Public Projects Carelessly Managed

Posted: Jul 08, 2013 12:01 AM

On a drive back from a visit to Monticello yesterday, I listened to Jon Meacham’s biography of Thomas Jefferson. In 1784 Jefferson was interested in a project to improve trade routes to the West from the Potomac River. In a March 15 letter to George Washington, he wondered whether it might be a (state) government-supported project, but admitted one problem with that idea:

But a most powerful objection always arises to propositions of this kind. It is that public undertakings are carelessly managed and much money spent to little purpose.

So as small as the government was back then, it was already commonly known that government projects are often screw-ups. By the way, if you look at the history of the oldest federal agencies—such as the Bureau of Indian Affairs and the Corps of Engineers—you will find scandals, mismanagement, and cost overruns from the the beginning.

Today, the parade of failures and mismanagement continues. Back from Monticello, I caught up on the Washington Post and found an article by Walter Pincus describing the “explosive costs of nuclear weapons disposal.”

Costs have skyrocketed for the Mixed Oxide Fuel Fabrication Facility at the Savannah River plant in South Carolina … When the National Nuclear Security Administration (NNSA) originated this MOX program in 2002, design and construction were to cost $1 billion. By 2005, the estimate was $3.5 billion. When project construction began in 2007, it was three years behind schedule with a $4.8 billion price tag. According to NNSA’s fiscal 2014 budget request, construction will hit $7.78 billion. The annual cost to run the facility has also exploded. NNSA estimated in 2002 that it would cost $100.5 million a year to operate the MOX plant. Annual operating costs are now expected to be $543 million.

Regarding the Hanford Nuclear site in Washington state, Pincus notes:

To handle treatment of the millions of gallons of highly radioactive liquid waste, much of which dates to the 1940s, the Energy Department decided in 2000 to build a Waste Treatment and Immobilization Plant. The cost was estimated at $4.3 billion with a 2011 completion date. A December 2012 GAO audit said the cost has tripled, to $13.4 billion. Completion is not expected until 2019.

I discuss the huge cost of nuclear site cleanup in this essay and the problem of government cost overruns in this piece.

Governments have always been inefficient in handling spending projects, and will probably always be so. Of course, there are things we need governments to do, such as defending the nation. But the poor management record of government is one good reason to keep it out of all those activities that the private sector can and should be doing for itself.      

P.S.: The story of early navigation improvements on the Potomac is a long and complicated one, and the efforts included both public and private financing. Here is one summary.