Bureaucracy Times

All the news fit to be declassified.

Category: Institutional Bureaucracy

  • SEC Flagged OTC Link’s Access-Control Problem in 2016. It Was Still There in 2023.

    Three SEC examination cycles identified compliance problems at a major over-the-counter trading operator. The public record does not explain why years passed before enforcement followed.

    The Securities and Exchange Commission censured OTC Link LLC on Tuesday and ordered the broker-dealer to pay a $575,000 civil penalty for repeated failures involving technology and security requirements under Regulation Systems Compliance and Integrity, better known as Regulation SCI.

    The penalty is straightforward.

    The timeline is considerably less so.

    According to the SEC’s September 22 administrative order, the agency identified a deficiency involving OTC Link ATS’s access-control policy during a fiscal year 2016 examination.

    SEC examiners returned in 2019.

    The problem was cited again.

    They returned again in 2022.

    It was cited again.

    And according to the SEC, as of fiscal year 2023, the access-control policy “had still not been formally established.”

    That leaves an obvious question: What happened during those seven years?

    The SEC isn’t saying.

    A Rule Requiring “Prompt Action”

    OTC Link is a registered broker-dealer and a subsidiary of OTC Markets Group. It operates alternative trading systems used by broker-dealers to execute or facilitate transactions in securities that trade outside national securities exchanges.

    Because of its role in the market, OTC Link ATS is subject to Regulation SCI, a regulatory framework covering the technological infrastructure of important securities-market entities.

    Among other requirements, Regulation SCI requires covered entities to maintain policies and procedures governing their technological systems, conduct periodic reviews and take “prompt action” to remedy identified deficiencies.

    According to Tuesday’s SEC order, OTC Link’s problems went well beyond one unfinished document.

    The Commission identified deficiencies involving account management and access controls, network-device security configuration, data-loss prevention, application vulnerability management, and vulnerability testing and remediation.

    But the access-control policy provides perhaps the clearest illustration of the timeline.

    The SEC says the policy was deficient during its FY2016 examination because it remained in draft form.

    A subsequent examination resulted in another deficiency letter in 2019.

    Another examination produced another deficiency letter in 2022.

    By FY2023, according to the Commission, the policy still had not been formally established.

    If federal regulatory examinations came with punch cards, OTC Link was getting close to a free one.

    Then Came the Consultants

    The chronology finally begins moving faster in 2024.

    According to the SEC, OTC Link retained third-party compliance consultants that year to evaluate its Regulation SCI program and recommend improvements.

    Beginning in March 2025, the company established additional policies covering areas including application vulnerability management, account management and access control, and network-device configuration management.

    The SEC ultimately found that OTC Link willfully violated several provisions of Regulation SCI. The company agreed to a censure, a cease-and-desist order and the $575,000 penalty without admitting the Commission’s findings, except as to jurisdiction.

    But this was not OTC Link’s first recent encounter with SEC enforcement.

    In August 2024, the SEC charged OTC Link with separate anti-money-laundering compliance failures.

    In that case, the SEC found that from March 2020 through May 2023, OTC Link failed to implement reasonably designed policies and procedures for monitoring transactions on its trading platforms for suspicious activity.

    The result was remarkable: OTC Link did not file a single Suspicious Activity Report during that period, despite its three platforms facilitating tens of thousands of OTC transactions daily.

    OTC Link paid $1.19 million to settle that matter. The SEC said that investigation also grew out of an examination conducted by its Division of Examinations.

    The two cases involve different regulations and different compliance failures. There is no evidence in the public record establishing that one caused or contributed to the other.

    Their timelines nevertheless overlap.

    Three Examinations, One Unanswered Question

    The SEC’s latest order establishes that its examiners repeatedly found problems at OTC Link.

    What it does not explain is what happened after they found them.

    Bureaucracy Times contacted the SEC’s Office of Public Affairs on September 22 seeking the dates of the deficiency letters associated with the 2016, 2019 and 2022 examinations.

    We also asked whether OTC Link submitted remediation plans after those examinations, whether the SEC ever considered the deficiencies resolved, whether remediation deadlines were established, when examiners determined previously identified deficiencies remained unaddressed, and when the matter was referred or otherwise escalated to the Division of Enforcement.

    We specifically asked how the seven-year history of the access-control policy squared with Regulation SCI’s requirement for “prompt action” to remedy deficiencies.

    The SEC declined to answer.

    “Attributable to an SEC spokesperson, we decline comment beyond our public filings including our press release which we issued today,” SEC Public Affairs Specialist David Ausiello told Bureaucracy Times.

    That leaves the Commission’s own enforcement order to tell the story.

    FY2016: deficiency identified.

    2019: cited again.

    2022: cited again.

    FY2023: still not formally established.

    2024: outside consultants brought in.

    March 2025: additional policies established.

    September 2026: enforcement action announced.

    None of that absolves OTC Link of the violations described by the SEC. The Commission’s order places responsibility on the company for maintaining the required policies and promptly correcting deficiencies.

    But regulatory oversight is also supposed to do something after regulators repeatedly discover that a regulated entity has not fixed a previously identified problem.

    The SEC has now documented three examination cycles and years of unresolved deficiencies at an operator of important securities-market infrastructure.

    What remains missing from the public record is what the regulator did about those findings along the way.

    For now, the SEC has declined to fill in that part of the timeline.

    Sources: SEC Administrative Order, In the Matter of OTC Link LLC, Release No. 34-106458 (September 22, 2026); SEC press release, OTC Link AML enforcement action (August 2024).

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  • VA Pricing Problems Spread Beyond Drugs, With 11 of 12 Medical-Supply Proposals Flagged

    Earlier this month, Bureaucracy Times reported that nearly seven in ten pharmaceutical proposals examined by the Department of Veterans Affairs inspector general contained problems in the commercial pricing disclosures VA uses to negotiate federal drug prices.

    Apparently, the pharmaceuticals weren’t special.

    In a new report released Sept. 22, the VA Office of Inspector General examined 12 nonpharmaceutical Federal Supply Schedule proposals covering medical supplies and services. Eleven of the 12 proposals, or 91.7 percent, contained commercial-sales disclosures that auditors determined were not accurate, complete, or current.

    The proposals represented approximately $814 million in estimated contract value and included 12,246 offered items.

    Only one proposal passed through the review without OIG identifying disclosure deficiencies.

    That matters because VA uses commercial-sales information to determine whether prices offered to the federal government are fair and reasonable. Vendors are generally required to disclose information about their commercial pricing practices, including discounts and concessions offered to other customers.

    In other words, the government is negotiating with information supplied by the companies sitting across the negotiating table.

    And, once again, OIG found problems with that information.

    A Familiar Problem

    The findings closely resemble those in the pharmaceutical pricing review Bureaucracy Times covered on Sept. 8.

    In that report, OIG examined 16 pharmaceutical proposals and found that 11 contained deficient commercial-sales disclosures.

    Taken together, the two FY2025 reviews examined 28 pharmaceutical and nonpharmaceutical proposals.

    Twenty-two of them had disclosure problems.

    That works out to approximately 79 percent.

    The scale of the purchasing system involved is considerably larger than the sample. VA’s National Acquisition Center administers nine healthcare Federal Supply Schedules. Federal agencies purchased approximately $25.7 billion in products and services through those schedules during fiscal 2025, according to OIG.

