Serious Budget Cutting--Let's Keep it Going

Posted: Apr 11, 2011 12:01 AM

Government shutdowns, while dramatic, are not sufficient to bring about a return to fiscal sanity in the federal government. As calmer heads prevail and serious, budget cutting efforts begin to take root, getting a grip on bloated federal government spending will require more than just dramatic budget cutting proposals, but will require innovative and transparent ways to implement these policies and ensure each taxpayer dollar is well-spent..

Balancing the federal budget will require deep cuts to non-performing programs and will require changes to the existing budgeting process in future years. The most important change should be the implementation of zero-based budgeting--which determines a government agency's specific task or goal and then determines the resources needed to achieve that mission. But zero-based budgeting takes time as well as an understanding of the government programs and personnel involved.

In order to balance the federal budget, we are going to need to do things differently in almost every area of government. Here's another suggestion--now would be a great time to put in place no-cost, regulatory reform of the existing federal building process which could save billions of taxpayer dollars. One change that could be implemented immediately, which would be able to impact the 2012 budget, is adopting life-cycle costing for federal construction projects.

No area is more ripe for reform than federal building projects and construction of roads and bridges. The process of presenting federal building projects to congress for vetting and ultimate approval and funding is flawed and filled with budget gimmicks to hide a project's true cost.

The timeframe to complete a federal building project is too long. Moving from conception, to prospectus, to congressional approval often takes as much as three years. Design, bid and award can take another two years, with actual construction taking an additional two to five years. Funding is then dribbled across dozens of construction projects, so that multiple congressmen can wet their beak and claim credit for bringing home the bacon to their districts.

As a result, the American taxpayer often gets the worst possible return on our infrastructure investments. Projects take too long. Construction is often delayed, and repeated work order change requests and materials cost increases drive up costs, making construction projects more expensive than originally approved by congress, resulting in additional time delays as projects wait for additional congressional approvals and additional funding. Workers and firms, anxious to begin work, become increasingly frustrated with the molasses-like process that slowly flows along, undisturbed by taxpayers' need for greater accountability.

As the Administrator of the U.S. General Services Administration during the Bush Administration, I had responsibility for building, maintaining, and managing approximately $550 billion in government hard assets, so I know all too well that the current, bureaucratic, approval process needlessly delays federal construction projects, creates confusion and anger among legislators with projects in their districts and, ultimately, drives up the cost to taxpayers.

Congress should consider moving to Life Cycle Costing for federal construction projects as a way to be fiscally responsible and invested in long-term solutions that provide the lowest, long-term cost for the American taxpayer.>

Currently, federal construction cost assessments usually include minor escalations for changes in costs of materials and labor and little residual funding allocated for the cost of maintenance (remedial and preventive) of the building project. Even the slightest change result in a "back to the drawing board" approach that costs millions in taxpayer dollars. If congress needs more proof, a 2008 CBO Report showed that life cycle budgeting extends life of equipment, reduces cost of maintenance by 40%.

For example, asphalt is often used in construction of federal roads, driveways and parking lots because it has a low up-front cost. However, the construction estimates often do not take into account the frequency of repairs, asphalt's high cost of maintenance or it's environmental impact. (Results from an ongoing MIT research project even showed that concrete pavements can lead to big vehicle fuel efficiency savings over asphalt pavements.) Concrete, while having a higher initial cost, traditionally has fewer requirements for repairs and maintenance, and often represents a long-term, best value for the government. But that best value is lost in a bid and award system that only views and values the short term.

Another example of a perceived benefit is "going green" in construction, where "green" is an ever-moving target, often undefined and where sometimes the costs outweigh the perceived benefits. These sorts of construction inefficiencies are endemic in the process as short-term trumps long-term and politically correct trumps functional and practical.

Senator Dave Vitter has introduced legislation (S.615) to return federal construction to the basics. Admittedly, the hundreds of nitty-gritty decisions that, when taken together, waste or save taxpayers dollars are not going to make headlines. But these sometimes unglamorous policies reflect the kind of mundane, detail-oriented, difficult work that needs to get done if our country is ever going to reduce waste and return to fiscal sanity.

Congress needs to insist on true transparency into the costs of federal construction projects because that is the best way to prevent the kinds of cost over-runs that are currently the norm on federal building projects. Life-cycle project costing is an immediate way to insure greater transparency.

Implementing long-term, cost saving policies such as life-cycle costing will require a lot of heavy lifting by dedicated members of congress. But, when looking at the current budget crisis, it is clear that many of our nation's budget problems have been caused by decades of government leaders taking a short-term approach. Maybe it's time we tried something different.

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