Bureaucracy Times

All the news fit to be declassified.

  • The Number That Stopped Moving in 1985

    In 1985, a gallon of gas cost about $1.09, the Berlin Wall was still standing, and the Indian Health Service decided that $10,000 was a reasonable amount of money to connect a tribal school or ceremonial ground to a water system. Forty years later, gas costs three times as much, the Wall is a tourist attraction, and the Indian Health Service still thinks $10,000 is a reasonable amount of money to connect a tribal school or ceremonial ground to a water system.

    This is not an oversight in the sense of a memo nobody read. Per a new report from the Government Accountability Office, IHS senior officials told auditors they had never adjusted the figure because they did not believe it was constraining anyone (Government Accountability Office, GAO-26-107178). Constrain is an interesting verb choice for a policy that has been used exactly twice in two years.

    A Cap With Nothing Under It

    IHS runs a special project fund that can, in theory, pay up to $10,000 to connect an existing tribal community building, a Head Start school, a gathering place, a ceremonial ground, to a water line already being built for a nearby project. It sounds like a sensible bit of flexibility, the kind of accommodation an agency writes into its own rules so tribal communities do not have to run a separate federal gauntlet just to get a spigot into a building that already has walls and a roof.

    In practice, GAO found that of roughly 800 tribal water projects IHS funded in fiscal years 2023 and 2024, exactly two used special project funds for existing community buildings. Two. Not two percent. Two projects, full stop, out of eight hundred.

    Tribal officials and staff from a tribal health consortium told GAO exactly why the number is so small, and it is not because the buildings do not need water. It is because $10,000 does not buy water infrastructure anymore; it barely buys the truck that delivers the materials to build it.

    Tribal health consortium officials said the cap does not come close to covering even basic connection costs, citing the price of materials and the price of hauling those materials to remote tribal land as the primary obstacles. Faced with a fund that cannot fund anything, tribes do the rational thing and skip it, going hat in hand to EPA or USDA instead, agencies with broader statutory mandates that let them pay for the same buildings IHS’s own rule was theoretically designed to help.

    The special project fund exists on paper as a convenience. In practice it functions as a formality tribes have learned to route around.

    Math From the Reagan Administration

    Here is the part where the story becomes less about neglect and more about arithmetic nobody bothered to do. GAO ran the inflation numbers, and $10,000 in 1985 dollars is worth about $30,000 in fiscal year 2025 dollars, triple the amount IHS is still authorized to spend.

    That is not a rounding error produced by decades of general price creep; it is the kind of gap that appears when an agency simply stops looking at a number it wrote down once and filed away. IHS itself, to its credit, did not try to defend the figure once GAO put the inflation math in front of them. Agency officials acknowledged that construction costs have risen since 1985 and said the limit could warrant reevaluation in light of current labor and materials costs.

    That is a remarkably mild way to describe a policy that has effectively been auto-denying itself for four decades. Nobody at IHS appears to have decided, at any point between the second Reagan administration and now, that $10,000 no longer covered what $10,000 used to cover.

    The number simply sat there, technically still on the books, functionally inert, while every input it was meant to pay for, labor, pipe, transport, concrete, kept climbing. A ceiling that never moves is not neutral. It is a ceiling that gets lower every year, measured against the thing it is supposed to buy.

    The Workaround Tax

    The consequence of a dead-letter fund is not that the work stops; the consequence is that the work gets more expensive to arrange, just not on IHS’s books. When a community building cannot get water through the special project fund, tribes and IHS staff go looking for outside money, usually from EPA or USDA, and that search comes with its own overhead. GAO documents this pattern repeatedly across the broader report; pursuing outside funding to cover costs IHS itself will not cover tends to multiply administrative time for everyone involved, IHS engineers included, because now two or three agencies’ worth of paperwork has to be reconciled instead of one.

    A $10,000 cap that functioned properly would resolve a small, incidental cost in house. A $10,000 cap that has not functioned properly since roughly 1990 instead generates a shadow bureaucracy of grant hunting, all to connect a building that, in many cases, sits a few hundred feet from a water main that is already being installed.

    GAO’s recommendation here is almost apologetically modest. It does not ask Congress to rewrite the Indian Sanitation Facilities Act or reorganize IHS’s funding authority. It asks the Director of the Division of Sanitation Facilities Construction to evaluate whether $10,000 is still appropriate, in light of inflation and increases in labor and materials costs, and adjust it accordingly.

    This is, functionally, a request that the agency check a number against the last four decades of economic reality, a task that requires no legislation, no new appropriation, and no interagency task force. It requires someone to open a spreadsheet.

    What Stagnation Actually Costs

    It would be easy to read this as a minor line item in an 86 page report about a much larger set of problems, IHS’s narrow eligibility rules, USDA’s underwriting demands, EPA’s application backlogs. But the frozen $10,000 cap is worth isolating because it is the cleanest example in the whole document of a specific kind of federal failure, not malice, not even obvious negligence, but a number that was correct once and was never revisited, sitting quietly inside an agency’s own internal rules for so long that revisiting it now counts as a recommendation rather than routine maintenance.

    Somewhere in a tribal community right now, a Head Start school or a ceremonial ground is going without a water connection it could plausibly have gotten already, not because the money does not exist in the federal system, but because the specific pot of money set aside for exactly this purpose has been mathematically useless since roughly the first Bush administration, and nobody thought to check.

    That is not a scandal in the traditional sense. Nobody profited. Nobody hid anything. It is simply what happens when the machinery of government runs on numbers that were never designed to update themselves, and the humans responsible for updating them assumed, without checking, that the machinery was fine.

    Fediverse reactions

  • The Postal Service Passed Its Pay Audit. The Bill Just Got Postponed.

    Credit where it is due. The Postal Service Office of Inspector General reviewed the compensation, benefits, and bonus authority of 158 postal officers and executives for calendar year 2025 and found nothing to flag. No one exceeded the Executive Schedule Level 1 salary cap of $250,600. None of the eleven employees the Board designated as “critical senior executive” positions cleared 120 percent of the Vice President’s compensation, the $347,280 ceiling PAEA allows for a maximum of twelve such slots. The auditors made zero recommendations. Management, for its part, declined to comment, which in bureaucratic terms is the sound of an agency that has nothing to argue about.

    A Rare Clean Bill

    This is not nothing. The OIG’s CY2020 audit found a $5,833 monetary impact from noncompliance, a rounding error by federal standards but a finding nonetheless. This year there is no finding at all. The Postal Service is, in the narrow and specific sense that this audit measures, playing by its own rules. A watchdog publication built on the premise that institutions rarely get audited into a compliment owes it to its readers to say so when one does.

