Terminal idiots: nobody's dumber at buying computers than Uncle Sam

Washington Monthly, June, 1993 by Frank Greve

When a railroad tank car filled with pesticide overturned into the Sacramento River two summers ago, killing fish as far as 22 miles downstream, California authorities feared for the health of riverside residents.

Not to worry, pesticide experts at the Environmental Protection Agency (EPA) in Washington reassured them. After combing the EPA's computerized $14 million pesticide library, they concluded that the chemical, meta sodium, presented no known risk to humans.

Oops. A month later, two toxicology reports warning that the chemical could cause cancer, sterility, and miscarriages turned up. The reports, submitted in 1986 and 1990, had been inaccurately summarized and then misfiled, which was no surprise to anyone familiar with the system. So redundant and confused were the agency's nine data bases that information was constantly getting lost. Many veteran users trusted only Louis Rossi, a supervisor who kept paper records on file.

There was no disaster in the Sacramento valley, thanks to an industry hotline and alert state environmental officials who warned people against drinking locally drawn water. But the incident provides a dramatic glimpse of the government's disastrous effort to computerize itself. Across the federal landscape, offices are littered with unused, redundant, antiquated, ill-conceived, and incompatible systems. As a rule, they are eccentric and inefficient, bought to solve management problems that they've instead made permanent. "If you start with a mess and simply add technology, you end up with an automated mess," says Henry Philcox, the Internal Revenue Service's chief computer specialist.

He should know. IRS computers waste 100 million taxpayer hours a year due to errors, according to a former commissioner. Many of the mistakes are made by taxpayers. But hundreds of thousands of these errors occur during the IRS's touchingly arcane process of transcribing onto magnetic tape, by hand, the figures on paper returns submitted by more than 70 million taxpayers. Willfully oblivious to phone lines and optical scanners, the IRS flies tapes to National Airport from regional centers, then trucks them to the IRS's national data center in Martinsburg, West Virginia.

Like scores of other federal managers, IRS officials, who have sought new computers since 1970, blame the government's convoluted procurement rules. "Uncle Sam is the laughing stock of the private sector when it comes to buying computers," says former AT&T computer executive Steven Broadbent, who was until January the Treasury Department's top computer authority.

"What takes one year for the private sector to do, we're taking four to five years to do, and the half-life of this stuff is about a year," says former Internal Revenue Service commissioner Fred T. Goldberg, Jr. "It's a procurement process designed to fail."

Changing procurement rules, however, won't be enough. Shrewd computer buying requires attention from informed, decisive managers able to act fast and willing to take risks. Panda bears are more common in Washington, and the result is that the world's biggest computer customer--$150 billion in the past 10 years--is also one of the dumbest. The sums squandered on each of the government's hardware debacles, multiplied by the havoc these systems create, are adding up fast and soon the computer scandals of the nineties could make us all nostalgic for the Pentagon's procurement scams of the eighties.

Terminal illness

Anyone who's tried to master a new computer system knows how confusing the experience can be. But the government's learning curve has been spectacularly dismal, and when its financial managers make mistakes, they are extremely expensive. A few examples:

For years, the armed services ordered supplies based on inaccurate inventories kept by incompatible computers. Now, according to the General Accounting Office (GAO), they're stuck with $40 billion in over-ordered stocks.

* Taxpayers owe the IRS $71 billion in back taxes and are suspected of evading another $100 billion, but IRS computers are too slow and inaccurate to chase deadbeats efficiently. Meanwhile, more than $20 billion of the debt is approaching the statute of limitations. (The IRS is now shopping for a huge, new $23 billion system, a purchase bound to be rare fun for government waste watchers.)

* The Resolution Trust Corporation depends on a computerized real estate index to help it dispose of $17 billion in bottom-of-the-barrel assets from failed S&Ls. But the index lacks vital information--like purchase prices and brokers' names--in four out of five entries sampled by GAO investigators.

* The Pension Benefit Guarantee Corporation (PBGC) is supposed to charge higher premiums to companies that don't fully fund their pension obligations. But the computer used to figure and track the higher premiums crashed in 1989. And it's still down, so there's no way of knowing whether the PBGC's 60,000 pension plans are complying.

* To assure that borrowers get no new student loans if they've defaulted on old ones, the Education Department relies on a computerized loan history data bank. But the latest information extends only to 1991, a defect that sticks taxpayers with up to $800,000 a day in bad loans that would not have been guaranteed if the records were up to date, according to Education's inspector general.