Government waste, corruption, and, yes, every
tech geek's favorite whipping boy, Apple, Inc. (AAPL) were all complicit in a sad tale of bureaucratic waste,
according to the results of a probe by U.S. Security and Exchange Commission (SEC) Inspector General
I. Apple Sells the Government on an Expensive
In its effort to grow its business and achieve
greater profitability, Apple in recent years has looked to expand outside its
mastered realm of consumer electronics and enter into
the world of business solutions.
Under the leadership of Christopher Cox, the SEC
chair appointed by former President George W. Bush, the agency looked to
aggressively expand its high tech presence, in an effort to avoid the data
backup and storage woes that embarrassed it during the financial crisis.
The agency was ensorcelled by a particularly
enigmatic Apple salesman who assured them that his company could provide them
with the most competitive, best performing systems.
By 2008, according to the probe documents obtained
by a Reuters Freedom of Information Act (FOIA)
filing, the agency had fallen head over heels for Apple. It gave the
company blanket authorization to make a number of large purchases, which
federal regulations state should have been thoroughly reviewed and approved
first. In addition to skipping reviews and approvals on the purchases,
the SEC also improperly shared confidential financial information with Apple.
But Apple was not alone. It jumped on the
opportunity to promote a data storage solutions provider, Cloverleaf
Communications, with which it had close ties. The SEC had never done
business with Cloverleaf, but convinced by that same Apple salesman, blindly
entered a no-bid contract with the service provider.
Again, these actions were in gross violation of
federal contracting procedures, but the agency ignored that, convinced it would
see great results.
II. Poor Quality, Budget Overflows
Mr. Kotz writes that when the SEC eventually tried
to test its newly acquired hardware and services, it was beset by
"bugs" in the installation and setup process. According the
report, the project "quickly went downhill from there."
Despite all the money it spent, the agency
reportedly was met with little sympathy from Apple ("You're
installing it wrong", perhaps?) and Cloverleaf's new owners Dot Hill
Frustrated, SEC employees looked to bring up the
issues to their supervisor, hoping for solutions. According to the report
the supervisor ordered them "this information doesn't leave this
room" and then stormed out of the room.
Two years later and under the new leadership of
SEC Chairwoman Mary Schapiro, an Obama appointee, Mr. Kotz began digging up the
details of what went wrong. He estimates that the failed project cost
U.S. taxpayers at least $1M USD, much of which went directly into the coffers
of Apple and Cloverleaf.
Mr. Kotz writes that the SEC's actions seem
particular foolish given that Cloverleaf was "more expensive than other,
better-known and less risky alternatives."
SEC spokesman John Nester released a subdued
statement, commenting that the agency agrees with Mr. Kotz’s findings and is
promising to improve. He commented, "[The SEC is] taking steps
to improve our policies and controls over purchases of information technology
solutions, including pre-purchase review by management's technology and
business oversight committees."
Apple and Dot Hill both have refused to comment on
their payout at the expense of U.S. taxpayers.
III. Bad Timing
While the waste seems large by an individual's
standards, the dollar figures seem small compared to Apple's
billion dollar profits or the government's billions in spending. However,
while the carelessness may have cost a mere fraction of a percent of the
government budget, it's troublesome because it's indicative of broader issues.
The SEC also reportedly may have lost money on a bid
to rent 900,000 square feet of office space after it failed to secure the
necessary Congressional funding.
The SEC Investigator General plans to make his
findings public shortly, including other examples of SEC waste.
Reportedly, Congressional Republicans are looking
to use the probe as ammunition to try to starve the SEC of funding; making cuts
to its budget.
The real reason behind the desire to make those
cuts appears to be the desire to kill the Dodd-Frank financial overhaul law, a
financial bill that passed in the wake of the recent recession.
