The New York Times on Zombie Contracts
We’ve been trying to follow the work of the new Department of Government Efficiency (DOGE). Back in March, we posted about DOGE’s somewhat mysterious claim that it was “cancelling” contracts and leases. As we noted, most parties cannot “cancel” a contract. Unilateral cancellation of a contract is a breach. This is the government, so things are different, but not that different. Parties with the resources and the patience can pursue administrative remedies when the government wrongfully terminates a contract.
This is fairly small potatoes. The Times has identified 44 zombie contracts, and the total value of the contracts is $220 million. According to its website, DOGE claims to have saved taxpayers $165 billion, which would be impressive if true, but is still, by my math, only 16.5% of its goal of shaving $1 trillion from the federal budget of $7 trillion in a few months. Of course, as chronicled elsewhere, DOGE has taken credit for cancelling contracts that had already been shut down by previous administrations, or it has claimed to have cancelled contracts when it really was just not renewing them. According to BBC Verify, only $61.5 billion in savings have been itemized, and despite the “Wall of Receipts,” there are receipts accounting for just over half that amount.
The existence of zombie contracts should surprise nobody. Just as with Twitter, Elon Musk’s strategy is to cut everything that seems to him wasteful and then to backfill when he discovers that the cuts have gone too far. And you can easily imagine how they might become overzealous. For example, listen to this DOGE employee, best known as “BigBalls,” explaining how he discovered waste.
DOGE may not be as transparent as it claims to be, but its employees certainly are. They are tireless, they are dedicated, and they are uniform in their ideology. They believe that they are serving their country, and they are making personal sacrifices to do so. They are convinced that the people who work at the agencies that they are demolishing are engaged in systematic waste, fraud, and abuse. They think that they are uncovering $20 million outlays for which there is no evidence of purpose and no accountability. I’m afraid that simply doesn’t track. The receipts on the “wall of receipts” are for actual things. What I see when I watch the video is people who do not understand a system assuming the worst about that system and thus concluding that the things that they don’t understand are simply unnecessary.
It seems that many of the reinstated contracts that The Times has identified were reinstated because DOGE discovered either that they were required by law or that they were for essential services that the agencies could not accomplish on their own. It strikes me as quaint that the administration is reinstating contracts just because it would be illegal to cancel them. More recently, under its very robust version of the unitary executive theory, the administration seems to operate on the principle that the President can terminate any program or agency within the executive branch, notwithstanding the Take Care Clause.
But the real story here is not the zombie contracts or the elimination of waste, fraud, and abuse. The real story is the reduced footprint of the federal government. Whether or not DOGE becomes a permanent fixture in our government, many government programs have been shuttered, and they will not be immediately revived, at least not in their current forms. It may be that states and private entities will take up the work that the government used to do. That decentralization will no doubt give rise to its own inefficiencies, if not new forms of waste, fraud and abuse.
Brave new worlds.
UPDATE: The two New York Times journalists cited above have published a follow-up on their earlier article. Some of the zombie contracts had been removed from DOGE’s list of its accomplishments. Some remain on the list. Meanwhile, DOGE added 800 new “cancelled” contracts to the list and claimed an additional $5 billion in “savings.”