    The pharmaceutical proposals reviewed by OIG represented roughly $21 billion in estimated contract value. The latest nonpharmaceutical review adds another $814 million.

    These are not negotiations over boxes of tongue depressors in the supply closet.

    $29 Million Identified, $11.7 Million Sustained

    OIG’s review also produced measurable results.

    Auditors recommended lower prices for eight of the 12 proposals and calculated approximately $29.1 million in potential savings.

    VA ultimately sustained approximately $11.7 million of those savings.

    That is about 40 percent of what OIG identified.

    But the aggregate figure conceals substantial differences among individual negotiations.

    For one proposal, identified in the report only as Report 4, OIG calculated $10.85 million in potential savings.

    VA sustained none of it.

    Another proposal, Report 10, carried approximately $4.59 million in potential savings. Again, none was sustained.

    Report 11 produced another $987,400 in potential savings and zero sustained savings.

    The opposite happened with Report 6. OIG identified approximately $11.75 million in potential savings, and VA ultimately sustained approximately $11.55 million, or more than 98 percent.

    Why one negotiation captured nearly everything OIG identified while others captured nothing is one of the more interesting questions left by the report.

    Unfortunately, figuring out who was sitting on the other side of those negotiations is not particularly easy.

    The Vendors Without Names

    The OIG summary does not identify the companies associated with the 12 proposals.

    There is a reason for that. According to OIG, the individual preaward reports are not publicly released because they contain proprietary commercial information.

    Bureaucracy Times attempted to reconstruct several of the unnamed vendors using information that is public.

    We compared the report dates, contract award dates and other information contained in OIG’s appendix against VA’s publicly accessible Federal Supply Schedule contracting records.

    The exercise produced several plausible matches, but not enough evidence to responsibly attach an OIG finding to a specific company.

    That distinction matters.

    For example, multiple VA medical-supply contracts were awarded on some of the dates appearing in the OIG report. A matching award date can identify candidates, but it cannot establish that a particular vendor was the subject of a particular OIG review.

    So we aren’t going to guess.

    The result is an odd transparency gap.

    VA publicly identifies its Federal Supply Schedule contractors. OIG publicly identifies millions of dollars in potential savings associated with individual proposal reviews. But the public information does not reliably connect the two.

    The government knows which companies submitted the problematic disclosures.

    The public gets Report 4.

    And Then There Is Report 11

    One entry in OIG’s appendix raises another question.

    Report 11 was issued Sept. 2, 2025.

    The table lists the corresponding contract award date as July 30, 2025.

    That would put the award 34 days before OIG issued its preaward report.

    There may be an entirely routine explanation. The date could reflect an existing contract, a modification, an effective date or some other element of the acquisition chronology.

    Our reconstruction uncovered another reason for caution. In at least one portion of the public contracting record, dates that appear to represent contract effectiveness do not necessarily correspond neatly with the literal date on which an award was made.

    That makes the chronology difficult to reconstruct from the summary alone.

    But it also illustrates the larger problem.

    OIG is performing these reviews precisely because commercial pricing disclosures affect the government’s ability to negotiate favorable prices. Across the pharmaceutical and nonpharmaceutical reviews examined by Bureaucracy Times this month, 22 of 28 proposals contained problems with those disclosures.

    The latest audit alone identified $29.1 million in potential savings.

    VA captured $11.7 million.

    And the public still cannot readily determine which companies were responsible for the disclosures behind the remaining millions.

    For a federal purchasing system that moved $25.7 billion in healthcare products and services last year, “Report 4” leaves quite a bit to the imagination.

    Sources: VA OIG, Federal Supply Schedule Nonpharmaceutical Preaward Reviews for Fiscal Year 2025 (VAOIG-26-00128-191, September 22, 2026).

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  • The Postal Service and Its Watchdog Cannot Agree on Whether They Spoke in 2024

    Somewhere in a federal email server sits the answer to a question that should not require an article to resolve. Did the United States Postal Service ask its own Inspector General for help in March 2024, and did the Inspector General say no? The Postal Service says yes, it asked, and yes, it was refused. The Inspector General says that characterization is false. Both cannot be right, and the fact that a $78 billion federal agency and its statutory watchdog cannot settle this in private, and instead settled it in the pages of a public audit report, tells you most of what you need to know about the state of oversight at USPS.

    The occasion for this standoff is Report 25-129-R26, “Customer Survey Integrity,” published by the USPS Office of Inspector General on September 15, 2026. The underlying subject, employees gaming a customer satisfaction survey system called Customer 360, is by federal standards almost quaint. What makes it worth your time is not the fraud. It is the fact that the agency’s official written response to its own watchdog reads less like a management letter and more like a rebuttal brief, and that the watchdog’s reply reads like a judge losing patience with counsel.

    A System Built to Be Gamed, Gamed As Designed

    C360 exists because the Postal Accountability and Enhancement Act requires USPS to report customer satisfaction data to the Postal Regulatory Commission every year. Resolve a service request, trigger a survey, roll the survey scores up through post office, district, and area, and eventually the national number lands on a page the PRC reads as a proxy for whether the mail is working. In fiscal 2025 that pipeline produced 5.5 million invitations and 1.2 million responses feeding a satisfaction score that has, for years, hovered somewhere in the high thirties to high forties, comfortably the worst of every customer metric USPS tracks.

    OIG’s audit found that this number has been inflated by two distinct schemes. The first, a nationwide exploit of the “Email Us” feature on usps.com, let employees invent customer issues tied to their own personal inboxes so they could receive and complete their own satisfaction surveys. OIG flagged roughly 119,000 of these as high risk. The second, a regional “booster campaign” concentrated in the WestPac Area, had employees logging routine, already resolved interactions, retrieving someone’s mail counts as a “walk-in service request” if you are creative enough, purely to generate more surveys to manipulate. Walk-in requests in the affected district rose by roughly 3,200 percent. One post office pushed its score up by more than 21 percent this way. At least 83 postmasters, managers, and supervisors either manipulated scores directly or told their people to.

    None of this is especially shocking as institutional behavior goes; performance metrics attached to bonuses tend to get gamed, and USPS is neither the first nor the hundredth federal entity to discover this. What distinguishes the case is what happened after OIG wrote it down.

    Two Federal Bodies, One Set of Facts, Zero Agreement

    USPS management’s written response, signed September 1, 2026, by Marc McCrery, Michael Elston, and Elvin Mercado, opens by stating that management “strongly disagrees with the single finding in the OIG’s report and all related recommendations as currently written.” It proceeds to reject all six recommendations, and along the way makes a claim that, if true, rewrites the entire premise of the audit. USPS says it notified OIG in March 2024 about employees manipulating email addresses, requested OIG’s assistance, and was turned down.

    OIG’s evaluation section, printed in the same report, calls this characterization something close to a fabrication. The Inspector General states it “strongly disagrees with the Postal Service’s characterization that we denied assistance,” explains that investigators reviewed the referred complaint, routed the administrative piece back to USPS for internal handling, and referred the systemic question to the Office of Audit, which is precisely how this audit came to exist. In OIG’s telling, this report is the assistance USPS says it never received.

