Outrage over $16 muffins marks heightened scrutiny, experts say

The prices seem more suited to a Parisian cafe than a Justice Department conference: $16 muffins, $8 cups of coffee, and $10 brownies.

The Justice Dept. Inspector General raised eyebrows this week with an audit reporting seemingly exhorbitant expenditures the agency made in the course of producing conferences, for food and other items. But the cost of the food (which may be more defensible than it seems) is really not the point. Instead, the audit is just a headline-grabbing example of the kind of scrutiny agencies can expect in the new financial environment,  said Darrell West, vice president and director of governance studies at the Brookings Institution think tank.

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“With trillion-dollar deficits, there will be intense attention to all forms of government spending,” West said. “People will be looking for examples of waste and abuse, and when they find one, it will get attention.”

“It’s a combination of economic and political pressure that has put agency budgets on the line,” said Stan Soloway, president of the Professional Services Council. “The first thing to go will be travel and training, and [federal agencies] should be careful they do not diminish important opportunities.”

The controversy began when the Justice’s Office of Inspector General highlighted examples of inappropriately expensive food and beverage items paid for by the department at the 1,832 conferences it sponsored in fiscal 2008 and 2009 in a Sept. 20 report.

Auditors said the questionable items included $10 brownies, $8 cups of coffee and $16 muffins; however, the Hilton hotel chain subsequently has disputed the $16 muffin charge by saying the price also included coffee, fruit and juice, tax and service charges.

White House officials responded with an order to federal agency directors to immediately review all policies and controls associated with conference expenses and to require that all approvals for future conference spending must be made through departmental deputy secretaries or the level above.

“The IG report provides a reminder of how important it is that agencies undertake all due diligence to protect taxpayer resources from unnecessary expenditures,” Jacob Lew, director of the Office of Management and Budget, wrote in a memo to all department and agency heads on Sept. 21. Vice President Joe Biden pledged to go over the findings in the Campaign to Cut Waste.

There were outraged responses in the media, including Sen. Chuck Grassley, R-Iowa, blaming the alleged $16 muffin purchase on a “culture of elitism in Washington.” At the same time, a backlash has developed suggesting the angry reactions to overpriced food items was a bit overblown.

Looking at the bigger picture, analysts said pressures to cut federal spending in general have been rising for months and are not yet at their peak.

“Agencies are already watching their expenses like a hawk,” Soloway said. “The environment is very difficult, with huge financial pressures.”

He worries that quick policy changes—such as OMB’s rapid response to the muffin audit report—may lead to strict curtailments of federal employee training and other conference activities that may seem optional but actually are critical to underpinning workforce productivity and advancement.

“These are very serious conferences, so we don’t want to overreact,” Soloway said. It would be unproductive to cut conference expenses to such a degree that it denies important training and educational opportunities for federal employees, he added.

Belt-tightening is tough now, but it likely will get even tougher in the next two years and may negatively impact the administration’s productivity and transparency agendas, said Trey Hodgkins, senior vice president for the TechAmerica industry organization. He noted that House and Senate committees recently have cut e-government funding for items such as the Federal IT Dashboard. The dashboard has been promulgated as an efficiency tool by former federal Chief Information Officer Vivek Kundra.

The extremely tight budgetary environment, with the instability of ongoing continuing resolutions to pay for government operations, is likely to hamper the administration’s e-government and cloud agendas, Hodgkins said. “The IT Dashboard and cloud, all of these are getting caught up in the process,” he said.

In any case, the current laser focus on government spending is not likely to change anytime soon.

“It would be very foolish for federal managers to ignore the current political climate and the sharp focus on government spending. The quick response from the White House and OMB shows how sensitive the administration is to the issue,” said Joe Newman, director of communications for the Project on Government Oversight watchdog group.