August 2, 2013: In the United States a defense contractor (SAIC) recently agreed to pay the government $5.75 million to settle (but not admit guilt) accusations that the firm defrauded the government by taking military contracts and then finding a way to keep the money and not do any work. No one went to jail over this, mainly because the government knows that companies like SAIC would spend much more than the disputed contract was worth to fight the accusations in court. Since justice delayed (long enough) is justice denied, the government tends to take what it can get and publicize the theft and the circumstances.

There is a lot of this misbehavior, mainly because the defense budget is so large and the number of people monitoring it is outmatched (in numbers, experience, enthusiasm, and lack of moral scruples) by the contractors. It’s not for nothing that defense contractors, especially those working in numerous office parks just off the beltway road that circles Washington DC, are called “beltway bandits.” Most contractors are honest, hard-working people trying to provide what the Department of Defense needs. But a significant minority are out to grab as much as they can, any way they can, and as often as they can without getting prosecuted. Getting caught from time to time and paying a settlement is seen as a cost of doing business.

One of the most lucrative areas for scamming is in software. The government official who is supposed to monitor software development often does not have the skills or experience to do it properly, giving the contractors a lot more opportunitys to steal. The extent of this larceny did not become clear until after the Cold War ended in 1991, and the Department of Defense was ordered to shrink and especially cut back on programs, especially research related, that were Cold War oriented. That’s when it was discovered that many of these projects had lost all usefulness years ago and were no longer used. But the contractors managed to keep getting money to “maintain” the unused software. Much of the 1990s was spent sending special (as in qualified) Department of Defense inspectors around to find and terminate as many of these projects as they could find. Ever since more of these illegal contractor gold mines are stumbled on and shut down. The contractors have little incentive to come forward as it’s easy money and there is little risk involved. After all, most of the contractors involved in making this scam work are only following orders.