    But an audit that measures compliance with a cap is not the same as an audit that asks whether the cap means anything. It measures whether water stayed inside the container. It does not ask what happens to the water that would have overflowed.

    The Account That Never Closes

    Buried in Table 2 of the report, well past the highlight box that most readers will stop at, is the answer. When an executive’s earned compensation would push them over their statutory ceiling, the Postal Service does not simply withhold it. It defers it into an interest bearing account and pays it out later, in whatever future year the executive’s total compensation happens to sit below the cap.

    Deputy Postmaster General Douglas Tulino, who also holds the titles of Chief Operating Officer and Chief Human Resources Officer, a three hat arrangement that ought to raise its own eyebrows, deferred $198,650 in calendar year 2025 alone. His running balance sits at $515,462.18. Joseph Corbett is carrying a deferred balance of $538,887.66. David Steiner, the Postmaster General, has $86,695 sitting in the same holding pattern. This is not back pay owed for work not yet done. It is compensation already earned, already valued, simply held in escrow until the calendar catches up to the paycheck.

    The Office of Legal Counsel blessed this arrangement back in 2013, and the Postal Service formalized it in an August 2023 pay policy. It is legal in the fullest sense of the word. It is also, functionally, a way of making a hard salary cap into a soft one. The cap does not limit what an executive is paid. It limits when.

    Twelve Chairs, One Very Full Ledger

    The PAEA’s critical positions exception exists for a defensible reason, the argument that the Postal Service competes for executive talent against private logistics firms that pay considerably more than the federal government ever will. Fair enough. But the mechanism built to enforce a ceiling on that competition has, in practice, become a mechanism for deferring rather than denying the money that would breach it.

    Consider the company those eleven names keep. Chief Retail and Delivery Officer. Chief Logistics and Infrastructure Officer. Chief Technology Officer. Chief Information Officer. General Counsel. These are, by any measure, executive suite jobs at a nine figure operating budget, and the audit confirms their occupants are being compensated like it, just with the accounting spread across tax years instead of concentrated into one that would trip the wire.

    None of this requires a conspiracy. It requires only that a statutory salary cap, once it collides with an actual executive compensation market, gets engineered around rather than enforced. The engineering happens to be perfectly legal, transparently disclosed in an annual report, and blessed by the Justice Department. That is precisely what makes it a story rather than a scandal. Scandals get investigated and end. This just continues, one interest bearing dollar at a time.

    Solvency for Me, Not for Thee

    Here is the number that belongs next to Table 2, and does not appear anywhere in the OIG’s report because it was outside the audit’s scope. The Postal Service closed fiscal year 2025 with a net loss of $9.0 billion under GAAP, an improvement over the $9.5 billion loss the year before only in the sense that a slower car crash is still a car crash. Controllable loss, the figure USPS itself prefers because it excludes costs management says it cannot influence, still came in at $2.7 billion, up nearly a billion dollars from the prior year. Compensation and benefits expense across the organization rose $1.7 billion year over year, the single largest driver working against the modest revenue gains from Ground Advantage and stamp price increases.

    Postmaster General Steiner told the public in November that “the occasional appearance of financial progress is far outweighed by the reality of our significant systemic annual revenue and cost imbalance,” and asked Congress for changes to pension funding rules, the statutory debt ceiling, and workers’ compensation administration. He is not wrong that the agency’s finances are structurally broken. It is worth noting, in the same breath, that while the institution pleads for relief from Congress, its own compensation ledger keeps a small number of executives’ pay intact, merely rescheduled, interest accruing the whole time.

    The Postal Service passed its compliance audit. It deserves to be told so plainly. But compliance with a cap that bends rather than breaks is a different achievement than the audit’s clean headline suggests, and an agency nine billion dollars in the red is not obviously the place where “we will pay you later, with interest” should be standard operating procedure for the corner office.

    For more USPS OIG coverage, see Nashville’s Postal Honor System Just Failed an Audit — on four OIG reports finding that the compliance data Nashville reported to USPS headquarters bore little relationship to what auditors found on the floor — and The Pantry That Held a Federal Problem, on a joint OIG-DEA investigation that dismantled a drug distribution network running through the postal system.

  • The Red Tape Roundup — October 4, 2026

    A Note from the Editor

    Wrapping up another long week, and I’m happy to be done with this one. Not because of the workload, which remains as constant as the government’s stupidity, but because of an illness. The biggest story we broke this week was one of a brain-melting 103 degree fever. (We didn’t actually write about it, but it was quite the event.)

    Nevertheless, we trudged through the aches and pains, and we still maintained a pretty solid output. Sure, I may have been a little more lax with some agencies, like the SEC, as they release opinions and enforcement actions more than most other agencies I engage with. Usually, by the time I finish reading one SEC report, there are three more waiting in my inbox.

    Speaking of inboxes, we are nearing the end of our migration to Proton mail. When we started Bureaucracy Times earlier this year, we opted for a free email provider because, well, we weren’t making any money. Today, we still aren’t making anything from our labor, but we’ve realized the importance of privacy and paying for a robust mailbox. It also comes with storage, which is great because we’ve accumulated countless Federal Registers, Congressional Records, and OIG reports. Not to mention, we save a copy of every article we’ve written, and not just the published ones.

    Our move to Proton was prompted merely by observing the world around us. Bounce around social media long enough, and you’re bound to run across a citizen journalist who, during their investigations, has had an encounter with some level of government during their investigations. Since we report exclusively on the federal government, and usually not in a positive way, we opted for a mailbox that we felt would better protect our interests than the free-mail we were using.

    In this edition of The Red Tape Roundup, we capture the somewhat exciting developments on our FOIA battlefield. We still haven’t received ANY records, but we have promises from the agencies, backed by the full faith and fidelity of the United States government, that at some point, maybe soon, we will have something responsive to our requests. They just keep asking for extensions and stuff.

    I’m also still waiting for the FOIA rep from the Arctic Research Commission to call me back, but I’m not holding my breath. We had been in email contact in early September, and he even offered a telephone call where we could discuss my questions…but there was some big event happening in Alaska with nuclear reactors and baby seals or something, so he told me he’d contact me when he returned to DC. I’m still debating on when to send a follow up email.

    The funnest event of the week was our interrogation and evaluation of America.gov, the federal government’s new front door staffed by an AI butler. We dug through some of our most recent articles, sifted out 15 facts that were provable based on the government’s very own agency reports, and then launched those questions at the bot. It didn’t do half bad, actually, so we wrote about it and gave credit where it was due.

    The only thing we’re still trying to settle is what to name the bot…most of us feel we should call it Sam, but that’s probably cliche. The AI calls itself “America,” which we feel is a bit presumptuous. We’re not kidding…go ask it what its name is and it will say something like, “I am America.”