    Layered on top of that is a second, more technical dispute over who is withholding data from whom. USPS says OIG refused to hand over the files identifying the 119,000 high risk Email Us surveys, making the finding unfalsifiable by USPS’s own analysts and, in management’s words, likely to have produced “a high volume of false positive results.” OIG’s rebuttal is pointed. It notes that USPS applied filters similar to OIG’s own methodology when it ran its internal WestPac analysis in early fiscal 2026, and that analysis flagged 126 employees, 116 of whom OIG had already identified independently in prior years. That is not the outcome you would expect from a methodology its target insists cannot be replicated.

    A federal inspector general and the agency it oversees are now on the record with mutually exclusive accounts of a documented request for help. This is not a dispute about interpretation, tone, or the fairness of a statistical filter. It is a dispute about whether an email exists. One side can produce it or cannot. Neither has, publicly, and a FOIA request would settle the matter in the time it takes USPS’s records office to process it, assuming USPS’s records office is inclined to move quickly on a request that would either vindicate or embarrass its own Vice President of Customer Experience.

    Management’s Numbers, Read Against Themselves

    Credit where due, USPS’s rebuttal is not empty bluster. It includes its own worst case modeling, assuming every single OIG flagged survey was in fact fraudulent and stripped from the count. Even under that maximal scenario, USPS calculates its satisfaction score still rose 4.15 percentage points from fiscal 2023 through 2025, with no resulting change to the National Performance Assessment corporate scorecard, since C360 survey data is diluted down to roughly one percent of that scorecard’s total weight (twenty percent of the Customer Satisfaction Composite, which is itself five percent of the corporate total).

    Notice what that concession actually concedes. USPS is not arguing the fraud did not happen or did not move the number. It is arguing the fraud did not move the number enough to matter for bonuses, which is a different and considerably weaker claim than the one management spends four pages building toward. The Postal Service’s own defense, taken at face value, confirms the direction OIG’s finding points in even while disputing its magnitude.

    The agency does offer USPS a narrow, grudging concession on Recommendation 6: it will strip 3,688 flagged fiscal 2025 surveys and the original 2,500 surveys tied to the 2024 scheme from its scoring. It refuses, flatly, to revisit fiscal 2023 and 2024 more broadly, on the grounds that doing so “would not provide timely feedback or materially change the C360 score reported to the Postal Regulatory Commission.” Translated, the Postal Service is declining to fully correct a mandatory federal report to a rate setting commission because doing so would be inconvenient and probably wouldn’t change the headline number much. That is a defense a compliance officer should recognize as the kind of sentence that gets quoted back at you later.

    The Watchdog That Cannot Get an Answer

    Strip away the survey fraud, which is genuinely the less interesting half of this story, and what remains is an inspector general that cannot get its own oversight target to agree on a shared set of facts about their own correspondence, cannot get access to data it needs to validate its own audit trail without a public fight breaking out over who denied whom, and cannot get the agency to commit to a single implementation date across six recommendations, all of which were answered with some version of “management disagrees with this recommendation as written.” Every recommendation lists its Target Implementation Date as N/A. Every one lists its Responsible Official as N/A.

    Congress wrote the Postal Accountability and Enhancement Act on the premise that an independent inspector general would be able to verify what USPS tells the Postal Regulatory Commission. What this report demonstrates is not that the premise failed, exactly, but that it now depends on whether a federal agency will voluntarily hand its own watchdog the emails proving or disproving a claim that agency itself put in writing. The Postal Service disagreed with all six recommendations. It might start by disagreeing with itself less and producing the correspondence more.

    Source: USPS Office of Inspector General, Customer Survey Integrity (Report 25-129-R26, September 15, 2026).

  • Three Years Running, America’s Postal Watchdog Fails Its Own Report Card

    The Postal Regulatory Commission exists to keep an eye on the U.S. Postal Service. It reviews rate cases, audits service performance, and generally plays the part of the adult in a building full of trucks that don’t show up. So there is a certain poetry in the fact that, for the third consecutive year, the federal government’s own auditors have looked at the Commission’s cybersecurity and concluded, gently but repeatedly, that nobody is minding the store.

    The latest FISMA compliance audit, performed by KPMG under contract to the USPS Office of Inspector General, rates the PRC’s information security program as “Defined,” which is a polite way of saying Level 2 out of 5, which is a polite way of saying “Not Effective.” This is not a scandal in the sense of missing money or a whistleblower with a grudge. It is something more diagnostic of how the federal government actually runs, a quiet, well documented, thoroughly bureaucratic failure to do the basics, year after year, at an agency too small to notice and too obscure for anyone else to either.

    Groundhog Day in Arlington

    Start with the scorecard. In FY2024, the PRC scored Ad-hoc, the bottom rung, across all five cybersecurity functions then in use. In FY2025, it climbed to Defined, still “Not Effective,” but at least off the floor. This year, the agency improved further in three of six functions (Protect, Detect, and Recover all reached “Consistently Implemented”), while a newly added function called Govern, covering leadership and accountability for the whole program, opened at Ad-hoc, dead last, on its very first outing.

    That last detail is the one worth sitting with. The PRC has now had three straight audits, and the one category that measures whether the agency’s leadership has actually organized itself to manage cybersecurity risk is doing worse than areas the agency has had years longer to fix. Progress is real. It is also lopsided in a way that suggests the operational fixes are outrunning the institutional ones, which is what happens when an agency patches whatever the last audit complained about without building a structure to catch the next problem before an auditor finds it.

    There is also a quieter trick in the recommendation tracking. KPMG’s own appendix shows several findings “closed” in one year only to be “reissued” the next under a new recommendation number covering essentially the same gap. The FY2025 finding on cyber governance policy, for instance, gets closed in FY2026 and immediately reborn as a new recommendation about “cybersecurity current and target profiles,” a rename more than a resolution. Closure, in this accounting, means the paperwork changed forms, not that the underlying problem went away.

    The Chair Nobody Sat In

    If there is a single character in this story, it is the Chief Information Security Officer position, or rather its absence. The PRC’s first CISO departed in April 2024. The role sat vacant through the entirety of FY2025, run in the interim by the Chief Information Officer wearing a second hat, until a replacement finally started in August 2025, nearly a year and a half later. For a stretch in mid-2024, the Commission’s entire cybersecurity function, for an agency that hosts a public facing system processing regulatory filings, cost data, and PII, was staffed by one person.

    PRC management’s own explanation, offered without much embellishment across three consecutive audits, is that it is “a small agency with limited resources.” That is true as far as it goes. It also happens to be the same sentence, more or less, that management gave auditors in 2024 and again in 2025. A justification repeated for three years starts to function less like an explanation and more like a policy.

    Whose Money Is It, Anyway

    Here the story gets structurally interesting rather than merely sad, because the PRC does not control its own budget. By statute, the Commission submits its funding request to the USPS Board of Governors, which is to say, the leadership of the agency the PRC regulates, and the Governors may unilaterally cut the total by unanimous vote. The regulator’s paycheck is signed by the regulated.

    In September 2023, that is precisely what happened. The Commission requested roughly $22.6 million for FY2024; the Governors approved $21.1 million. Chairman Michael Kubayanda’s public statement on the cut warned it risked “eliminating positions in the understaffed agency” and “stopping long overdue technology upgrades,” and specified that the Commission was, at that moment, in the process of “establishing centralized databases, information management systems, and cybersecurity monitoring.” FY2024, recall, is the year the Commission’s cybersecurity program bottomed out at Ad-hoc across the board and the CISO walked out the door.

