Bureaucrats cheat taxpayers. The Federal Government is not a business. Employees do not lose their jobs when work is unfinished, performance subpar, or they fail to show up. They do not get fired if money is diverted, false invoices are paid, bids exceed market, promises are broken, deliveries are late, employees are bribed, and money is wasted. For decades, no one cared. Bureaucrats cheat – here’s how.
As a former congressional oversight investigator for five years, later managing two billion dollars at State for George W. Bush and Colin Powell, I was empowered to find that waste, restore accountability, reprogram money, end cozy contractor relationships, and claw money back. I did.
In the process, I learned 10 ways the bureaucracy and contractors cheat the taxpayers:
Trick One: Hide the money. When I got to State, after years of oversight investigations, I knew their tricks. One of the most notorious was ambassadors and senior staff skimming money for pet projects, for purposes unrelated to what money was appropriated for.
In short, we pay taxes, which are put in a bank. Congress takes that money – borrowing more than collected – to pay for programs and projects. This is the appropriation process.
After money is appropriated, it goes to OMB or the White House, where it is apportioned to departments. Cabinet secretaries give the money they get to assistant secretaries who give it to program managers who, with procurement officers, “obligate” it to contractors, who are later paid.
So, what is the bureaucrats’ trick? They hide money they cannot spend, “obligating” it to escrow accounts run by friendly contractors, which lets them spend it on whatever they want later.
Trick two: Favor friends. Since bureaucrats spend their lives in cubicles with “yes/no” power over contracts, regulations, and how money is spent, they favor contractors friendly to them, who give them things, take them places, get close to them, make them feel important, and imply future jobs.
How do they do this? Dozens of ways, unnoticed by Congress, unknown to The People. They pretend to abide by laws requiring “free and open competition” by “inviting” others to compete, and then – funny thing – their friends win. Over and over.
They do not object when favored contractors overprice services, or add task orders to contracts without competition. They look the other way when deliveries are late, and failures are improperly reported.
They permit general invoicing, no specifics – even if required – on hundreds of thousands, then millions and billions in unchecked invoices. Unless stopped by an oversight investigator, inspector general, whistleblower, or Justice Department, all goes unnoticed.
In egregious cases, false invoices are presented, and paid, no questions asked. Why? The federal government has 2000 departments, agencies, commissions, three million employees, and maybe ten million contractors and subcontractors – too many white rabbits to chase.
Trick three: Salary doubling. Federal contractors – unlike the private sector – can double the price of an employee hired on a personal services basis, with no competition. If a bureaucrat wants to hire someone for $100,000 – maybe a friend – they use an existing contractor, or a “body shop,” to sign them, then pay another $100,000 to the contractor
Trick four: Insider Inspectors General. While much is made of inspector generals, who are supposed to audit and protect taxpayers, we are obviously being underserved. Reasons are several. Agency heads and Congress often do not insist on oversight. Otherwise, IG reports to no one. Often, they are the bureaucracy. Much gets by, why Reagan removed 16 and Trump removed 17.
Trick five: Sub stiffing. Contractors create a team, win a contract with a collection of subcontractors, then pay them less or do not use them, maximizing profit margins – at the expense of promised outcomes. Since bureaucrats see success as money spent, no need for oversight.
Trick six: “I See Nothing.” While the False Claims Act allows the government to recover from dishonest contractors, falsity must be reported and pursued – by the bureaucrats. With 6.75 trillion spent in 2024, only 2.9 billion was recovered. Common theme? “I see nothing.”
Trick seven: Find, fine, rehire. Too often, when major fraud is discovered and gets around, it produces a fine, but that is it. The process does not include firing the offender. They pay a fine and get rehired.
Trick eight: Job bribes. Contractors want to win money. With Trump on the hunt, that clicking sound is emails are being deleted across the entire bureaucracy. Look at contracts left by mid-level bureaucrats, then look at where they end up working later. You find a non-trivial correlation.
Trick nine: Yearend Slush. Notice how the federal budget – and state budgets – keep rising. They do because leaders are irresponsible and want to spend, and bureaucrats have an unspoken rule: Spend everything, wildly if needed, so nothing is left over – because next year’s number depends on it.
Trick ten: Keep poor records. Poor records, unreported integrity violations, looking the other way is how cheats help cheats. The federal government recorded 109,000 contracts in 2023. GAO investigators found major gaps in integrity reporting, and fewer reported breaches by half in 2022 and 2023 than in 2019 and 2020. Interesting, eh? Administrations changed in 2021.
Bottom line: The bureaucracy has a long-established system and unwritten rules. These rules allow them to keep power, jobs, and influence, redirect money without oversight, and cheat taxpayers. That is about to stop – and why you hear all these gnashing of teeth.
Robert Charles is a former Assistant Secretary of State under Colin Powell, former Reagan and Bush 41 White House staffer, attorney, and naval intelligence officer (USNR). He wrote “Narcotics and Terrorism” (2003), “Eagles and Evergreens” (2018), and is National Spokesman for AMAC. Robert Charles has also just released an uplifting new book, “Cherish America: Stories of Courage, Character, and Kindness” (Tower Publishing, 2024).
https://amac.us/newsline/society/10-secret-bureaucrat-cheats/