    Even so, we, the people, are America—not the bot.

    We are all, as imperfect and fallible as we are, the waters of this nation. We are the sea of freedom loving people, ebbing and flowing like mindless sheep during every election cycle.

    This Week’s Top Five

    1. “$308 Million to Keep the Lights On in a Building From 1945”
    2. “The Room They Called ‘The Fishbowl’ for Six Years, and the Officer Whose Job Was Not to Notice”
    3. “Cox Media Group Was Selling a Lie, and the FTC’s Price Tag Was $930,000”
    4. “The 20-Minute War at 18,000 Feet: FedEx Flight 705 and the FBI Files”
    5. “We Asked America.gov 15 Questions the Government Already Answered. It Did Surprisingly Well.”

    FOIA Watch

    Another week in the federal records system, where “we found 45 files” counts as both progress and a warning.

    The LSC Files

    LSC OIG found the records. Now comes the redaction machinery. The Legal Services Corporation Office of Inspector General issued its initial determination on our FOIA #26-10, saying it intends to comply with the request and has identified approximately 45 PDF files that may be responsive.

    The catch, naturally, is that the records still have to be reviewed, redacted and assembled. LSC OIG expects portions may be withheld under Exemptions 4, 6 and 7(c). It also interpreted our request for investigative reports as excluding exhibits attached to those reports, while leaving us the option of requesting the exhibits after we see what the reports contain. That is almost certainly what will happen.

    The first batch of records may therefore function less as the end of this request than as the table of contents for the next one.

    The VA OIG Files

    VA OIG gave us a useful denial. Our request concerning the Zachary Hess Dawson veterans-benefits fraud case was denied under FOIA Exemption 7(A), which protects law-enforcement records when disclosure could interfere with an ongoing proceeding.

    The reason matters: VA OIG specifically tied the withholding to the still-pending federal criminal case in the Southern District of West Virginia.

    In other words, the records exist, but the prosecution currently stands between us and them. The denial carries a 90-day appeal window. For now, we’re treating this less as a dead end than a marker telling us when the records may become substantially more interesting.

    The Richmond VA Files

    Richmond VA told us to FOIA it, so we did.

    After we sent a media inquiry to the Central Virginia VA Health Care System about the policies and leadership issues raised by a recent VA Inspector General investigation, Public Affairs Officer Jeff Clements directed us to the facility’s FOIA office.

    On October 1, we submitted the formal request for SOP 011-014 and related records. This is one of the more familiar federal transparency rituals: ask the press office a question, receive a records-request form, and begin again from the beginning.

    The GAO Files, maybe

    GAO assigned us a case number. Our attempt to obtain the restricted Government Accountability Office report GAO-26-107773SU, concerning HHS OIG fraud investigations, is now PRI-26-286.

    GAO says it is processing the request under 4 C.F.R. Part 81, its public-records regulations. That distinction is important because GAO, despite having “Accountability” right there in the name, is part of the legislative branch and isn’t subject to FOIA.

    We are therefore learning the parallel universe of GAO records access one regulation at a time.

    The Used Cooking Oil (UCO) Files

    The used-cooking-oil inquiry bought EPA a little more time.

    EPA’s press office contacted us October 2 seeking an extension on our questions about stolen used cooking oil, Renewable Fuel Standard controls, and the integrity of feedstocks entering the RIN system. We agreed.

    The new deadline is October 6 at 5 p.m. ET.

    The Department of Treasury and IRS questions concerning the 45Z Clean Fuel Production Credit remain outstanding as well. Somewhere between a stolen restaurant grease tank and a federal renewable-fuel credit, this investigation became considerably less ridiculous than its raw material would suggest.

    The USARC Files

    The Arctic records continue their migration through government. NSF’s portion of the U.S. Arctic Research Commission investigation remains on the Complex track, while DOI request DOI-2026-009648 continues to seek the FY2024 and FY2025 Interior Business Center payroll and personnel-cost records needed to reconstruct what USARC actually costs beyond the figures visible in its own publications.

    The SEC Files

    Meanwhile, our SEC request for the underlying examination records involving OTC Link and Regulation SCI remains in processing after the Commission invoked its own 10-day extension for geographically dispersed records, potentially voluminous material and inter-office consultations.

    FOIA Files “Pending”

    The week’s lesson is that “pending” covers an impressive amount of territory. It can mean 45 PDFs waiting for redaction, records withheld behind an active prosecution, a request newly entering a VA queue, a GAO case governed by an entirely different disclosure regime, or EPA asking for four more days to explain the federal regulatory implications of stolen fryer grease.

    The filing cabinets remain undefeated.

    From the Investigative Desk

    The Arctic Commission Is Becoming an Accounting Exercise

    The U.S. Arctic Research Commission investigation began with what looked like a fairly modest question: What does this tiny federal commission actually do?

    That question has proved surprisingly expensive to answer.

    USARC is unusual enough that conventional agency accounting doesn’t tell the whole story. It is a small independent federal entity with commissioners, staff, outside support and administrative services that intersect with other parts of government. Its public-facing publications provide pieces of the picture, but not necessarily the complete cost of operating the institution.

    So we have been reconstructing it from the outside in.

    The investigation has now moved through the Commission’s statutory reporting obligations, its publication history, commissioner and staffing questions, contractor relationships, website development and acquisition records. That work has led increasingly toward the less glamorous but more consequential layer underneath all of it: payroll, administrative support and contracting.

    One important piece sits with the Interior Business Center.

    IBC provides payroll and other administrative services across the federal government, including services connected to USARC. We requested FY2024 and FY2025 records showing aggregate payroll, employer-paid personnel costs, employee counts, pay categories and any commissioner compensation processed through the system. DOI acknowledged that request as DOI-2026-009648.

    NSF has another piece of the puzzle. Its related request is being processed on the Complex track.

    Then there are the contractors.

    We have been tracing historical contracting relationships associated with the Commission, including website and data work, while working through federal acquisition systems that were not designed with the apparent expectation that anyone might someday try to reconstruct a small agency’s contractor history across several years.

    That distinction matters because this investigation is no longer simply about finding a budget number.

    The question is becoming whether the figure a member of the public encounters when looking at USARC actually captures the full federal cost of maintaining USARC, including services performed or processed elsewhere in government.

    We don’t have that answer yet.

    And we are deliberately not forcing one.

    The records still outstanding should allow us to distinguish direct Commission spending from payroll, interagency administrative services and contractor costs without counting the same dollar twice. Until those records arrive, any grand total would carry considerably more confidence than evidence.

    For now, the spreadsheet continues to grow.