    The following year tells a more complicated story, and honesty requires including it. For FY2025, the Governors approved the Commission’s full $25.4 million request, no cut at all. Yet the CISO seat remained empty for the entire year regardless, filled only as FY2025 was closing out. So the money explains the disaster year reasonably well. It does not fully explain the second straight failing grade, which looks less like a budget problem and more like the ordinary friction of hiring a specialized federal position, a separate and more mundane kind of government dysfunction, but dysfunction all the same.

    Grading on a Curve

    None of this amounts to negligence or coverup. The PRC agreed with all nine of KPMG’s new recommendations this year, as it agreed with all of them the previous two years, and the underlying trend, Ad-hoc to Defined to a mix of Defined and Consistently Implemented, is genuine improvement by any honest reading. The agency went from a two person cybersecurity operation to six people in about two years. That is not nothing.

    What it is, instead, is a small case study in how “Not Effective” becomes a permanent institutional address rather than a temporary embarrassment. The fixes keep arriving with implementation dates a year or more out (several of this year’s nine recommendations are not due until September 2027), the governance layer keeps testing worse than the operational layers built under it, and the agency tasked with holding the Postal Service accountable spends its own compliance report explaining, once again, that it is small, understaffed, and doing its best. It probably is. The report just keeps saying so anyway.

    Sources: USPS OIG / KPMG, FY2026 Federal Information Security Modernization Act Audit of the Postal Regulatory Commission (Report 26-016-R26, September 2026); PRC Chairman Kubayanda statement on FY2024 budget cut.

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  • The Dots Say What Warsh Would Not

    A Chairman Who Declines to Own His Forecast

    At his press conference on September 16, Fed Chair Kevin Warsh offered the public a tidy piece of humility. The central bank, he said, “cannot affect any individual price,” whether at the gas pump or the grocery checkout, but it could work to keep any change in relative prices from broadening out, from producing “second and third order effects on the economy.”

    It is a reasonable description of monetary policy’s actual reach. It is also, conveniently, a description with no falsification clause attached. If prices broaden out anyway, the Committee can say the hike softened what would otherwise have been worse. If they do not, the Committee takes the credit. Either outcome confirms the theory, which should always make you suspicious of the theory.

    There is a second detail worth sitting with, buried in the fine print of the Summary of Economic Projections released the same afternoon. Of the 19 seats on the Committee, only 18 participants submitted a projection for 2028 and 2029, and Warsh himself is understood to have again declined to submit his own dot for the federal funds rate, a habit he established at his very first meeting as chair back in June.

    A central banker who will tell reporters, at length, what the Committee is trying to accomplish, while declining to put his own number on paper for where rates should go, has found a genuinely elegant way to be accountable for the rhetoric and insulated from the record.

    What the Dots Actually Say

    The rhetoric was calm. The dots were not. In June, the median FOMC participant projected the federal funds rate would end 2026 at 3.8 percent, consistent with the one quarter point hike that had already been substantially priced in. By September, with that hike delivered and the range sitting at 3.75 to 4 percent, the median projection for year end had moved up again, to 4.1 percent.

    Read plainly: the Committee did not simply catch up to where it said it was headed. It moved the target further away, in the same direction, in the same meeting where it congratulated itself for a “timelier return” to 2 percent inflation.

    The inflation numbers explain why. Median PCE inflation for 2026 came in at 3.7 percent, versus 2.0 percent, the Committee’s own longstanding target, a gap that would embarrass most institutions into using the word “elevated” more than once in a press release. Core PCE, which strips out food and energy on the theory that doing so reveals the underlying trend, sat at 3.4 percent.

    Seventeen of eighteen participants said the risks to inflation were weighted to the upside. Seventeen of eighteen said their uncertainty about inflation was higher than normal. This is not a committee that is confident inflation is cooling. This is a committee that voted to raise rates while telling you, through its own survey data, that it expects to be wrong in the direction of more inflation, not less.

    The One Number That Actually Moved in the Fed’s Favor

    Credit where it is due. The unemployment rate projection improved, from a June median of 4.3 percent to 4.1 percent in September, and GDP growth ticked up slightly as well. That is the justification buried inside the jargon of “economic activity is expanding at a solid pace.” A labor market that is not cracking gives the Committee room to lean against inflation without immediately worrying about a recession it is causing. It is a coherent policy position.

    It is just not the position that got spoken aloud at the podium, where Warsh’s framing stayed centered on prices rather than on the fact that a resilient labor market is precisely what buys the Fed room to keep hiking.

    Reading the Distribution Instead of the Median

    The median number flatters the Committee with an appearance of consensus that the underlying distribution does not support. Figure 2 in the SEP shows twelve participants clustered around a year end midpoint near 4.125 percent, but four sit higher, near 4.375, meaning four members of the Committee think two more quarter point hikes belong on the table before December, not one.

    Two participants sit lower, at 3.875, essentially arguing the September hike should not have happened at all. That is not a unanimous outlook dressed up as a single dot. That is a room with real disagreement about how much further to go, compressed into a median that makes the disagreement disappear.

    An institution that wants credit for transparency does not get to publish the distribution and then let the chair speak only in the language of the median. The dots, read honestly, say the Fed expects to keep hiking into a labor market it currently likes and against an inflation number it currently distrusts. Warsh, at the microphone, said something calmer and vaguer, and declined to attach his own name to either number.

    The public got the speech. The institution kept the paper trail to itself.

    Primary sources: Federal Reserve, September 2026 Summary of Economic Projections; Federal Reserve, September 16, 2026 FOMC statement.

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  • Washington Helped Build Google’s Ad-Tech Empire. Now It’s Trying to Pry It Open.

    The Justice Department is celebrating a federal court order designed to loosen Google’s grip on online advertising technology.

    There is just one awkward historical detail.

    The federal government reviewed and cleared some of the acquisitions that helped Google build that grip in the first place.

    On Sept. 16, the Justice Department announced what it called “substantial relief” in its antitrust case against Google. The U.S. District Court for the Eastern District of Virginia ordered Google to make important portions of its advertising technology work more readily with competing systems, allow publishers greater access to their own data, prohibit certain preferential bidding practices and submit to six years of outside monitoring.

    It is the latest development in a case that produced a major government victory in April 2025, when U.S. District Judge Leonie Brinkema found that Google had unlawfully maintained monopolies in publisher ad servers and open-web display ad exchanges.

    But getting from a collection of advertising businesses to an unlawful monopoly took years.

    And Washington was watching for much of the trip.

    The Government Approved the Building Blocks

    In 2007, Google agreed to buy DoubleClick for $3.1 billion.

    DoubleClick was no minor addition. Its technology included a publisher ad server that would eventually become Google’s DFP and technology that developed into Google’s AdX advertising exchange. Those products later became central to the Justice Department’s monopolization case.

    The Federal Trade Commission investigated the DoubleClick acquisition for eight months.

    Then it let the deal proceed.

    The vote was 4-1.

    At the time, the FTC concluded that the transaction was unlikely to substantially lessen competition. Regulators even considered the possibility that Google might combine or bundle DoubleClick’s products with its other advertising businesses.

    The commission concluded that DoubleClick lacked the market power necessary to make such a strategy a significant competitive threat.

    That prediction has not aged particularly gracefully.

    Nearly two decades later, a federal court found that Google unlawfully tied its publisher ad server, DFP, to its AdX exchange as part of conduct that helped maintain its monopoly power.

