore spots ("Fraud, Waste and Abuse: The Cost of Mismanagement," AIMD-98-265R). The list reads like a series of embarrassing television news magazine exposés waiting to happen:

• The Health and Human Services Department's inspector general estimated the Health Care Financing Administration (HCFA) doled out $20.3 billion in improper Medicare payments last year. HCFA also administers Medicaid, and GAO says that program, too, is highly susceptible to abuse. From 1990 to 1994, for example, an Ohio man used Medicaid money to hire a go-go dancer, install a sound system at a night club and fund "other personal pleasures," GAO said.
• Because it uses non-integrated computer systems that require manual data entry, the Defense Department overpays its contractors hundreds of millions of dollars each year. Between 1994 and 1996, contractors voluntarily returned overpayments worth $1 billion a year to the Pentagon.
• Poor accounting systems prevent the Forest Service from making wise business decisions. The service's database for contracting activities "is so inaccurate that it is of little use in controlling contracting operations or assessing procurement policies," GAO said.
• The Department of Housing and Urban Development disbursed $900 million in excess housing subsidies in 1997.
• Information technology investments throughout the government are troubled. After eight years and $20 billion, the Defense Department's Corporate Information Management initiative has failed to save the billions of dollars in operating costs the system's designers promised. The Federal Aviation Administration wasted $1.5 billion on an automation program it revamped in 1994.

Budget Committee spokeswoman Adrien MacGillivray said hearings will be held on the management problems.