All Commentary
Saturday, September 1, 1990

Another World

Dr. Lesher is president of the U.S. Chamber of Commerce

If it sometimes seems as if Federal bureaucrats inhabit a different world from the rest of us—it is because they do.

A case in point is the Federal Energy Regulatory Commission (FERC), an independent agency that among other things sets rates for transportation of natural gas, issues licenses for hydroelectric plants, sets rates for sale of electricity; and also sets rates for transportation of oil by pipeline.

FERC’s work is highly technical, and the agency is forever hosting long-winded public hearings in which throngs of attorneys drone on and on as if they were being paid by the hour, which most of them probably are. It is a tedious business, but someone has to write every word down in black and white for lawyers to read.

Indeed, the importance of these FERC heatings is such that there is always a great demand for the transcripts which are about as thick as telephone books, and can sell for more than $6 per page. Not surprisingly, many private companies that specialize in such work would be very happy to transcribe FERC heatings at no charge to the agency. They know they can make ample profit selling transcripts to the public.

So it was that when the contract to transcribe FERC hearings came up for renewal last year, several firms submitted bids offering to do the work for nothing. But the firm that had been doing the work, Ace-Federal Reporters, took it one step further, offering to actually pay FERC about $7,900 per year for the privilege.

Now any private firm in that situation would jump at the offer, but FERC is a government agency living in another world. To the bureaucrats at FERC, the paltry $7,900 offered by Ace-Federal wasn’t worth the trouble of handling it. FERC hastily rewrote its contract specifically to bar bonus bids. What followed next was a typical Washington free-for-all: Ace-Federal raised the ante, offering to pay FERC more than $1 million over the five-year life of the contract, FERC awarded the contract to another bidder, and Ace-Federal filed a lawsuit against FERC.

FERC insists it is within its legal rights to deny the contract to Ace-Federal, and it may be. But the core of the problem is the bureaucracy’s indifference to economic reality. An extra $1 million or so means nothing to FERC. The money would actually go to the Treasury Department which, so far as FERC is concerned, might as well be another country. Also, FERC bureaucrats have nothing to gain by saving the agency money. To the contrary, it would make it more difficult for the agency to justify its annual demand for more funding from Congress.

The last I heard, FERC was in Federal court fighting tooth and nail to avoid having to accept more than a million dollars from a contractor. And if you can understand that mentality, then perhaps you can also understand why Uncle Sam can’t get by on $1.2 trillion a year.