    There is an important distinction. The court did not rule that Google’s acquisition of DoubleClick itself was illegal. The government’s eventual case concerned what Google subsequently did with the market position it had assembled.

    Still, Washington had examined one of the central building blocks before Google put it into the building.

    Then Came More Pieces

    Google acquired Invite Media in 2010 for approximately $81 million.

    Invite Media provided technology on the advertiser side of the market and ultimately became part of Google’s advertiser-buying infrastructure. The Justice Department’s 2023 complaint would later identify the acquisition as another step in Google’s expansion across the advertising technology stack.

    The transaction apparently fell below the threshold requiring federal premerger notification, meaning regulators did not conduct the same kind of review that DoubleClick received.

    Then came AdMeld.

    Google agreed to purchase the publisher advertising technology company in 2011 for roughly $400 million.

    This time, the Justice Department investigated.

    The Antitrust Division gathered information from Google, AdMeld and other participants in the advertising industry. It ultimately closed the investigation without challenging the acquisition, concluding that the deal was unlikely to substantially reduce competition.

    One of the government’s assumptions was that publishers could use multiple advertising platforms and shift their business among them.

    Years later, the Justice Department revisited that conclusion.

    Principal Deputy Assistant Attorney General Doha Mekki described the government’s earlier reasoning in a 2023 speech and delivered an unusually concise bureaucratic postmortem.

    “We were wrong.”

    Google’s growing scale, DOJ subsequently argued, combined with exclusionary practices to undermine precisely the competitive alternatives regulators had expected would remain available.

    Washington Comes Back With a Crowbar

    By 2023, the Justice Department was telling a very different story about the advertising market.

    Its antitrust complaint specifically traced Google’s expansion through DoubleClick, Invite Media and AdMeld, arguing that Google had established control across critical portions of the technology used to buy and sell open-web advertising.

    Two years later, Judge Brinkema found Google liable for unlawfully maintaining monopolies in publisher ad servers and ad exchanges.

    The government then sought something much more dramatic: structural relief that included forcing Google to divest its AdX exchange.

    The court declined to go that far.

    Instead, Google received what might best be described as federally mandated interoperability.

    Under the final judgment, Google must create and support integrations connecting AdX and DFP with Prebid, an open-source advertising technology widely used by publishers. AdX must also be capable of submitting real-time bids into competing publisher ad servers.

    Publishers must be allowed to access and export their data from Google’s systems, making it easier to migrate to competitors.

    Google’s advertiser tools are prohibited from bidding preferentially into Google’s own advertising products simply because Google owns them.

    And a monitor and technical committee will oversee Google’s compliance for six years.

    The government helped open the door.

    Now it is installing a monitor to make sure Google leaves it open for everyone else.

    A Monopoly on Fixing Monopolies

    There is a tempting joke here about the federal government objecting to monopolies while maintaining something of a monopoly on deciding what constitutes one.

    Legally, however, the distinction matters.

    Federal antitrust law does not prohibit a company simply because it becomes enormously successful or even obtains monopoly power. The Sherman Act targets acquiring or maintaining that power through unlawful exclusionary conduct.

    Nor did the court retroactively declare Google’s major acquisitions illegal.

    The more interesting story is institutional.

    Federal regulators examined Google’s $3.1 billion DoubleClick acquisition and approved it. DOJ examined the roughly $400 million AdMeld acquisition and approved that too. Invite Media slipped beneath the federal premerger-review threshold.

    Those three acquisitions subsequently appeared in the Justice Department’s own reconstruction of how Google built its position across the advertising technology stack.

    The FTC made predictions about the competitive consequences of DoubleClick.

    DOJ made predictions about AdMeld.

    The market developed.

    Google developed with it.

    Eventually, DOJ acknowledged that at least one of those predictions had been wrong.

    Now, almost two decades after the DoubleClick acquisition, the federal government has won a court order requiring Google to connect the resulting advertising infrastructure to competitors, share information with customers and operate under years of technical supervision.

    The Justice Department calls that restoring competition.

    It may also be something considerably more familiar in Washington.

    Fixing yesterday’s regulatory assumptions with tomorrow’s regulatory oversight.

    <strong>Sources:</strong> <a href=”https://www.justice.gov/opa/pr/department-justice-again-wins-substantial-relief-against-google&#8221; target=”_blank” rel=”noopener”>Department of Justice, September 16, 2026 press release on Google ad tech remedies</a>; <a href=”https://www.justice.gov/atr/case/us-and-plaintiff-states-v-google-llc-2023&#8243; target=”_blank” rel=”noopener”>U.S. and Plaintiff States v. Google LLC, DOJ Antitrust Division case page</a>; <a href=”https://docs.justia.com/cases/federal/district-courts/virginia/vaedce/1%3A2023cv00108/533508/1410&#8243; target=”_blank” rel=”noopener”>U.S. District Court for the Eastern District of Virginia, April 17, 2025 liability opinion</a>; <a href=”https://www.justice.gov/atr/case-document/file/1566706/dl&#8221; target=”_blank” rel=”noopener”>DOJ complaint, January 24, 2023 (PDF)</a>; <a href=”https://www.ftc.gov/news-events/news/press-releases/2007/12/federal-trade-commission-closes-googledoubleclick-investigation&#8221; target=”_blank” rel=”noopener”>FTC press release closing the Google/DoubleClick investigation, December 20, 2007</a>.

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  • The Fed Finally Hikes, and Conveniently Skips the Month Before Voters Do

    The Reversal Nobody at the Podium Wanted to Name

    On September 16, 2026, the Federal Open Market Committee did something it had not done since 2023. It raised interest rates. The vote was 12 to 0, a quarter point, lifting the target range to 3.75 to 4 percent.

    You would not know from the statement itself that this was a reversal of years of cutting. The Committee’s prose, as always, arrived sanded down to the texture of a hospital waiting room…

    “Economic activity is expanding at a solid pace.”

    “Productivity growth is strong.”

    “Job gains have kept pace with the workforce.”

    Four sentences later, almost as an afterthought: “Inflation remains elevated.” Today’s action, the statement assured us, “will support a timelier return to the Committee’s 2 percent goal.”

    Timelier than what, exactly, the statement does not say. Timelier than the last several years of the Committee insisting inflation was transitory, then persistent, then manageable, then, apparently, in need of an actual hike to fix.

    If you have whiplash, you are reading the sentence correctly. The institution that spent 2024 and 2025 cutting rates on the theory that inflation was heading obediently toward target has just told you, in the driest possible language, that the theory did not hold.

    “Geopolitical Developments” Is Doing an Enormous Amount of Work

    The statement attributes elevated uncertainty, in part, to “geopolitical developments.” This is a phrase built for a press release, not a diagnosis.

    Chair Kevin Warsh, at the podium, came slightly closer to naming the mechanism, telling reporters that the Fed “cannot affect any individual price” on items like oil or groceries but would work to ensure that any change in relative prices “don’t broaden out, don’t have second and third order effects on the economy.”

    That is a serviceable description of what a central bank actually does. It is also, notably, not a description of any specific tool the Fed is using to accomplish it. Raising the federal funds rate a quarter point does not touch the price of oil, does not touch the price of eggs, and does nothing to whichever geopolitical development is allegedly driving both.