    The Arctic, apparently, is easier to map than a federal commission.

    On Our Radar

    A few things that haven’t become stories. Yet.

    A $55.6 million recycling credit is looking for an institutional home. Our continuing DOE records work has led back to the old BNFL contract associated with cleanup and recycling at the East Tennessee Technology Park. When we began asking about the contract and its recyclable-material credit, DOE’s Environmental Management Consolidated Business Center told us the matter was outside its purview.

    That has started a jurisdictional search through DOE’s records apparatus to determine which office actually inherited responsibility for records from a decades-old cleanup contract. Before we can ask what happened to the money, apparently we must first determine which filing cabinet inherited the question.

    America.gov says it can search roughly 29,000 federal websites. We have been asking it questions. The revived federal portal now includes an AI-powered search system with an extraordinarily broad advertised federal corpus.

    Rather than simply accepting the sales pitch, we ran a controlled set of questions drawn from subjects we had already researched independently, giving us something unusually valuable when testing an AI search engine: known answers against which to compare its performance. We also sent GSA questions about indexing, coverage, models, providers, retention and whether search configurations are preserved. The public experiment produced an article. The underlying governance questions remain open.

    Forty-five PDFs are waiting behind the LSC OIG door. The initial determination in FOIA #26-10 is notable beyond the FOIA desk because the forthcoming production could provide an unusually concentrated look at the Inspector General’s investigative work. LSC OIG has already warned that some material will be redacted and that appended exhibits aren’t currently included. Once the reports arrive, we’ll be looking not merely at individual cases but at patterns: what triggered investigations, how they were resolved, what consequences followed and what the public summaries left out.

    And the tiny island of Vanuatu turned out to be considerably more interesting than its size suggests. A seemingly ordinary U.S. cooperation memorandum led us into a much larger geopolitical picture involving infrastructure, strategic geography and competing international interests in a Pacific island nation many Americans would struggle to locate on a map. We’ve published the first piece. The larger question now sitting on the desk is whether the agreement we found is an isolated development or one small move on a much larger board.

    None of these is being promoted to a full investigation merely because it knows how to look intriguing.

    But we’re watching.

  • The Fund That Worked Until It Almost Didn’t: FDIC, 2023, and the Return of the Bank Run

    The Slogan With an Asterisk

    The FDIC’s marketing has one genuinely remarkable claim behind it: since the agency opened its doors in 1934, no depositor has ever lost a penny of insured deposits. It is the rare piece of government messaging that happens to be true. It is also, on its own, a slightly misleading way to describe what actually happened in March 2023, when the failure of three regional banks forced federal regulators to quietly abandon the very insurance limit the FDIC exists to enforce.

    Of the entities covered so far in this series, the FDIC comes closest to the textbook version of a government corporation Congress imagined when it wrote the 1945 Government Corporation Control Act: funded entirely by risk based premiums on the industry it regulates, receiving no annual appropriations, and repaying its initial seed capital rather than leaning on the kind of soft, interest free financing that let TVA and the RFC balloon into open ended liabilities. That design held up for ninety years. Then three banks failed inside two weeks, and the difference between “the FDIC works” and “the FDIC has discretion to decide who actually gets protected” became very hard to ignore.

    The Cleanest Design in the Series, Almost

    The FDIC was created by the Banking Act of 1933 after more than 9,000 banks failed between the 1929 crash and 1933, wiping out roughly 1.3 billion dollars in depositor losses, according to the FDIC’s own institutional history. Congress gave it an initial 289 million dollar loan from the Treasury to get started, a debt the agency subsequently repaid in full. Since then, the FDIC has funded its operations entirely through insurance premiums charged to member banks and earnings on its Treasury securities holdings, a structure the Federal Reserve Bank of Minneapolis has noted receives no congressional appropriations at all, which puts the FDIC closer to actually behaving like the self-sustaining commercial entity every government corporation is nominally supposed to be.

    That design worked exactly as intended for eight decades, through the savings and loan crisis and the 2008 financial crisis alike. Then, on March 10, 2023, Silicon Valley Bank failed, followed within days by Signature Bank and, weeks later, First Republic, together the second, third, and fourth worst bank failures in American history, according to reporting on the FDIC’s own inspector general findings. GAO later found that the Federal Reserve and FDIC had identified concerns about both SVB and Signature Bank as far back as 2018, but neither regulator escalated those concerns into formal enforcement action in time to force a fix before the banks collapsed. The FDIC itself estimated the failures would cost the Deposit Insurance Fund roughly 18.7 billion dollars, the bulk of it tied not to ordinary insured deposits but to the decision to protect deposits above the standard 250,000 dollar insurance limit entirely.

    The Limit That Got Overridden Anyway

    That decision is the part worth sitting with. Federal law lets Treasury invoke a systemic risk exception, on the joint recommendation of the FDIC and the Federal Reserve, to cover deposits beyond the statutory cap when a bank failure threatens the wider financial system. GAO reviewed the invocation for SVB and Signature Bank and concluded the decision likely helped prevent broader instability, noting that deposit outflows from smaller banks slowed within a week of the emergency action. In other words, the mechanism worked. But the mechanism only exists because the ordinary insurance limit, the thing depositors are told to rely on and the thing the premium structure is actually priced around, turned out not to be sufficient the moment a bank run could happen at the speed of a group chat rather than a physical line outside a branch.

    The FDIC’s own inspector general did not let the agency off easy afterward. A review released in December 2024 found the FDIC’s readiness to resolve large regional bank failures was, in the OIG’s words, not sufficiently mature to facilitate a consistently efficient crisis response, citing gaps in staffing, technology, and coordination across divisions. The OIG issued eleven recommendations, and the same reporting noted GAO’s own parallel review found FDIC lacked even a centralized system for tracking supervisory recommendations across its own examiners, meaning emerging risks at supervised banks could fall through cracks nobody was specifically watching for.

    Deregulating the Morning After

    Here is where the story takes a turn that fits uncomfortably well with the rest of this series. Rather than responding to that OIG report with a tightening of supervisory practice, the FDIC’s new leadership moved in the opposite direction. Travis Hill, installed as acting chairman on January 20, 2025, moved quickly to reshape the agency’s regulatory posture. Within weeks, he rescinded the FDIC’s 2024 Statement of Policy on Bank Merger Transactions and withdrew four other pending regulatory proposals, part of what one law firm’s analysis described as a wholesale regulatory purge. The stated goal was making merger review faster and more predictable for the banking industry. The practical effect was that the same agency whose own watchdog had just flagged coordination and readiness failures in the run up to 2023 spent its next chapter loosening the review process for the kind of consolidation that produces exactly the large, complex institutions whose failures are hardest to manage. Hill, confirmed by the Senate as the agency’s 23rd chairman in December 2025 and sworn in the following January, had by then already set the agency’s direction.

