Eleanor Hill’s testimony before Congress last spring sounded like it was lifted from 1980s newspaper accounts of government purchasing scandals. Hill, then-inspector general for the Department of Defense, told a Senate Armed Services subcommittee that the government was getting ripped off. She warned of “significant problems” in government contracts and a dearth of competition. In one instance, the Defense Department had paid $76 for a 57-cent screw, according to an audit done by her office. In another, the government had paid a defense contractor $403 for a part available on the open market for $25. “Much more needs to be done … to safeguard against the continuing threat of procurement fraud and mismanagement,” said Hill, now a partner at King & Spalding’s Washington, D.C., office.
Mind you, this hand-wringing came after a decade of reforms to the system. Back in the 1980s, the government had been caught buying $600 toilet seats and hammers priced their weight in gold. At the time, the Pentagon was skewered for its la-di-da attitude toward price and competition. The calls to reform the system reached a fever pitch in the early 1990s, when Al Gore went on David Letterman’s Late Show to smash a government-issue ashtray — an example of products subject to long lists of silly government requirements. Finally, in 1993, President Bill Clinton appointed a Harvard University professor named Steve Kelman to “reinvent” the procurement machine. During the next four years, Kelman helped turn a slew of controversial, free-market style reforms into law.