    What it does is tighten financial conditions broadly and hope the broadening effect Warsh described never shows up. That is a bet, not a mechanism, and the statement’s studious refusal to name the underlying driver means the public is being asked to trust the bet without being told its odds.

    A Skip Calendared Suspiciously Close to an Election

    Here is where the institutional story gets more interesting than the monetary one. Most FOMC participants pencil in a total of two hikes this year in their updated projections, and the Committee is expected to skip its October meeting, a decision one asset manager tied explicitly, in reporting following the announcement, to the meeting’s proximity to the midterm elections.

    The Federal Reserve has spent decades building a reputation, however imperfect, on the idea that its calendar answers to data, not to ballots. A skipped meeting is not itself a scandal. But when the skip is reported in the same breath as the midterms, and nobody at the Fed rushes to correct the record, the silence tells you something.

    Either the independence is real and the timing is coincidental, in which case the Fed has an obligation to say so plainly; or the timing is not coincidental, in which case the public deserves to know that too.

    What the Institution Owes the Public It Did Not Deliver

    None of this means the rate decision was wrong on the merits. A quarter point hike after a multiyear cutting cycle, with inflation still running hot, is a defensible call, and 12 to 0 votes do not happen by accident. But defensible policy and adequate disclosure are two different things, and the September statement gave the public one while withholding the other.

    The Fed will tell you, correctly, that a terse statement is a feature, not a bug, designed to avoid spooking markets with unnecessary color. Fair enough. But if the data justified a reversal this stark, the institution owes the public more than four sentences of boilerplate.

    And if the October skip really is unrelated to the midterms, the burden is on the Fed to say so, not on financial reporters to speculate in its absence.

    The Committee reconvenes, by the current schedule, well after voters have had their say. Whether that is coincidence or caution dressed up as one, the Fed has not told us, and until it does, the question is not going away.

    Primary sources: Federal Reserve, September 16, 2026 FOMC statement.

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  • Nashville’s Postal Honor System Just Failed an Audit

    The Postal Service Office of Inspector General does not typically announce itself. It shows up before the carriers do, counts what it finds, and compares that count to what management already told headquarters. In Nashville, over three days in July, that comparison broke down almost everywhere it was tried.

    Four reports released September 17 (covering the Church Street Station, the Hendersonville Main Post Office, the Lebanon Main Post Office, and the Nashville Processing and Distribution Center that feeds all three) describe an operation running on self-certification, in a district where almost nobody was checking whether the certifications matched the floor.

    The Paperwork and the Reality

    Start with the number every field manager is supposed to report daily, undelivered mail sitting in the building after carriers leave for the street. The Postal Service has a system for this, the Delivery Condition Visualization tool, and a policy requiring managers to log it accurately before day’s end.

    At Church Street, auditors found 5,158 delayed pieces stacked at carrier cases, on the workroom floor, and in the throwback case on a single July morning. Management had reported none of it.

    At Hendersonville, auditors counted 7,276 delayed pieces; management’s own DCV entry captured 48 percent of that total.

    At Lebanon, the smaller rural unit, the shortfall was proportionally similar, 164 pieces found against 40 reported, a 24 percent capture rate isolated to one route overwhelmed by a botched reassignment.

    Three units, three different failure stories (an untrained acting supervisor at Church Street, an absentee postmaster at Hendersonville, a carrier case too small for its own route at Lebanon), and one identical result: the number that travels up to district, area, and headquarters bears little relationship to the number sitting in the building.

    The OIG’s own language is almost bureaucratic understatement here; inaccurate DCV reporting, it notes, “can result in improper actions taken to address issues.” That’s one way to put it. Another is that the agency has been managing its mail backlog using data it privately admits, in three separate audits, it cannot trust.

    Nobody’s Holding the Keys

    Arrow keys open street collection boxes and apartment mail panels, and the Postal Service treats them, on paper, as tightly controlled accountable property. In practice, Nashville treated them like spare change.

    Church Street had one key missing and nineteen more in active use that had never made it into the national RADAR inventory system. Hendersonville had two keys missing and one more found on-site despite being logged as lost. Lebanon had one missing and thirteen unlogged keys sitting in a vault behind a lockbox whose own key, per the report, was kept somewhere that had “not always” secured it.

    The detail that unifies all three units is not the sloppiness, which is almost expected at this point, but what happened after. Postal Service policy requires any missing or lost arrow key to be reported immediately to the U.S. Postal Inspection Service. None of the three stations did it.

    The Lebanon postmaster told auditors she knew the reporting requirement and skipped it anyway, on the theory that the keys were probably just in transit between facilities. That is not an oversight; it’s a judgment call to not escalate a security gap that, per the OIG’s own boilerplate repeated in all three reports, “can result in undelivered mail” and “increased risk of mail theft.”

    Three units, three postmasters, and not one referral to the agency’s own law enforcement arm.

    The Scan That Isn’t a Scan

    Every tracked package’s status, the “Delivered,” the “No Access,” the “Held at Post Office,” exists because a carrier or clerk scanned it. Customers, insurers, and USPS’s own performance metrics all treat that scan as ground truth. Nashville treated it as a formality.

    At Church Street, 21 of 30 sampled packages, seventy percent, had scans that didn’t match what actually happened to them, including thirteen marked “Delivered” that plainly weren’t.

    At Hendersonville the rate was worse, 23 of 30, with some “No Access” scans logged more than four miles from the delivery address.

    At Lebanon, all six sampled packages had integrity problems, with hold notices posted on parcels that had no accompanying hold authorization form.

    Scale that same failure up to the Nashville P&DC, the plant that processes and dispatches for all three stations, and it stops looking like a delivery-unit habit and starts looking like a systemic one. Load scan compliance there sat below both the FY25 and FY26 goals, with a documented downward trend management admitted it wasn’t monitoring.

    And when auditors went looking for the handheld scanners themselves, twenty of seventy Surface Visibility units and one of twenty-three PVS units hadn’t been used since mid-April and simply couldn’t be located, a shortfall the OIG valued at $12,075 in questioned costs. An inspector watched a driver try to walk out of the transportation office with a scanner without signing for it.

    Nobody stopped him until the OIG did.

    Why Nobody Caught It

    Every one of these findings traces back to the same structural cause, stated by the people responsible for catching it. The Hendersonville postmaster was on extended leave for two weeks before and during the audit, leaving three recently promoted, undertrained supervisors to run the unit’s closeout, route adjustments, and package handling with no meaningful oversight; staff described her, when she was present, as unapproachable.

    At Church Street, an acting PM supervisor closed out the unit alone because the redline process, the checklist meant to catch exactly this kind of gap, was never taught to him. At the P&DC, logistics management runs with a single supervisor per shift, splitting attention between dock activity, driver availability, and scanner distribution until, inevitably, something goes unwatched.

    None of this reads as concealment so much as capacity collapse. That is, the checks exist on paper, the people meant to run them are stretched across too many duties to run them consistently, and the gap only closes when an outside auditor counts what’s actually there.

    USPS agreed with every finding across all four reports, which is the expected and mostly empty gesture at this stage. The recommendations tied to the P&DC report carry implementation dates running out to May 2027, nearly two years after the conditions that triggered them. The three delivery unit reports, meanwhile, are interim.

    A capping report covering all three stations and the district as a whole is still pending, and based on how long the equivalent report took after a similar 2023 audit in Memphis, Nashville shouldn’t expect it before winter.

