Analysis: Waste and Abuse in the Security-Industrial Complex

In his 1960 farewell speech, President Dwight Eisenhower warned against the excesses of the “military industrial complex.” Today, we are burdened by a burgeoning security-industrial complex that exploits our desire for security and empties our national wallet. 

In an effort to combat that waste, Washington is abuzz with talk of reining in federal spending. In January 2011, President Obama wrote an op-ed about removing regulations that “waste time and money.” Last November, House Republicans pledged to ban earmarks from being inserted in legislation in Congress. Even Defense Secretary Robert Gates has planned to cut $78 billion over the next five years from the Pentagon’s spending.

These ideas have their merits, but they are not the only means of cutting wasteful federal spending.  In fact, many Washington analysts, security experts and economic gurus have identified a Washington target that wastes billions of dollars on ineffectual or fraudulent programs and services. Some are even  calling for its elimination: the Department of Homeland Security (DHS).
 
DHS is a massive agency (over 200,000 employees) with too many responsibilities and a surging budget (FY2010 budget is almost $56 billion). Created in [year]by merging 22 agencies, including the Federal Emergency Management Agency (FEMA), the Office of Health Affairs, the Coast Guard and the Transportation Security Administration (TSA), DHS is too big and bloated to operate efficiently.  Rampant mismanagement, fraud and waste have become entrenched in its operations, costing  U.S. tax payers billions,  while not improving national security.
 
But don’t take just my word for it.
 
In its 2004 report, the 9/11 Commission warned that federal spending on homeland security could be inflated or used as a cover for political “pork” [p. 396]. “[T]his issue is too important for politics as usual to prevail. Resources must be allocated according to vulnerabilities,” the report sagely stated. Unfortunately, this warning has been largely ignored. In her blog for Foreign Policy magazine, Anne Applebaum blasts DHS for providing “unimaginable bonanzas for favored congressional districts around the United States, most of which face no statistically significant security threat at all.” Some of these projects include:

• $436,504 to the Blackfeet Nation of Montana "to help strengthen the nation against risks associated with potential terrorist attacks"
• $1million to the village of Poynette, Wisconsin (pop. 2,266) for an "emergency operations center"
• $67,000 worth of surveillance equipment purchased by Marin County, California, that is still in its original packaging four years later

A House of Representatives Committee on Government Reform report found many of the “largest homeland security contracts have proven vulnerable to waste, fraud, abuse, and mismanagement.” According to the Washington Post, the House Committee on Homeland Security identified approximately $15 billion worth of failed contracts for projects ranging from unused (but built at taxpayer expense) Coast Guard ships to airport baggage screening.  This estimate does not include the $1 billion spent on project to build a “virtual fence” across the southwest border that was cancelled by DHS Secretary Janet Napolitano in January 2011 because the five year old project did not meet “standards for viability and cost effectiveness.” It was replaced by old equipment that was already in use on a similar task.
 
Even DHS has identified massive waste and fraud among its activities.  An internal audit conducted by the DHS Inspector General (IG) found several billions of dollars wasted or unaccounted for by TSA. In one instance, TSA had “exhausted” the original funding from a $1 billion contract to a company that was supposed to upgrade the nation’s information technology and a telecommunications infrastructure.  The job remains largely unfinished.   The audit also found over $300 million of a $741 million contract to assess and hire airport passenger screeners was either unaccounted or wasted, including $20-an-hour temporary workers billed to the government at $48 per hour, subcontractors who signed out $5,000 in cash at a time with no supporting documents, $377,273.75 in unsubstantiated long-distance phone calls, $514,201 to rent tents that flooded in a rainstorm, and $4.4 million in "no show" fees for job candidates who did not appear for tests.
 
The Government Accountability Office (GAO) and DHS IG have identified multiple weaknesses and lapses in DHS's grant programs, including questioning costs such as excessive charges and duplicate payments, poor oversight of state grantees, and lack of guidance for grantees in preparing applications and understanding purposes for which funds can be used. Some of these reports can be viewed here, here, here, here, here, and here.
 
The Heritage Foundation has issued several reports targeting FEMA (“a colossal mistake”) and fraudulent security claims, noting that “Audits showed $34 billion worth of Department of Homeland Security contracts contained significant waste, fraud, and abuse.” If DHS cannot or will not be eliminated, Heritage is one of several organizations (including the 9/11 Commission, the Center for Strategic and International Studies (CSIS), and the Commission on the Prevention of Attacks Using Weapons of Mass Destruction) seeking significant reforms to the way it runs and is regulated by Congress.
 
An independent government watchdog organization said “DHS has come to epitomize the unworkable, incompetent government bureaucracy. The stories about the agency would be comical if only our national security were not at stake.”  
 