    This is not corruption or mismanagement in the way the RFC’s cronyism was, and it is not the multi-decade debt spiral TVA has been running twice now. It is something quieter: a genuinely well designed, self-funded government corporation discovering that even its cleanest structural feature, premium funded insurance with a hard dollar cap, still depends on a discretionary political judgment call about who gets bailed out beyond that cap when the alternative looks worse. The FDIC did not need a conservatorship. It needed an emergency exception to its own rules within days of a crisis starting, which is a smaller version of the same problem.

    Why It Matters

    Every entity in this series so far has hit the same wall from a different direction. The RFC discovered that market discretion without oversight curdles into cronyism. Fannie and Freddie discovered that dodging the 1945 Act’s accountability regime just moves the risk somewhere less visible until it detonates. TVA discovered that a debt ceiling only constrains behavior for as long as Congress declines to raise it, which turns out to be not very long at all. The FDIC, built about as well as a government corporation can be built, discovered that the line between “self-funded insurance program” and “implicit federal guarantee” gets redrawn the moment enough money is at stake, and that the agency meant to price and contain that risk can still be caught flat footed by how fast it moves in an era of instant digital withdrawals.

    None of this means deposit insurance is a bad idea, any more than TVA’s debt history means public power is a bad idea. It means the closest thing this series has found to a genuine success story still needed an emergency override within its first real stress test in fifteen years, and that the policy response since has been to loosen the very oversight machinery that watchdog after watchdog just said was not ready. Whichever government corporation this series covers next, that is the question worth asking of it: not whether the design looks sound on paper, but what happens the first week the design gets tested for real.

    Next in the series: Amtrak, the only government corporation here whose founding fiction was written into the planning documents on day one — by the same planners who privately doubted it.

    Fediverse reactions

  • The Two Year Emergency Order That Needed Seven Years and an Act of Congress to End

    In February 2018, the DEA declared an emergency. Fentanyl related substances, a class of chemicals built by tweaking fentanyl’s molecular structure just enough to dodge existing schedules, were flooding the illicit drug supply, and DEA used its statutory power to temporarily place the entire class into Schedule I. Temporary scheduling orders under the Controlled Substances Act are built to last two years, occasionally three if a permanent scheduling case is pending. This one lasted more than seven, according to a new GAO report on federal drug scheduling, because the process built to handle individual substances had no idea what to do with a class that might contain twenty four million of them.

    The math is not a typo. FDA officials told GAO that depending on which chemical variations you count as valid modifications, the fentanyl related substance class could encompass close to twenty four million distinct chemicals. The Controlled Substances Act requires an individualized scientific and medical evaluation for each substance before it can be permanently scheduled through the normal administrative process. Evaluating twenty four million compounds one at a time, within any statutory deadline that has ever existed, was never going to happen.

    An Emergency Order Standing In for a Law

    DEA formally asked HHS to begin evaluating fentanyl related substances in April 2019, more than a year after the temporary order took effect. HHS did not start sending evaluations back until July 2020. By then the original two year clock was already running out, and Congress had to step in repeatedly just to keep the temporary order from lapsing entirely, extending it in pieces until a hard deadline of September 30, 2025. For most of a decade, in other words, the legal basis for federal fentanyl prosecutions rested not on a permanent, individually justified schedule placement, but on a standing emergency declaration that kept getting renewed because nobody had a better option.

    GAO’s report treats this almost gently, as a case study in “how legislative scheduling can address certain challenges with administrative scheduling.” That framing undersells what actually happened. The administrative process is the one Congress designed to require scientific rigor, an eight factor analysis of abuse potential, medical use, and public health risk, substance by substance. When that process could not scale, the answer was not to fix the process. It was to let an emergency order function as de facto permanent law for seven years, then have Congress skip the individualized evaluation requirement entirely.

    Congress Legislates Around Its Own Statute

    In July 2025, Congress passed the HALT Fentanyl Act, permanently placing all fentanyl related substances into Schedule I as a class, with mandatory minimum sentences including ten years for trafficking one hundred grams or more of any fentanyl analog. Legislative scheduling does not require a scientific and medical evaluation of any kind. Congress can schedule a substance by simple statute regardless of whether it independently meets the Controlled Substances Act‘s own criteria, and in this case it scheduled millions of substances that had never been individually evaluated, because the agency process that was supposed to evaluate them had spent seven years failing to keep pace with the chemistry.

    GAO’s own prior work flagged what this means in practice. Research organizations interviewed for a 2021 GAO report on the same subject warned that class wide scheduling without individualized review risks convicting people over substances that later analysis might show have little or no actual abuse potential. Criminal justice stakeholders went further, warning that sweeping penalties onto an undefined and expanding chemical class could produce lengthy federal sentences for trace amounts and deepen existing racial disparities in sentencing, concerns that did not stop the legislation and do not appear to have been resolved by it. The HALT Act’s fix for a broken administrative process was not to make that process work. It was to make the process legally irrelevant for this entire category of drugs.

    Congress did carve out one narrow accommodation while it was at it. The Act eased registration requirements for research institutions studying fentanyl analogs, allowing multi site studies under a single license instead of the old substance by substance paperwork. That provision quietly concedes the same point the rest of the law ignores, that these chemicals are different enough from one another to require individual study when the purpose is understanding them, but not different enough to require individual review when the purpose is prosecuting someone for possessing them. The bar for scientific caution turned out to depend entirely on which side of the courtroom was asking.

    What Happens Now That the Science Stopped Mattering

    Since the HALT Act passed, FDA told GAO it has not received a single new request to evaluate a fentanyl related substance for the purpose of scheduling, because there is nothing left to schedule; Congress already did it, permanently, for the whole class, present and future. FDA officials said they may still occasionally review a specific substance, mostly to authorize research into it rather than to inform any scheduling decision, since the scheduling decision has already been made regardless of what the research finds. As of this spring, FDA had evaluated forty six fentanyl related substances at DEA’s request under this narrower, research only track.

    That is the actual shape of where this ended up. A federal drug law that was supposed to run on individualized scientific findings now runs, for an entire and still expanding class of substances, on a blanket legislative designation passed because the science could not keep pace with the chemistry and nobody wanted to say so out loud for seven years. The emergency order worked exactly as designed, as a stopgap. The failure was in treating the stopgap as an acceptable substitute for the law it was supposed to hold a place for, for longer than most federal sentences run.