    Until then, the operative fact is simple. An agency that runs on self-reported compliance data, unaudited inventory logs, and scans nobody double-checks is only as accurate as its most honest, best-trained, least overworked field supervisor.

    In Nashville this summer, that bar turned out to be considerably lower than the number the Postal Service had been reporting to itself.

    For more USPS OIG coverage, see The Pantry That Held a Federal Problem — on a joint OIG-DEA investigation that dismantled a drug distribution network running through the postal system — and The Postal Service Passed Its Pay Audit. The Bill Just Got Postponed. — on how the same OIG found full compliance with executive salary caps while $1.1 million in deferred compensation quietly accrues interest on a $9 billion annual loss.

    Sources: Church Street Station, Nashville, TN: Delivery Operations (26-110-1-R26) | Hendersonville Main Post Office, Hendersonville, TN: Delivery Operations (26-110-2-R26) | Lebanon Main Post Office, Lebanon, TN: Delivery Operations (26-110-3-R26) | Efficiency of Operations at the Nashville Processing and Distribution Center, Nashville, TN (26-109-R26)

  • The Actuary’s Gift: How a $316 Billion SSI Expansion Got Pre-Scored While the Inspector General Was Still Counting the Last Round of Overpayments

    The Social Security Administration’s Office of the Chief Actuary keeps a very particular kind of stationery: dry, unfailingly polite, and capable of detonating a fiscal grenade. On September 15, 2026, Chief Actuary Karen P. Glenn sent one of these letters to Speaker Emerita Nancy Pelosi, scoring a Supplemental Security Income overhaul that would cost the federal government an additional $316 billion over the next decade.

    It arrived, as these things do, with a straight face and a clean conscience — and an awkward footnote: the same week the letter went out, the SSA’s own inspector general was still trying to explain why the agency cannot stop overpaying people whose bank accounts it never bothered to check twice.

    An Actuary’s Gift, Itemized

    The letter to Pelosi scores a seven-provision proposal drafted by Dr. Wendell Primus of the Brookings Institution, and it is, structurally, a marvel of quiet generosity.

    Provision A raises the SSI federal benefit rate by $70 for individuals and $105 for couples.

    Provision B triples the general income exclusion.

    Provision C triples the earned income exclusion.

    Provision D excludes 40 percent of Social Security benefits from the SSI income calculation entirely.

    Provision E quintuples the countable resource limit, from $2,000 to $10,000 for individuals, while sheltering up to $50,000 in retirement savings from counting against eligibility at all.

    Provision F eliminates the consideration of in kind support (food, shelter, a couch to sleep on) as income.

    Provision G has the IRS hand SSA a list of people who might qualify but haven’t applied.

    Total combined cost through 2034: $316 billion, layered on top of a baseline SSI program the actuaries already project will cost $722 billion over that same window. The single largest line item is not the benefit increase everyone will read about in the press release; it is Provision G, the outreach provision, at $135 billion, more than the benefit hike and the resource limit changes combined.

    Glenn is admirably honest about the uncertainty here, noting flatly that “the actual effect that this provision would have on participation is uncertain.” One might call that the actuarial equivalent of a shrug, delivered at a cost of $135 billion.

    A Proposal With a Long, Familiar Résumé

    None of this is new, and that is precisely the point worth dwelling on. Provision D, the 40 percent Social Security exclusion, is lifted nearly verbatim from a 2024 Brookings paper by Primus and coauthors. Primus, notably, already has a different SSA-scored proposal circulating through Congress; a broader solvency package he sent to then Minority Whip Steny Hoyer produced its own actuarial letter in January 2025, one dealing with the OASDI trust funds rather than SSI alone.

    Provision E, the resource limit increase, is essentially the text of the SSI Savings Penalty Elimination Act, and the broader package overlaps substantially with the SSI Restoration Act, reintroduced this past March by Rep. Adelita Grijalva, Sen. Elizabeth Warren, Rep. Jan Schakowsky, and Rep. James Moylan, with 30 cosponsors.

    What is missing from the Pelosi letter is a bill number. This is not legislation being scored, rather an idea being pre-scored, run through the actuary’s office by a private economist working through a member’s office, presumably so that whoever eventually introduces the combined package can wave around a $316 billion figure with an official SSA letterhead attached to it.

    It is a perfectly normal way to legislate in Washington, and it is also, if you squint, a way of credentialing an idea through an agency whose job is arithmetic, not politics, so that the arithmetic can later be cited as though it settled the politics.

    The Resource Limit and the Inconvenient Auditor

    Here is where the story gets uncomfortable for everyone involved. The SSA’s own Office of the Inspector General published its Fiscal Year 2024 compliance audit under the Payment Integrity Information Act in May 2025, and it found that SSA failed two of the ten reporting requirements, both in the SSI program specifically.

    The SSI improper payment rate climbed from 9.41 percent (roughly $5.3 billion) in 2019 to 10.62 percent (roughly $6.5 billion) in 2023, moving in exactly the wrong direction despite years of corrective action plans that read, in retrospect, like a to do list nobody finished.

    The leading cause, according to the OIG, is unreported resources sitting in financial accounts above the current limit, and the agency’s own data shows that 89 percent of those overpayments occurred because a recipient’s circumstances changed after their initial approval, in the gap between reviews where nobody was looking.

    The OIG estimates $2 billion in overpayments could have been prevented in 2023 alone had SSA simply run its existing verification tool more often. It has not implemented that recommendation. A separate OIG audit released the same month documents the mechanism in detail: 63 unresolved SSI earnings alerts sat for an average of 733 days, long enough for the agency’s own finality rules to erase $664 million in overpayments from collectability entirely.

    Into this specific, well documented gap, Provision E proposes to quintuple the resource limit and exempt up to $75,000 in retirement accounts for couples from ever being counted.

    But it is worth noticing that Congress is being asked to widen precisely the category of asset that its own watchdog just identified as the single largest driver of a persistent, unresolved overpayment problem, at the same moment SSA is finally rolling out zero dollar tolerance verification for the old, much smaller limits.

    A Program on Autopilot, Redirected

    The 2025 SSI Annual Report, which supplies the baseline assumptions for Glenn’s letter, tells a story of a program quietly shrinking relative to everything around it. SSI expenditures were 0.22 percent of GDP in 2024 and are projected to fall to 0.17 percent by 2049, a decline attributed to a shrinking pool of eligible citizens and benefits growing slower than average incomes. Recipient numbers actually dropped slightly between January 2024 and January 2025, from 7.30 million to 7.26 million.

    Against that backdrop, the Primus proposal does not merely add to the program; it reverses its trajectory. The letter’s own table shows $104 billion in new costs against a $339 billion baseline for 2025 through 2029, a roughly 30 percent acceleration over five years, applied to a program the actuaries themselves describe as coasting toward relative irrelevance.

    That may well be defensible policy. Poverty among elderly and disabled Americans is a real and measurable thing, and $688 a month, the current average SSI payment, buys considerably less than it did when the resource limits were last touched in 1989. But it is not the same claim as “modest technical fix,” which is how proposals like this tend to be marketed once the actuarial letter gets attached to a press release.

    Somewhere between the Brookings paper, the Grijalva bill, and Karen Glenn’s very polite letter, the size of the ask got lost in translation, and it is the sort of thing a $316 billion program deserves to have said about it plainly, in public, before anyone votes on it.

