On Wednesday of last week, I reported to you that one of Washington's small businessmen is in trouble with the government.
The government is the small businessman's biggest customer, but the government is very slow to pay. The businessman doesn't have enough capital to carry delinquent accounts, so he must borrow from his bank -- at a very high interest rates, of course.
When the government is especially late in paying its bills, the businessman must choose between paying his employees and remitting to the government the taxes he withheld from employee paychecks. He pays his employees. The government that caused the trouble by not paying its bills counters by fining and peanalizing him.
At the end of the Wednesday column, I commented that perhaps vendors who have been kept waiting for unreasonably long periods should put the government on c.o.d. By coincidence, on the very day that column was published, Roarda, Inc., told the District of Columbia that Roarda would deliver no more gasoline to the city until its past-due account was paid. The District owed Roarda about $140,000, and the company was tired of waiting for its money.
The next day, the city's gas pumps ran dry and hundreds of city vehicles couldn't be operated.
On Friday, City Administrator Elijah B. Rogers ordered the bill paid, and it was. The city was removed from Roarda's deadbeat c.o.d. list, and gasoline flowed into the pumps again.
If you think there's little importance to such events, let me suggest that you consider George E. Humphries' comment on governments (federal, state and local) that acquire reputations for being slow pay.
George notes that the first effect of a government's delay in paying bills is that its suppliers must borrow in order to pay their own operating expenses. iThis forces some firms, especially small ones, to stop bidding on government contracts.
There is also a secondary effect, he says. The company that can afford to carry a delinquent account merely adds the cost of doing so to the amount that it normally charges.
"This means that the government (in other words, the taxpayer) is paying for the cost of these delays in paying bills. You and I are paying extra for the goods and services our government buys.
"As I recall, this year there was a bill before Congress which would have required government agencies to pay the prime rate of interest on overdue accounts owed to suppliers.
"It didn't pass, of course."
George thinks that if penalties for late payment came out of the budgets of the agencies that fail to pay their bills in time, they might begin to get the message.
And he thinks that if the penalties had to be paid out of the salaries of government employees found responsible for the delays, there would be an even greater impact.
District Liner Humphries sees no solution to the problem except "independent auditors and inspectors whose advancement depends on reducing waste, who use hard-nosed production criteria and who have the authority to transfer or even fire mid-level bureaucrats."
He adds: "Congress and the president could do this if they wanted to badly enough. However, the Civil Service (like every other individual or organization) would resist with every available means the application of objective standards by an independent arbiter. As Humphries' Law has it, 'Objective evaluation is fine for everybody but me. Nobody understands my problem. Nobody can be trusted to be fair to me.'"
There is much in what you say, George -- especially in your comment that in the end it's the taxpayer who gets it in the neck.
However, we must keep in mind that many laws and regulations spell out the degree to which government employees must verify that a supplier or contractor has "performed" according to the contract. If the laws and regulations are written (or interpreted) too loosely, vendors can cheat the government blind. If they're too strict, it takes forever to make sure the government got it's money's worth.
Either way, the government is doomed to pay a higher price for everything it buys or leases. The larger a government is, the more ponderous and unwieldly it becomes. There is no way to run it efficiently or economically, not even if your name is Ronald Reagan -- or Harry Houdini.