    Nobody in this story made an obviously wrong call at any single step. DEA was right to act fast in 2018 against a genuine public health emergency. HHS was not unreasonable to take time evaluating chemistry nobody fully understood yet. Congress was arguably right that waiting for twenty four million individual evaluations was never a serious option. The failure is structural rather than personal, which is exactly why GAO’s report treats it as a footnote to a larger story about missing paperwork rather than the headline it probably deserves on its own. A statute built around individualized scientific findings quietly stopped requiring any, for the drug category currently killing more Americans than any other, and it took seven years and an act of Congress for anyone to say so plainly.

    Sources: U.S. Government Accountability Office, Drug Scheduling: DEA and HHS Face Challenges in the Administrative Process (GAO-26-108623, September 2026); GAO-21-494, Fentanyl Analogues: Agencies Addressing Scheduling Challenges But Face Broader Issues (2021); HALT Fentanyl Act, Public Law 119-26 (signed July 16, 2025).

    Fediverse reactions

  • The Department of Veterans Affairs Discovers a New Definition of “Still Under Review”

    Somewhere in the sprawling apparatus of the Veterans Health Administration, a manager looked at a growing backlog of unreviewed medical requests and arrived at an elegant solution. Rather than review them, VHA staff would simply tell providers the request was still being reviewed, close it, and move on. A new inspector general audit confirms the practice was still running as recently as April 2026, which is the kind of detail that should end careers and will instead end up in a corrective action plan with a target completion date sometime next year.

    The VA Office of Inspector General‘s audit of “requests for services,” the mechanism by which community providers ask VHA to approve additional care beyond what a veteran was originally authorized to receive, examined 2.6 million such requests filed between October 2024 and January 2026. The Community Care Field Guidebook requires a decision and notification within three business days. Nationally, that standard was met 17 percent of the time. At one facility the OIG visited, the compliance rate was 5 percent.

    Numbers like that are what happens when an institution optimizes for the appearance of a metric instead of the substance behind it, and nowhere in this report is that clearer than in what OIG politely calls “inappropriate processing.”

    A Denial Dressed Up as Patience

    At one of the four medical facilities the OIG team visited on site, community care staff told investigators that managers had instructed them to close out requests for services on the fourth day after they entered the system, whether or not a delegated clinician had actually reviewed the case. The kicker is what staff were told to send the provider: a letter stating the request was still under review, even as the system recorded it as denied.

    According to a community care nurse interviewed for the audit, the Consult Toolbox used to once offer a “needs more time” option for exactly this situation. That option disappeared. Two staff members told OIG that once it vanished, only “approval” and “denial” remained, so staff began selecting denial and appending a note reading “still under provider review” before sending it out on schedule, day four, like clockwork.

    This is not a backlog. A backlog is what happens when demand outpaces capacity and a queue grows. What OIG documented is a workaround built specifically to generate compliant looking output while the underlying clinical decision never happened. The community care chief at that facility confirmed to investigators that the practice was still in effect as of April 2026, months after the audit period covered by the report had already closed, which suggests this was not a temporary emergency measure but a standing operating procedure.

    The Fourth Day Ritual

    Understanding why this matters requires understanding what a “request for services” actually is. It is not the initial referral to a community provider; it is what happens when that provider, mid treatment, determines the veteran needs more care than was originally authorized, additional visits, an extended course of therapy, a follow up procedure. Until VHA approves it, per the agency’s own guidebook, no additional care is supposed to be provided or paid for.

    So a denial letter that falsely claims the request is “still under review” does not just misinform a provider about paperwork status. It leaves the provider in the position of having to guess whether to continue treating the veteran without authorization, at the provider’s own financial risk, or to halt care and wait for a decision that, per this scheme, was never coming through proper channels in the first place. OIG’s report notes elsewhere that when denials go undocumented or improperly communicated, providers may keep delivering care that ultimately goes unauthorized and unpaid, leaving either the veteran or the provider holding the bill.

    None of this is incidental to the broader findings. Across the full 2.6 million request sample, only about 1.4 million, 54 percent, had any documented notification at all. The other 46 percent simply vanished into the record with no evidence anyone was ever told anything. The fabricated “still under review” letters are simply the one facility where investigators caught the mechanism in the act rather than inferring it from an empty data field.

    Nobody Is Watching the Watchmen, Because the Watchmen Quit

    How does a practice like this survive long enough for a federal auditor to walk in and document it in real time. The answer, per OIG, is that VHA’s oversight of this process is close to nonexistent. The agency’s own national performance report, the one tool that might have flagged a facility with a 95 percent noncompliance rate, was quietly discontinued in February 2025 after officials decided the underlying data could not be trusted. As of this audit, seventeen months later, no replacement had been implemented; VHA’s projected launch date is September 2026, which by pure coincidence is also the publication date stamped on this report.

    In the interim, community care staff at another facility resorted to tracking their caseloads the old fashioned way, with thirty separate nurses keeping thirty separate spreadsheets, no shared system, and no way to know whether a request assigned to one nurse’s tracker had already been resolved somewhere else. This is what institutional oversight looks like when the institution has given up on building oversight and left it to individual employees armed with Excel.

    The Under Secretary’s Concurrence, and Other Bureaucratic Absolutions

    VHA’s response to all six of OIG’s recommendations was concurrence, which in federal audit parlance means agreement in principle and very little else in practice. The acting under secretary for health promised to reinforce training on notification procedures, evaluate system capabilities, and eventually build a functioning national report. Every action item carries the same target completion date, July 2027, nearly a full year from now, for a scheme that OIG confirmed was actively deceiving veterans and providers as of this spring.

    There is no recommendation addressing accountability for the manager who ordered the practice, no mention of referral for discipline, no acknowledgment that what happened at that facility was not a process failure but a decision, made by someone, to fabricate the appearance of compliance rather than deliver it. The report notes that three cases uncovered during this audit were serious enough to be referred to OIG’s Office of Healthcare Inspections for review of potential clinical harm. One of those was referred to the local medical facility itself for further review, which is a bit like asking the fox to audit the henhouse’s security footage.

    VHA will spend the next several months evaluating, assessing, and reinforcing its way toward compliance with a three-day standard it already had, has had for years, and simply chose not to follow. The veterans waiting on denial letters that arrived dressed as patience were, in the meantime, the only ones actually kept honestly informed. Informed, that is, of the wrong thing, on schedule, every single time.

    Sources: VA Office of Inspector General, Audit of VHA’s Processing of Requests for Services for Community Care (Report No. 25-03946-211, September 2026).

    Fediverse reactions

  • The $1.4 Billion HUD Couldn’t Be Bothered to Count

    For nine consecutive years, the Department of Housing and Urban Development has known, by its own admission, that its largest rental subsidy program is “susceptible to significant improper payments.” For nine consecutive years, it has declined to say by how much. Not because the number is unknowable. Because in 2017 HUD fired the contractor whose job it was to know, and simply never got around to hiring a replacement.

