Air Force Col. Kurt A. Bergo, director of contracting at Joint Base Andrews,… (Astrid Riecken/For The…)
This past week, the Department of Veterans Affairs bought $562,000 worth of artwork.
In a single day, the Agriculture Department spent $144,000 ontoner cartridges.
And, in a single purchase, the Coast Guard spent $178,000 on “Cubicle Furniture Rehab.”
This string of big-ticket purchases was an unmistakable sign: It was “use it or lose it” season again in Washington.
All week, while Congress fought over next year’s budget, federal workers were immersed in a separate frantic drama. They were trying to spend the rest of this year’s budget before it is too late.
The reason for their haste is a system set up by Congress that, in many cases, requires agencies to spend all their allotted funds by Sept. 30.
If they don’t, the money becomes worthless to them on Oct. 1. And — even worse — if they fail to spend the money now, Congress could dock their funding in future years. The incentive, as always, is to spend.
So they spent. It was the return of one of Washington’s oldest bad habits: a blitz of expensive decisions, made by agencies with little incentive to save.
Private contractors — worried that sequestration would result in a smaller spending rush this year — brought in food to keep salespeople at their desks. Federal workers quizzed harried colleagues in the hallways, asking if they had spent it all yet.
“The way we budget [money] sets it up,” said Sen. Tom Coburn (R-Okla.). “Because instead of being praised for not spending all your money, you get cut for not spending all your money. And so we’ve got a perverse incentive in there.” But, Coburn said, “nobody’s talking about it but me and you.”
Coburn said he had meant to mention it in his floor speech Wednesday. Then, when he got to the podium, he forgot.
“Use it or lose it” season is not marked on any official government calendars. But in Washington, it is as real as Christmas. And as lucrative.
And — it appears — about as permanent.
“We cannot expect our employees to believe that cost reduction efforts are serious if they see evidence of opportunistic spending in the last days of the Fiscal Year,” President Lyndon B. Johnson wrote to underlings in May 1965. Even then, Johnson said an end-of-year binge was “an ancient practice — but that does not justify it or excuse it.”
Today, government spending on contracts still spikes at the end of the fiscal year on Sept. 30.
In 2012, for instance, the government spent $45 billion on contracts in the last week of September, according to calculations by the fiscal-conservative group Public Notice. That was more than any other week — 9 percent of the year’s contract spending money, spent in 2 percent of the year.
Much of it is spent smartly, on projects that had already gone through an extensive review.
But not all of it.
In 2010, for instance, the Internal Revenue Service had millions left over in an account to hire new personnel. The money would expire at year’s end. Its solution was not a smart one.
The IRS spent the money on a lavish conference. Which included a “Star Trek” parody video starring IRS managers. Which was filmed on a “Star Trek” set that the IRS paid to build. (Sample dialogue: “We’ve received a distress call from the planet NoTax.”)
“That is a major problem,” acting IRS commissioner Daniel I. Werfel told Congress in June, explaining the role of “use it or lose it” in that debacle.
Other end-of-year mistakes are less spectacular — but they still cause problems. One recent study, for instance, found that information technology contracts signed at year’s end often produced noticeably worse results than those signed in calmer times.
And late-September waste also weighs on its witnesses, federal workers. After President Obama set up an online suggestion box for federal workers, many asked to get rid of the “use it or lose it” system. They suggested “rolling over” money for use in the next year. And they listed dumb things they had seen bought: three years’ worth of staples. Portable generators that never got used. One said the National Guard bought so much ammunition that firing it all became a chore.
“When you get BORED from shooting MACHINE GUNS, there is a problem,” an anonymous employee wrote.
“People want to do the right thing,” said Dean Sinclair, a former State Department employee who is crusading to change the system. “It’s not that the federal workforce is filled with bad people. The system sort of forces them to make bad decisions.”
He suggests giving bonuses to managers who return leftover money to the Treasury at year’s end. “It takes time and effort to waste money,” Sinclair said. “Remember that.”
Obama, like presidents before him, has exhorted agencies to plan better and avoid rushed decisions at year’s end. But the White House says Congress is making that job harder.