Implementing the oversight needed to enforce the
new law would be relatively expensive. The SEC is requesting $222M USD, a
16 percent increase to $1.407B USD for the fiscal 2012 that begins October 1.
quote: At least Halliburton is taking IRAQ's money instead of ours :)
quote: draining your wallet for crap
quote: Basically was told that I'm not irresponsible enough. That I didn't have enough debt.
quote: Cut the large spending first, like welfare and medicaid
quote: Welfare and Medicaid don't cover seniors dumbass. Medicare does.
quote: This kind of waste is inexcusable no matter the amount.
quote: Quite a bit.
quote: Spending money on a dying generation is a huge waste.
quote: Serves them right for getting old and raising a generation of ungrateful children.
quote: Dignity is irrelevant in death, as you still die.
quote: The minute the government decides I must pay for everyone's parents, that is the point where it is no longer acceptable.
quote: The minute the government decides I have to pay for your kids education it is acceptable to you, however? Kind of a double standard, seeing as our Elders are a real resource to younger generations.
quote: Hmmm... Taking all emotional morality out of this equation, I see no reason for your continued life. A person without emotion and morality is either a stone cold killer or a vegetable. I'd like to meet you, vegetable.
quote: My grandmother also worked her whole life but still spent every dime they had saved in order to care for him, and if it hadn't been for Medicare and Social Security she would have lost everything. He's been gone for years now, and she can't work. She would be destitute or rely on me or my parents to take care of her without social entitlement programs.
quote: The reality is that in America it is not easy to save for retirement. Wages are incredibly low and most people live paycheck to paycheck. Those that are able to save usually don't have enough to last through our ever increasing life spans.
quote: If you don't want your tax dollars supporting such programs, then run for office and change the laws. If you are successful, then God help us all because I can only imagine the cruel, dystopian state humanity would be in.
quote: We stand upon the shoulders of giants, and I for one would rather enjoy the view than stab them in the back.
quote: I believe in the goodness of people. I actually think that you are already in a dystopian state if you think you need the gov't to take care of you because you distrust your fellow man.
quote: All I have to say about that is that it was "our fellow man" who drove these no-bid contracts through all over government in the last 10 years.
quote: I have no faith that [our "fellow man"] gives a damn about anyone's interests but his own.
quote: so hopefully you won't make it to old age.
quote: I make more than double the national average wage. My earnings potential as it stands moves to quadruple the average within a few years assuming I do nothing to better myself or start my own business, then the potential rises significantly (I get about 3 job listings a week for over 100k a year and I turned down a job for over 100k as it stands to work where I am at because I can afford to make that choice). I live in an area where there are no state income taxes, housing is cheap and cost of living is low.
quote: I make more than double the national average wage.
quote: You're looking more like Mother Teresa with every passing moment.
quote: Canada on Secret Oil Offensive
quote: Read the article and a few others and it's all conspiracy theory or wanton ranting... I can see why you were drawn to the article now.
quote: I'd rather not, she was a pretty good example of a hypocrite and a fraud.
quote: Show me another animal that worries more about its seniors over its young.
quote: We're not animals you ignoramus.
quote: I don't produce logical arguments for you to like me.
quote: I don't produce logical arguments.
quote: Things that make logical sense do so regardless of the speaker.
quote: Things that do not make logical sense do not regardless of the speaker.
quote: I will let them die.
quote: When I say seek professional help it's not a criticism, it's really good advice. Your viewpoint doesn't change that.
quote: If I was a sociopath as you insinuate, as all psychiatrists will turn away any sociopath immediately.
quote: I will let them die.
quote: He makes double the average US salary, I'm sure Al Capone thought highly of his earnings as well.
quote: I would let them die.
quote: He clearly doesn't see the irony of a sociopath giving advice to the rest of society in regards to the social contract between the young and the elderly.
quote: Finally, a logical comment everyone can understand and agree with.
quote: Considering letting someone die would not be hurting, mistreating or stealing from another, there is no rationalization.
quote: serious financial management problems at the Department of Defense (DOD) that have prevented DOD’s financial statements from being auditable
quote: 'although the financial statements are not auditable for FY 2010, the Department's financial managers are meeting warfighter needs'
quote: billing = billion