    That is the opening fact of HUD OIG Report 2026-FO-0006, and it is worth sitting with before the number arrives, because the number is the least interesting part. Any auditor can find a bad statistic. What OIG actually documented is an agency that spent nearly a decade in willful, well-funded ignorance of its own $38.4 billion program, then disputed the homework once someone else finally did it.

    An Agency That Outsourced Its Own Curiosity

    The Public and Indian Housing Tenant-Based Rental Assistance program, known more casually as Section 8 or the Housing Choice Voucher program, is the federal government’s largest direct rental subsidy. It moved $38.4 billion in fiscal 2025, 43 percent of HUD’s entire budget, through roughly 2,200 local Public Housing Agencies that calculate each household’s subsidy using a formula built from income, deductions, rent reasonableness, and utility allowances. It is, by design, decentralized, manual, and dense with judgment calls, which is precisely why the Payment Integrity Information Act requires HUD to estimate how often the formula gets applied wrong.

    HUD used to pay a contractor to run that estimate every year. It discontinued the contract in 2017 and has not produced a figure since, citing “decentralized payment processes, dated and disparate systems” and a familiar chorus of complexity. OIG did not accept complexity as an excuse; it built the estimate HUD wouldn’t. Auditors pulled a stratified sample of 300 payments from the 2.3 million monthly housing assistance payments on the books in March 2025 and checked each one against the underlying documentation.

    Seventy-four were wrong. That is 25 percent, one in four, extrapolated to a projected $1.43 billion a year in improper payments, a number OIG discounted downward for statistical caution before publishing it, meaning the real figure is probably higher, not lower.

    Where the Money Actually Leaks

    The errors sort into a fairly mundane taxonomy, which is itself the point; nothing here required fraud, only inattention. Income miscalculations accounted for the largest share (PHAs entering figures that didn’t match pay stubs, relying on stale documentation, or simply skipping verification against HUD’s own income-matching system). Utility allowance errors came next, PHAs applying the wrong schedule or the wrong unit size to a calculation most of them still do by hand. Then there is a category OIG calls “program compliance,” meaning the PHA skipped a required step entirely, no annual reexamination, no rent reasonableness analysis, no verified immigration status, and got the whole payment marked improper as a result, not because the dollar amount was necessarily wrong but because nobody could prove it wasn’t.

    That distinction matters more than it sounds. OIG also logged 13 “technically improper” payments, cases where the PHA broke a rule but the dollar amount happened to land correctly anyway, pure luck rather than diligence. The audit treats those as a warning sign rather than a reprieve; the same shortcuts that produced a correct number this month are exactly the shortcuts that will produce a wrong one next month.

    Then there is HOTMA, the Housing Opportunity Through Modernization Act, signed in 2016 with instructions to raise the medical and disability expense deduction threshold and the elderly and disabled household allowance. Ten years later, HUD’s own system still runs the old, lower thresholds, because the software meant to replace HUD’s aging PIC system, itself a replacement project HUD started in 2021, still has no launch date. A statute a decade old, unenforced, because the agency’s internal IT timeline has quietly outlived the urgency that produced the law in the first place.

    The Monitoring That Wasn’t

    If the errors were merely common, that would be one story. What makes it worse is how little anyone at HUD was watching for them. The agency ran 19 targeted “Calculation of HAP, Adjusted Income, and Rent” reviews in fiscal 2023 and has run zero since. In fiscal 2025, HUD completed 14 total Compliance Monitoring Reviews, covering nine separate program areas, for a portfolio of 2,200 housing agencies and 2.3 million households. That is not oversight so much as its rumor.

    PHAs, for their part, were not shy about explaining why, once OIG actually asked. Understaffed offices process tens of thousands of annual reexaminations with no time to verify small, fluctuating income sources like child support or unemployment benefits. HUD’s own income-verification tool, the Enterprise Income Verification system, updates quarterly and simply doesn’t capture pensions, TANF, or state benefit income at all, meaning the tool HUD requires PHAs to use cannot see a meaningful share of the income it’s supposed to catch. Guidebooks on calculating rent and running reexaminations haven’t been updated since 2019 and 2020 respectively, years before several of the rule changes they’re supposed to explain.

    The Part Where HUD Argues With the Math

    Faced with all this, the Office of Public and Indian Housing did what agencies under audit reliably do, agreed with the spirit and quibbled with the specifics. PIH accepted the recommendation to work on simplifying HAP calculations and to develop better monitoring. It rejected the recommendation to embed a mandatory documentation checklist into its own system, for the reasonable-sounding but conveniently timed reason that its legacy IT platform can’t support it. And it declined to concur with the $1.43 billion figure itself, saying it was still waiting on additional information from OIG.

    OIG’s rebuttal, printed in the report without much editorializing needed, lays out a timeline; final results shared with PIH in March 2026, three follow-up meetings in April to walk through methodology sample by sample, and no further request for information from PIH until July, three months after the walkthroughs concluded. The agency that spent nine years unable to produce its own improper payment estimate spent another four months sitting on someone else’s before deciding it needed more homework.

    PIH’s written response includes one more line worth quoting in spirit if not verbatim, namely that the risk of error is “largely outside of PIH’s direct control,” a structural feature of a complex, decentralized statute rather than a management failure. That may even be half true. It is also the sentence every agency reaches for once the number gets big enough to need one, and it is a strange thing to say about a program HUD chose, for nine years running, not to measure at all.

    Source: HUD Office of Inspector General, Report 2026-FO-0006, “HUD’s Public and Indian Housing Tenant-Based Rental Assistance Program Had Significant Improper Payments,” September 17, 2026.

  • The Agency That Fired the People Who Knew Where the Files Were

    When GAO auditors asked the General Services Administration for basic records on which federal buildings it had sold, and when, and how long each sale took, the agency handed over a dataset in which nearly 45 percent of the values were missing across the two fields that mattered most. Not obscure fields. The Acceptance Date and the Completed Disposal Date, the start and finish lines of the entire disposal timeline GAO was asked by statute to evaluate. GSA runs the federal government’s primary real estate disposal program. It could not, on the first attempt, produce a clean accounting of its own recent transactions.

    Half the Staff, All of the Institutional Memory

    The explanation, once GAO pressed for it, tracks a specific and traceable event. In March 2025, GSA’s Public Buildings Service began a major reorganization that cut staffing levels by roughly 50 percent. GSA officials told auditors that even after producing a revised dataset, still missing about 6 percent of values in the same two fields, they could not fill in the remaining gaps because the staff who had worked on those specific disposal projects were no longer employed by the agency.

