It is commonplace in Canada to see spending vastly outweigh initial costs. Sometimes, in the case of military procurement, this is because operating and maintenance costs are excluded.
But two examples, across different parties, stand out to me. One is the long gun registry, an attempt to show who owns registered firearms. Obviously, this is unpopular with certain people and parties. It might be good if it helps the police solve crimes, but even this is controversial.
The other was a revision and digitization of civil servant and governmental pay. No doubt this is endlessly complicated and extensive. Errors will occur. But these should diminish with time.
How can government, and the experienced businesses they hire, literally spend many billions of dollars, an amount hard to fathom, on what are essentially lists, databases and putting (many) known procedures in computer form. Is this deliberate incompetence to maximize profit, plain incompetence, or are more shady elements involved? Have other countries had similar difficulties? I do not have the expertise to assess the problem, but it seems of large scope and moderate complexity. What am I missing?
Sometimes, it’s simple feature creep, i.e. a project gets scoped initially but then the requirements change or expand as it proceeds.
If something will take 3 years to implement, it’s unsurprising that after a year or two, the project scope changes. Some new boss comes in and wants to change how things are done or teams are structured. Or some new technology obviates elements of the ongoing project. Or standards have changed. Or elections happen, the people at the top are different, and the new team suddenly wants reviews and modifications.
This isn’t exclusive to government. It happens all the time in industry but is naturally less visible. I’m currently about to wrap up a 2.5 year project (non-government), and the project was initially scoped at 1.5 year years. No real incompetence or corruption at any stage. Mostly, changes due to reality (COVID was a really big one) and/or altered requirements on the client end.
Our company saw something similar with digitization of a particular sort of record that is still often found on literal paper filed in warehouses. It took longer and was more expensive than initially estimated, usually due to unforeseen issues. And then, since it was already taking so long, the requested features list expanded as they went. Long projects rarely look the same at the end as originally envisaged.
I’m not sure if the OP is talking about contract overruns or long term spending in excess of expectations.
If the former, granting contracts on lowest bids encourages underestimating costs, which, if done subtly, can guarantee overruns. If the latter, maintenance costs more than development for lots of long lived software projects. Feature creep might get counted as that.
I was involved in a project for private industry that took far longer and cost far more than projected, and flopped anyhow. I at least got out quickly. So I agree that it’s not just government.
I don’t know much about the long gun registry, but when I read about the Phoenix pay system I recognize a lot of IT projects – the legacy system that kind of works but contains a lot of edge cases that need to be replicated, the non-technical management greatly underestimating the scope, the external consultants more interested in massaging the workflows into what’s already available in the software they know how to provide. Just a standard IT boondoggle.
Doesn’t your government give you a budget breakdown to look at? For example the Florida Department of Highway Safety & Motor Vehicles information services budget is presented like this:
INFORMATION SERVICES ADMINISTRATION
APPROVED SALARY RATE
8,681,274
Line Item
Budget
2710 SALARIES AND BENEFITS
12,594,036
2711 OTHER PERSONAL SERVICES
272,869
2712 EXPENSES
6,787,541
2713 OPERATING CAPITAL OUTLAY
53,931
2714 SPECIAL CATEGORIES: CONTRACTED SERVICES
19,821,806
2715 SPECIAL CATEGORIES: RISK MANAGEMENT INSURANCE
62,562
2716 SPECIAL CATEGORIES: TAX COLLECTOR NETWORK - COUNTY SYSTEMS
6,015,132
2717 SPECIAL CATEGORIES: DEFERRED-PAYMENT COMMODITY CONTRACTS
1,420,309
2718 SPECIAL CATEGORIES: LEASE OR LEASE-PURCHASE OF EQUIPMENT
10,607
2719 SPECIAL CATEGORIES: TRANSFER TO DEPARTMENT OF MANAGEMENT SERVICES - HUMAN RESOURCES SERVICES PURCHASED PER STATEWIDE CONTRACT
51,202
2721 DATA PROCESSING SERVICES: NORTHWEST REGIONAL DATA CENTER (NWRDC)
4,330,506
TOTAL: INFORMATION SERVICES ADMINISTRATION
51,420,501
That’s the general budget approved last month (page 401-403), it doesn’t necessarily get much more detailed than that unless I want to dig through the legislature’s appropriations process. It is easier to visit the department’s website and find out the breakdown of actual disbursements last year ($13.3 million disbursed out of a $23.5 million budget) for “contracted services”.
Object Title
Operational Amount
CONSULTING SVCS - GENERAL
1,022,731.50
CONTRACTUAL SVCS - OTHER
3,529,803.19
IT SERVICES - GENERAL
8,811,148.21
JOB OPPOR ANNOUNCEMNTS/ADS
150.00
LEGAL/OFFICL ADVERTISEMNTS
288.82
MAILING/DELIVERY SERVICES
1,001.36
TRAINING SVCS - GENERAL
2,191.00
Total
13,367,314.08
They publish more detailed information for each of these categories, for example here is the breakdown of disbursements for IT Services, by vendor:
It will go so far as to tell me which dates the State paid each vendor, and how much was paid, but I don’t think they’re going to make the actual invoices public. HOWEVER, once I know the vendor’s name, it’s not to hard to look up their contract with the State which is, by law in my jurisdiction, a public record.
So here is the contract between Florida and Accenture LLP, which was given $4.5 million last year to provide IT services to the Department of Highway Safety and Motor Vehicles. If I really wanted to get into the nitty gritty of what the public dollar is buying here, I could go further - it looks like this firm provides IT consultants rather than hardware. So I could go look up public records and meetings, and I would expect to see their consultants present and doing something of consequence, or at least their reports mentioned.
