Smithsonian Comes Under Fire At FY ’08 Budget Hearing

The Smithsonian Institution came under fire during this week’s markup of its fiscal year 2008 budget by the House Appropriations’ Subcommittee on Interior, Environment and Related Agencies.

The Smithsonian Institution’s budget would be frozen at the FY ’07 level. The Smithsonian would receive $536 million for operating costs, some $35 million less than the administration’s request for fiscal year 2008.

The Smithsonian was the subject of severe criticism during the markup from House Appropriations Committee Chairman David Obey (D-WI). Chairman Obey stated that for two years in a row the Smithsonian had been an embarrassment because of the excesses of “the dearly-departed” Secretary Lawrence Small, who resigned earlier this year. Obey said that if he had his way, the Institution would have received no federal funding at all for this year, not just a freeze, until the Smithsonian Regents exercised some real oversight over the organization.

In addition, the Subcommittee approved an amendment offered by Representative Virgil Goode (R-VA) adding committee report language addressing concerns about sole source, non-competitive contracting done by Smithsonian Business Ventures (SBV).

SBV has been the subject of numerous investigations recently concerning business practices, governance issues, expenses, and salaries, as has the Smithsonian Institution generally. There have been Congressional inquiries, Government Accountability Office (GAO) studies, there is an ongoing Smithsonian Independent Commission review, and an Inspector General report concerning SBV is expected in June.

As previously reported, SBV chief executive office Gary M. Beer recently announced that he would not seek reappointment when his contract expires this fall, due mainly to the controversies over his past business dealings, most notably SBV’s television deal with Showtime.

With respect to its student travel program, SBV recently entered into an exclusive contract with a Swedish travel company that was not competitively bid despite the fact that there are numerous student travel companies based in the U.S.

The committee language, as adopted states, “The Committee is concerned that the increasing use of exclusive licensing agreements and the awarding of contracts through non-competitive processes conflicts with the Smithsonian Institution’s public trust obligations and its mission to increase and diffuse knowledge. The recent awarding of a contract with respect to the Smithsonian Institution’s student travel program is an example of an agreement which causes the Committee concern. The Committee expects the Smithsonian Institution to address the issues of sole-sourcing and competitive bidding processes with respect to its business ventures, particularly when it grants licenses or contracts to companies to operate under the Smithsonian logo through non-competitive processes. Within 60 days of enactment of this legislation, the Smithsonian Institution is directed to submit a report to the Committee describing under what circumstances it considers it appropriate to license the use of its logo to businesses and nonprofit organizations, and under what circumstances, it considers it appropriate for such licenses to be exclusive. The report should also include a detailed analysis of the Smithsonian Institution’s due diligence practices with respect to potential business activities, risk analysis with respect to such arrangements, and monitoring of business activities to ensure compliance with its contractual obligations and consistency with its mission.”