    Sit with the shape of that admission. This isn’t a case of records being lost to a server failure or a filing error. The people were the record. Once they left, the knowledge of what happened on individual property sales left with them, because nobody had apparently built a system robust enough to survive the departure of the humans who ran it. A disposal program depends on knowing when a building was accepted for sale and when the sale closed. GSA cut the workforce that tracked those two dates by half and then discovered, when someone finally asked, that it could no longer fully answer the question.

    Not a New Complaint, Just a Newly Confirmed One

    This is where the story stops being a one-off staffing hiccup and starts looking like a pattern GAO has been circling for years. In April 2026, a separate GAO review concluded that GSA was not using quality disposal data and recommended the agency establish a formal plan to ensure the reliability of its sales and disposal records going forward. GSA agreed with that recommendation. As of August 2026, it remained open, meaning the agency has acknowledged the problem in writing and has not yet fixed it.

    The Public Buildings Reform Board, for its part, told GAO it has its own version of the same complaint. Data in the Federal Real Property Profile, the government’s central database for tracking what it owns, was described by Board officials as unreliable and potentially inaccurate on something as basic as a building’s deferred maintenance needs. The Board also noted that OMB’s last formal call for agency disposal candidate data before January 2025 went out in October 2020, a gap of nearly five years during which the underlying inventory the entire disposal apparatus runs on simply wasn’t being refreshed.

    A Program Built on Records It Can’t Verify

    None of this data infrastructure is incidental to FASTA’s mission. The entire premise of the program, that the government can systematically identify unneeded buildings and dispose of them faster than the traditional process allows, depends on knowing what the government owns, what condition it’s in, and how long past disposals actually took. GAO’s own statistical analysis of disposal timelines, the one that found FASTA properties sold roughly five months faster than non-FASTA ones, had to be built on a dataset with known, acknowledged gaps, gaps the agency running the program could not close because it no longer employed the people who could have closed them.

    The irony writes itself without much help. A law designed to speed up how quickly the government sheds property it doesn’t need is administered by an agency that, mid-implementation, shed roughly half its own staff and then couldn’t fully reconstruct the paper trail on the properties it had already sold. GSA says it’s working on it. The recommendation to fix the underlying data quality problem has been open since 2022, reaffirmed in 2026, and remains open still. Somewhere in that gap between acknowledgment and correction is where a federal real estate program has been quietly running for the better part of a decade, on records nobody can fully vouch for.

  • VA Can’t Count Its Own Toxic Exposures Staff. It Also Can’t Track What They Do.

    The Department of Veterans Affairs has spent $51.7 billion since 2022 out of a fund built to make good on the PACT Act’s promise to veterans exposed to burn pits, Agent Orange, and every other slow poison the military handed out alongside a rifle. Congress just added another $52.7 billion for FY2026. And according to a new VA Office of Inspector General audit, the Veterans Benefits Administration cannot say with confidence how many people it actually pays out of that fund, let alone what any of them do all day.

    The Missing Forty-Three

    Every six months, VBA is supposed to run a recertification process, essentially a roll call, to justify the continued need for central office staff hired using the Toxic Exposures Fund. It is the kind of housekeeping exercise that exists precisely so nobody has to ask, months later, “wait, who are we paying and why.” In FY2025, VBA’s own recertification authorized 43 fewer employees than HR Smart, the department’s official personnel system, actually showed drawing pay from the fund at the same time.

    Forty three people is not a rounding error. When OIG asked about the gap, VBA officials said their goal was to reduce the number of fund supported support staff, a phrase that answers a question nobody asked and dodges the one that matters. It took a VBA employee confirming, after OIG presented its findings, that the agency had simply been paying for more central office staff than it had ever authorized. VBA’s response has been to announce it will stop charging central office staff to the fund altogether, which solves the embarrassment without explaining how it happened or for how long.

    That last part matters. Recertification has run since October 2023. Four different chief financial officers have cycled through VBA’s top finance job since the estimation methodology was published in December 2023, a level of turnover that the audit itself flags as a reason nobody was ever assigned to keep the paperwork straight. Leadership musical chairs is a familiar VA excuse; it is less familiar to see OIG connect that turnover directly to money moving without anyone responsible for watching it move.

    A Fund Nobody Can See Into

    Here is the part that should worry veterans more than the staffing math. VBA’s inability to reconcile who it pays traces back to something more basic. VA’s computer systems cannot tell PACT Act related work apart from ordinary work in the first place. Not approximately. Not unless someone manually estimates it. VBA officials told OIG flatly that none of VA’s systems are configured to track Toxic Exposures Fund data and services separately, and that VA has no activity based cost accounting capable of tying a given employee’s actual tasks to a given funding stream.

    That is not a footnote to the staffing failure; it is the mechanism that made the staffing failure possible. If a system cannot tell you whether an employee’s workload is PACT Act related, it certainly cannot tell you whether that employee should still be on the payroll under that fund six months from now. The recertification process was supposed to be the human patch for a technical gap. The patch failed in exactly the way you would expect a manual workaround to fail, quietly, for at least one full cycle, until an outside auditor forced the count.

    VHA has the identical hole, dressed slightly better. None of its systems can track individual episodes of toxic exposure care either, so VHA built its own workaround, called expenditure transfers, to shift the money between accounts after the fact. That workaround produced its own paper trail of errors, about $371,000 misapplied to the wrong accounts, including one facility that charged research costs to a medical services account explicitly reserved for patient care. VHA caught and fixed it, and corrected a second error a facility flagged on its own once auditors were already in the building. VBA did not catch its own gap; OIG did, and only after VBA’s own recertification numbers failed to match what HR Smart had been showing all along.

    Reconciliation Is Not a Software Feature

    OIG’s four recommendations amount to VA promising to build the tracking apparatus it should have had before it started spending $51.7 billion. VBA is now finalizing an actual cost estimation methodology, four years and four CFOs after the fund launched, and has committed to properly coding employees in HR Smart by October. VHA is promising quarterly sampling of its expenditure transfers, which is a reasonable fix for a problem that only exists because the underlying systems cannot do the job automatically.

    None of this required forensic accounting. It required VA to build accounting systems that can distinguish one funding stream from another, a capability most mid sized nonprofits manage without a $52.7 billion appropriation. Instead, VA ran a specialized, congressionally mandated benefit for four years on spreadsheets, proxies, and an honor system recertification that nobody was checking.

    The department has now concurred with every recommendation and set target completion dates stretching into 2027. Veterans exposed to toxic substances during their service are entitled to more than a promise that the tracking will eventually exist. They are entitled to a department that could already answer the question OIG had to ask for them: who, exactly, is this fund paying, and for what.