I’m sure they are sometimes reluctant to publish data they find politically sensitive. But in fairness I have never looked nor sufficiently interested to go the freedom of information route. There are occasional journalistic bromides. Canadian journalists are okay at providing overviews but rarely offer a lot of academic details. Perhaps they are unavailable, assumed uninteresting, assumed overly complex or whatever.
To look at one item, there was a C$18 million payment made to “407 East Development Group”, and as with vendors in Florida once you know the name you can go online and find out what they are contracted to do.
The 407 East Development Group General Partnership has signed a contract with the Province to design, build, finance and maintain phase one of Highway 407 East. The consortium will receive annual payments from the Province over a 30-year period. These payments cover design, construction, lifecycle repair and renewal of the highway and project financing. […] The Province will invest $1 billion toward the project, the value to deliver phase one of Highway 407 East today (also known as the net present value). 407 East Development Group General Partnership will receive annual payments from the Province.
It looks like Canada has some sort of bidding site for public contracts, which you may be interested in browsing.
And here is one such award, if I am reading correctly Canada’s Department of National Defense bought 6 guns (up to 30mm) for C$1,331,124.55 from Colt, three weeks ago.
I think it is neither incompetence nor corruption. I think its the nature of a bureaucracy that has no motivation to conserve spending and often has motivation to spend money for the sake of unloading it off of the books.
I’ve worked in the private sector and in a small corner of government. Private sector, motivated by profit margins, (ideally) carefully controls what gets spent, and if they have something budgeted that doesn’t get spent is easily moved elsewhere. Govt has no need to control expenses to maximize profit, and if you don’t spend your budget its difficult to ‘give it back’ and everyone becomes worried that next year your budget will be summarily reduced.
When I have seen these kinds of problems, often you can put it down to the fact that at the top of each ladder is a political appointee who plans to stay an average 18 months, and has some kind of personal mission—to make es mark and chalk up a “victory,” to pursue a personal obsession, to set emself up for es next job, or to reward friends and political patrons. Political appointees are nightmares, whose whims and obsessions often prevent any kind of reasonable resolution of a project. The law often tries to make bureaucrats the responsible line between political appointees and corruption, but in the end, it’s hard to say no to a boss. The boss might be gone in less than two years but in the meantime often has the power to fuck up your life.
Of course this kind of thing happens in a lot of private sector positions too, with a class of journeyman, flashy “chiefs” who stay long enough to climb one step up the ladder and leave before the impact of their actions is fully realized.
In the U.S. there’s an insane appropriations system that punishes you if you save money. There’s that too. At the end of every fiscal year, agencies scramble to spend money on anything or else they lose the funding and may be punished the next time around with lower funding. It’s stupid and crazy.
Cost overruns are a feature of most public procurement processes, an unintended side effect of the principles adopted to govern them.
Public procurement laws generally require the government to accept the lowest tender, unless there is a demonstrable and compelling reason for not doing so. The idea, obviously, is to ensure that the public gets maximum value for its dollar, and also to make it harder for the person awarding the tender to favour the expensive tender from his cousin Jim. So there’s a big incentive for tenderers to put the lowest possible price on the tender.
But pricing a complex project is difficult, and depends on many variables whose values are unknown at the time of the tender. If it’s a five-year project, what will wage inflation be over the next five years? Price inflation? And that’s just the beginning.
So the tenderer prices the project on the basis of a set of assumptions (X, Y and Z will all happen; A, B and C will not happen) and subject to contingencies (this price doesn’t cover the cost of doing D, E or F, should it become necessary to do any of them). The assumptions won’t be the assumptions judged most likely to be borne out; of the assumptions that might plausibly be hoped to be borne out, they’ll be the assumptions that generate the lowest tender price. The contingencies and exclusions will be selected on the same basis.
So the tender ends up as a document that says “in a possible but, frankly, miraculously favourable combination of circumstances, the cost of this project will be $X. In any other combination of circumstances, it will be rather more than that.”
Inevitably, the miraculously favourable combination of circumstances does not eventuate, and the cost is rather more than the tender price. This is presented as a “cost overrun” or as “overspending”, but in truth it’s at least in part an artefact of a public procurement system that incentivises unrealistically low headline prices on tenders.
I’m always reminded of the way P. J. O’Rourke described this (though I don’t believe it’s completely original to him):
[Paraphrased] There are four ways to spend money.
You spend your money on yourself. You want good value for your money and you exercise care in getting it.
You spend your own money on other people. You look for the bargain. When you buy a gift for your third-cousin, you go to the dollar store. Quality hardly matters.
You spend other people’s money on your self. You try to get the absolute best and don’t care about the price.
You spend other people’s money on other people. You don’t care a bit about price or quality.
What further accountability do you think appropriate?
Every ministry has to appear every year in front of the Public Accounts Committee of the Commons, chaired by an Opposition member, and answer any question that the members throw at them, in public.
They’re also audited every year by the Auditor General, whose report is public to anyone who wants it.
The Minister responsible can get a question about spending in their department at any time while Parliament sits.
Proceedings in the Commons and Committees are webcast live and are permanently archived.
The media can report on all of the above.
The Freedom of Information Act means that anyone can make FOI requests about government operations.
What private business is subject to that sort of accountability?
I agree private business is not subject to that. I favour increased accountability for private business and think recent events mandate tougher action against dubious practices and shady money.
Governments are spending public money. Your money, your children’s money, future money. Why should they not be held to a higher standard than private business?
I would like to see a British style question period with less posturing and more ministers being asked questions and having to answer them. As it is, I do not think it very effective. The unallotted $15B uncovered by auditors presumably is for future defence spending and not slush.