Tuesday, July 30, 2013

Scandalous Levels of Waste, Fraud, and Abuse in Private Sector T&E Budgets

Via Ezra Klein's Wonkblog, The U.S. Travel Association's latest report shows that private businesses overspend on meetings by 90% compared to the U.S. Government. What's more, greedy private-sector employees are depriving you, the consumer, of lower prices and instead are abusing their expense accounts, spending over 20% more than government employees.

The US Travel Association's spin on these charts is that the government should spend more on meetings, but I prefer to think of this an another reason why you should be skeptical of applying "private sector" fairy dust to government agencies in order to wring out efficiencies. There's plenty of private-sector spending that doesn't make the maximum effort to find the lowest price. It may seem silly to teach a bunch of mid-level IRS managers the Cupid Shuffle as an ice breaker or morale event, but it's not like it makes good fiscal sense to have Metallica headline a conference for CRM software developers or for Microsoft to bring in Macklemore and deadmau5 to do a private show for their interns.

Remember this the next time Darrell Issa goes on a witch hunt because a hotel failed to itemize an invoice properly, making it look like the agency paid $16 for a blueberry muffin when it really paid that much for full continental breakfast service and meeting space. Government agencies are actually quite careful with their travel and expenses policies compared to the private sector.


Will said...

Fair enough with regard to private government contractors versus public agencies.

But exorbitant "expenses" spending is not necessarily bad. Companies like Microsoft, in particular, with a high proportion of revenue to production costs and a relatively small workforce, would otherwise just be stockpiling its profits.

Nick Beaudrot said...

Well in the long run it would be returned to shareholders via dividends or buybacks, or used to make real investments.

And of course the median business traveler is not working for MSFT