A new report from the Government Accountability Office finds that the National Archives and Records Administration’s Electronic Records Archive project is headed for major cost overruns. Initiated in 2001, the project was originally projected to cost $745 million but could end up costing $1.4 billion. The project’s development phase was supposed to be completed by September, but the GAO estimates that it won’t be completed until 2017.

The purpose of the Electronic Records Archive project is to create a digital system for gathering and storing government records that would be accessible to the public. In 2005, the National Archives selected Lockheed Martin to develop the system. Unfortunately, the GAO report makes it clear that the National Archives hasn’t been up to the task of properly overseeing the project.

The examples of shoddy management are too numerous to recount. For instance, the National Archives was supposed to follow a system for managing the project’s costs and progress called earned value management (EVM). However, the GAO found “anomalies” in the monthly reports submitted to the National Archives from Lockheed Martin that are crucial to EVM.

From the report:

• Planned work was removed from the [performance measurement] baseline without also removing its corresponding budget. This is an inappropriate EVM practice and results in the appearance of favorable cost and schedule performance trends.

• Work was shown as fully completed in one month’s report but, in subsequent reports, the same work was reported as less than 100 percent complete. For example, Increment 3 development work was reported as 100 percent complete in July 2009, but 2 months later, in September 2009, it was reported as 10 percent complete. In another example, program support activities for Increment 3 were reported as 100 percent complete in August 2009, but in the subsequent month as 49 percent complete.

• Dollars were reported as spent in a given month, but no work was reported as scheduled or completed.

The GAO says that National Archives and Lockheed Martin officials “provided justifications for these anomalies…. However, these justifications were not always valid.”

Cost overruns in government are not anomalies. In fact, as a Cato essay on government cost overruns demonstrates, they occur all too frequently. The reason is simple:

People tend not to spend other people’s money as carefully as they spend their own. In governments, policymakers and administrators deal with large amounts of other people’s money, and so wasteful spending is a big problem…. Cost overruns are illustrative of the persistent failures of federal management and provide one justification to downsize the government.

Cost Overruns at the National Archives is a post from Cato @ Liberty - Cato Institute Blog

Each semester, when I speak to Cato’s new employees and interns, I give them a quick discussion of some of the reasons that government tends to grow, such as the problem of concentrated benefits and diffuse costs and what James Payne called “the culture of spending.” In his book by that title, Payne noted:

The congressman lives in a special world, a curiously isolated world that is dominated by the advocates of government action. He is subjected to a broad chorus of persuasion that incessantly urges the virtues of spending programs. Year after year he hears how necessary government programs are.

Day after day, year after year, people come to the congressman’s office with stories about why some particular government program is needed — to help their grandfather, their brother-in-law, their community — and rarely if ever does a constituent fly to Washington to urge his congressman to vote against any particular one of the myriad programs that add up to his entire income tax bill.

The Washington Post has a great illustration of this problem in the Sunday paper. The little town of Owego, New York, was excited to hear that Lockheed Martin would build the new presidential helicopter — it’s called Marine One, though fortunately for Lockheed the government wanted 23 of them — at a plant in Owego. But as the price tag ballooned from $6.8 billion to $13 billion, even politicians began to see it as an unnecessary expense. The military canceled the program on June 1. Hundreds of jobs will be lost in Owego. And as the Post writes:

An 11-year-old Owego girl, whose parents are longtime Lockheed employees, recently hand-wrote a letter to Obama. It was published in the local newspaper and quickly became a voice for her shaken community.

“Lockheed is the main job source in Owego,” Hailey Bell, now 12, wrote. “If you shut down the program, my mom may lose her job and a lot of other people too. . . . Owego will be a ghost town. I’ve lived here my whole life and I love it here! Please really, really think it over.”

I’m sure she loves her parents and her town. And there’s no reason to expect Hailey to understand what $13 billion means to taxpaying Americans all over the country. But this is just the kind of story that members of Congress hear all the time: save my parents’ jobs, save my community, save our farms. And it all adds up to a $4 trillion federal budget with a $1.8 trillion deficit. (And by the way, if you Google “fiscal 2009 budget,” you will quickly find the Obama administration’s budget page, which somewhat oddly does not show the actual budget totals but does invite you to “Use the map below to learn more about how the President’s 2010 Budget is restoring long-term opportunity and prosperity in your state.”)

For a more, shall we say, adult view of what it means to direct federal dollars to particular areas, we might turn to an advertisement in the Durango, Colorado, Herald in 1987, which touted the Animas-La Plata dam and irrigation project  and made explicit the usual hidden calculations of those trying to get their hands on federal dollars:

Why we should support the Animas-La Plata Project: Because someone else is paying the tab! We get the water. We get the reservoir. They get the bill.

That’s the way they tell it back home, usually without putting it in writing. In public and in Washington, they say, “Without this dam, our little town will waste away. Only you can save us, Mr. Congressman.” And it’s bankrupting us.

The “Culture of Spending” from the Mouths of Babes is a post from Cato @ Liberty - Cato Institute Blog

Sen. Johnny Isakson (R-GA) is fighting hard to maintain production of the F-22 Raptor fighter jet, which happens to be made by Lockheed Martin in Marietta, Ga. But Isakson insists that he’s not fighting for the plane just because it’s made in Georgia. No, he tells NPR, it’s important to recognize that it’s actually made by 90,000 workers in 49 states, and you don’t want to lose those jobs at a time of high unemployment.

In a letter to President Obama, he spelled out his argument, albeit with slightly different numbers:

Over 25,000 Americans work for the 1,000+ suppliers in 44 states that manufacture the F-22. Moreover, it is estimated that another 70,000 additional Americans indirectly owe their jobs to this program. As we face one of the most trying economic times in recent history it is critical to preserve existing high paying, specialized jobs that are critical to our nation’s defense.

To be sure, Isakson does insist that the plane is vital to national security, an argument that Defense Secretary Robert Gates and Cato’s Chris Preble challenge. But it doesn’t say much for Republican arguments against President Obama’s wasteful spending when Republican senators argue that we should build a hugely expensive airplane as a jobs program.

National Defense, Keynesianism, or Just Pure Rent-Seeking? is a post from Cato @ Liberty - Cato Institute Blog