    SSA Chief Actuary Letter to Speaker Emerita Pelosi (September 15, 2026)Download

  • GSA Has a $17 Billion Building Maintenance Problem. Now It’s Inspecting Buildings Less Often.

    The federal government has a building maintenance problem measured in billions of dollars, fewer people managing those buildings than it did two years ago, and a new policy allowing as much as five years to pass between the physical assessments it uses to estimate what many of those buildings need.

    That combination sits at the center of a new audit by GSA’s Office of Inspector General, which found that the agency’s Public Buildings Service was already understating repair and maintenance liabilities in some of its building assessments. This is Part 2 of our coverage; Part 1 covers how hundreds of those assessments were completed and approved by the same employee, defeating the agency’s own quality-control requirement.

    The September audit examined 196 buildings and found that 79 surveys underreported repair and alteration costs by a combined $73.2 million.

    The OIG did not extrapolate that figure across GSA’s entire portfolio, and neither should anyone else. The audit does not establish that every federal building assessment is understated by the same percentage.

    What it does establish is more consequential for the future: the system GSA relies upon to understand the condition and repair costs of its buildings was capable of missing known liabilities before the agency substantially lengthened the time between required physical assessments.

    And the government already has quite a maintenance bill.

    A $17 Billion Backlog

    GSA’s Public Buildings Service serves as the federal government’s civilian landlord, providing workspace for hundreds of thousands of federal employees across a portfolio that requires continuous attention — roofs, elevators, boilers, chillers, electrical systems, fire protection equipment. The backlog has been growing for years.

    The Government Accountability Office reported in 2025 that deferred maintenance and repair across Defense Department and civilian federal properties had more than doubled, rising from approximately $171 billion in fiscal year 2017 to $370 billion in fiscal year 2024.

    GSA’s portion exceeded $17 billion by March 2025, and GAO warned that allowing the trend to continue could cause federal assets to deteriorate further and require premature replacement — potentially costing substantially more than performing maintenance when originally scheduled.

    The problem was serious enough that GAO added the condition of federal buildings as a new concern within federal real property’s longstanding designation on its High-Risk List.

    GSA was therefore already trying to manage an aging portfolio carrying billions of dollars in deferred work when its workforce shrank dramatically.

    PBS Lost 45 Percent of Its Workforce

    Between September 2024 and November 2025, the Public Buildings Service went from 5,683 employees to 3,126 — a reduction of approximately 45 percent.

    GAO later found that PBS had not conducted strategic workforce planning before making those reductions.

    The consequences were not purely theoretical: officials from federal agencies served by PBS told GAO about concerns regarding the organization’s capacity, including project delays associated with having fewer employees available to perform essential real-estate work.

    PBS officials subsequently began trying to determine where workforce and skills gaps existed, even as the schedule for assessing federal buildings changed.

    Two Years Became Five

    GSA uses its Building Assessment Tool, or BAT, to estimate the cost of correcting major deficiencies in buildings for which PBS has maintenance responsibilities.

    A BAT survey is not simply an accounting exercise.

    It is a 40-section assessment based on a physical inspection of an individual building. The information produced through that process feeds GSA’s financial reporting, long-term capital planning and decisions about which repairs receive priority.

    Previously, PBS required those surveys every two years; beginning in fiscal year 2025, GSA moved to a five-year assessment cycle.

    The agency’s FY2025 financial reporting attributed the change to resource constraints and alignment with the minimum assessment frequency established by the Federal Real Property Council.

    GSA is not violating the federal minimum by inspecting buildings every five years. It has moved from its previous, more frequent schedule to the minimum interval permitted under the applicable government-wide standard.

    Nor does a building’s maintenance estimate simply sit untouched until someone returns with a clipboard five years later.

    GSA updates BAT estimates annually to account for changes in labor and material costs and other circumstances. Better project-specific information can also be incorporated when it becomes available.

    Those procedures can help keep the estimated price of known repairs current.

    But updating the estimated cost of a problem isn’t the same thing as discovering a new problem.

    A spreadsheet can tell GSA that the roof repair it identified three years ago is more expensive today.

    The spreadsheet cannot look at the roof.

    That distinction is precisely why the timing of the new OIG audit matters.

    The Inspector General Found Missing Repairs

    The GSA OIG concluded that PBS was not consistently following its own procedures for ensuring that BAT estimates were complete and accurate.

    Auditors found 79 surveys among their 196-building sample that underreported repair and alteration liabilities by approximately $73.2 million.

    The problem was not always that GSA lacked the information; in some cases, relevant records existed elsewhere within the agency, but surveyors and approvers did not consistently review them when preparing assessments.

    That means the agency could possess records showing that work was needed while the building assessment used to calculate maintenance liabilities failed to incorporate it.

    The OIG concluded that the deficiencies limited assurance that PBS was consistently using and reporting complete, accurate and reliable information about the repair and maintenance needs of its portfolio.

    Because PBS underwent significant staffing reductions and a major reorganization in 2025, the OIG noted, BAT surveys are now required every five years instead of every two, explicitly connecting that problem to the longer inspection schedule.

    The longer interval, auditors warned, increases the risk that GSA will be working with outdated maintenance-liability information.

    In other words, the five-year cycle isn’t the reason auditors found $73 million missing from the sampled surveys.

    But discovering that the system can miss liabilities makes the additional three years between required physical assessments considerably more important.

    Avoiding a Future Television Career

    There is, admittedly, an entertaining way to contemplate the eventual destination of buildings whose maintenance problems are allowed to accumulate.

    Fans of Mysteries of the Abandoned know the formula.

    Somebody builds an impressive structure. Somebody stops taking care of it. Nature begins submitting its own change orders. Eventually, a television crew arrives to explain why there are trees growing through what used to be the conference room.

    A federal building does not become Discovery Channel material merely because GSA inspects it every five years.

    But the joke works because deterioration isn’t particularly interested in the government’s inspection calendar.

    Roofs leak. Pipes corrode. Boilers age. Concrete cracks. Electrical equipment becomes obsolete. Water intrusion produces new problems while existing problems become more expensive.

    And the federal government is already carrying a maintenance backlog large enough that preventing deterioration ought to be considerably cheaper than documenting the ruins afterward.

    The Minimum Standard Meets a Maximum-Sized Problem

    There is nothing inherently improper about a five-year assessment cycle — it meets the federal minimum. That may actually be the more important point.

    GSA did not move to a five-year cycle while managing a pristine portfolio with abundant staff and a maintenance system demonstrating exceptional accuracy.

    It made the change amid resource constraints, a major reorganization, a 45-percent reduction in PBS staffing and a deferred-maintenance backlog exceeding $17 billion.

    The federal government’s broader maintenance backlog, meanwhile, has more than doubled since 2017.

    Now the GSA inspector general has demonstrated that the information system helping the agency understand those liabilities can omit repair costs already documented elsewhere inside the government.

    The OIG has recommended tighter controls over how BAT surveys incorporate maintenance information and stronger quality-control procedures. PBS agreed with the recommendations.

    Those changes may improve the accuracy of the information GSA collects, but they do not change the arithmetic of time. Under the old schedule, a required physical assessment returned every two years. Under the new one, it may not return for five.

    For a government already trying to decide which of billions of dollars in building repairs it can afford to make, three additional years is a long time for something to start leaking.