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How Congress Can Use an Obscure Law From the 1880s to Limit Wasteful Government Contracts

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Reason covers the release of Bureaucratic Dark Matter by Robert J. Hanrahan Jr.

When the U.S. Army got caught spending $76 million on video games, recruitment tools, and promotional items instead of spending it on research and development, the only punishment was a written reprimand and a new officer training program.

That's small potatoes. In 2001, the Air Force exceeded its obligation in a single year by $300 million on intercontinental ballistic missile replacement without congressional approval. In 2004 the Department of Housing and Urban Development managed to exceed their commitments set by congress by more than $1.5 billion for a variety of projects, according to GAO.

The federal government spent more than $477 billion on contractors in the last fiscal year, according to a Bloomberg Government report. As recently as 1984 the feds were only spending $168 billion. With a budget that large it's inevitable that some of it is misused or wasted.

But Congress has a tool that could be used to reduce that wasteful spending: The Anti-Deficiency Act, an obscure law that's been on the books for over 130 years. Instead of being a mere afterthought, Congress could give the ADA some teeth and use it to target wasteful contractor spending.

The Anti-Deficiency Act in was passed in 1884 to curb inappropriate spending in the Bureau of Indian Affairs. The law made it illegal for bureaucrats in Washington to exceed their budgets by spending money Congress hasn't appropriated, or "employing personal services not authorized by law," except in emergencies. In modern times it's mostly used as an asterisk for wasteful spending that goes on in bureaucracies, like in the examples above.

Last amended in 1950, the law provided for potential penalties for violations including termination, a $5,000 fine and up to two years in prison. Unfortunately, it's gone relatively unenforced over the last couple of decades.

"The wrong it was intended to correct was federal employees entrusted with appropriated funds using a portion of those funds to hire others to help with their work -- and in some cases do it entirely," says Robert J. Hanrahan of the Competitive Enterprise Institute, a free market think tank, in a new paper that argues Congress should take a more assertive role reining in the power of bureaucracies.

Read the full article at Reason.