As for security, DHS doesn’t grade so well in that department either. Bruce Schneier, a long time analyst and author on security technology related issues, has a web site that lists several DHS programs that have wasted billons dollars, and how much of what was purchased does not work as advertised. He and other security experts have called homeland security funded agencies like TSA little more than “security theatre.” He said, “Politicians tend to prefer security countermeasures that are very visible, to make it look like they're doing something. So they will tend to pick things that are visible even if they are less effective.” Instead, he calls for using money intended for DHS to be redirected toward “intelligence, investigations, and emergency response.”
 
An adjunct fellow at the Independent Institute, Art Carden, agrees. On his blog at Forbes.com, he wrote, “most screening devices are ineffective because anyone who is serious about getting contraband on an airplane can smuggle it in a body cavity or a surgical implant.  The scanners the TSA uses aren’t going to stop them.” Carden has called for the elimination of DHS. He wrote, “The Department of Homeland Security and the TSA are clear examples of trading something to get–not nothing, but actually less than nothing because they actual imperil our safety” by providing a false sense of security.
 
Other critics, including security consultant Doug Laird, also charge that many products bought by the department are not effective in combating terrorism. "Much of what we've seen touted by vendors after 9/11," Laird says, "is nothing more than a sales force trying to use 9/11 as the hype to get poorly advised folks to buy their products." 
 
But let’s get back to the waste.
 
According to the Washington Post’s 2010 special report about runaway federal spending on the domestic intelligence apparatus, "DHS has given $31 billion in grants since 2003 to state and local governments for homeland security…including $3.8 billion in 2010." While some of that money has addressed key vulnerabilities in major U.S. cities or is used to bolster important local infrastructure (e.g. firefighter equipment), federal money has supplanted spending at the state and local levels where many unnecessary projects are only considered because they are funded by Washington.
 
For example, nearly every state has begun operating a fusion center, an overly complex system of intelligence sharing bodies for law enforcement that have come under fire for classifying broad sections of the public as a threat to national security. This report issued by a Missouri fusion warned that third-party voters were a threat, and a Washington fusion center was involved in spying on peace groups. An ACLU report  documents ways in which fusion centers have used money to fund investigation of lawful free speech and assembly. Most fusion centers are costly and rely almost exclusively on the DHS for their funding. Perhaps they are overfunded and are looking for ways to spend their funds.   
 
Despite receiving hundreds of millions of dollars through DHS grants, a system wide review ordered by Colorado’s Gov­ernor Bill Ritter found that the state's homeland security structure was unable to handle a serious terrorist incident. Additionally, a federal audit in 2007 found that Colorado officials failed to properly monitor how they spent more than $156 million in federal homeland security grants from 2003 to 2006.
 
In California, the city of San Francisco spent $3.3 million of federal money to pay police overtime to quell antiwar demonstrations in 2003. Despite claims made by then-Mayor Willie Brown that terrorists might use the protests as “cover” to attack bridges and other sites, state monitors argued that the expenses were not related to “critical infrastructure protection.”  More examples of waste or fraud of DHS grants in California can be viewed here.
 
The Washington Times reported in 2006 that in Florida, the Plantation City Council  voted to use its $28,000 grant for treadmills, stationary bikes and training machines for police and firefighters. In Oregon, a $22,000 grant was used to buy an educational robot. In Wisconsin, the Onalaska Fire Department in Wisconsin used an $8,000 grant for clowns and puppet shows. 
 
In Tennessee, almost $500,000 from DHS was used to purchase and install closed-circuit security cameras at the University’s Neyland Stadium in 2010. The grant is part of Homeland Security’s “Buffer Zone Protection Program,” which helps increase the preparedness capabilities of buildings and installations identified as national critical infrastructure assets. Not to be outdone, the University of Southern Mississippi in Hattiesburg received a $3.5 million grant from DHS to develop curriculum and hold workshops aimed at establishing sports security standards and risk management certification for all NCAA schools in the country.
 
Conclusion
 
At a time when money is scarce and everyone is looking for places to make cuts, scaling back DHS spending makes a lot of sense. In a January 2011 poll from CBS, 55 percent of respondents said they would rather cut defense spending than take an axe to Medicare and Social Security.  In his annual letter about the importance of maintaining strong philanthropic programs, Bill Gates advises against cutting important foreign aid programs that promote human rights and health around the world.
 
Federal funding for the defense of our country should have a spe­cific purpose and not be available for virtually any use. It should be directed toward programs and systems that reduce risk and prevent attacks and disasters, not lawful First Amendment activity.   It should be managed carefully with appropriate review and oversight by agencies and Congress.  
 
Eisenhower’s warning is well known among Washington insiders. Less so are the words that followed his warning, but still remain true today:
 
“The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted.”