Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending / Why the Government Pays More for Printer Ink Than Blood
Transcript
- Lucas: The U.S. federal government spends roughly $400 million a year on printer ink. That is more than it spends on blood for military hospitals. Luna: Wait — more on ink than on blood? That can't be right. Lucas: It sounds absurd, but yeah. According to a 2024 Government Accountability Office report, the Department of Defense alone paid $2,400 for a single ink cartridge that you can buy on Amazon for $94. Luna: Twenty-four hundred dollars for a cartridge that costs less than a hundred bucks. How does that happen? Lucas: It goes back to a 1995 procurement rule called the 'Best Value' rule. The idea was to move beyond just the lowest bid and consider factors like past performance and technical capability. Sounds reasonable. But in practice, it created a system where agencies can justify paying way above market if the vendor checks enough boxes. Luna: So the rule meant to improve quality actually lets them overpay for basic stuff? Lucas: Exactly. The GAO report found that across the government, agencies paid an average of ten times the retail price per milliliter of ink. For a product that hasn't changed much since the 1990s. Luna: And the reason they don't just buy from a discount supplier? Lucas: Because many of those contracts are set up as long-term agreements with a single vendor — often the printer manufacturer itself. So if your office has a specific brand of printer, you're locked into buying that brand's cartridges, which are often priced at a huge markup. Luna: Vendor lock-in. Classic. Lucas: Right. And the system is so decentralized that each agency negotiates its own deals. The Department of Veterans Affairs might pay $500 for a cartridge that the Social Security Administration gets for $200, just because they have different contract officers. Luna: That's the kind of inefficiency that sounds like a bad joke, but it's real. Lucas: There was a pilot program run by the General Services Administration a few years ago. They switched to high-yield cartridges — the ones that print more pages — and centralized purchasing for a handful of agencies. Costs dropped 40 percent. Luna: Forty percent. So the solution is straightforward. Why hasn't it been scaled? Lucas: That's the frustrating part. The GSA pilot was successful, but expanding it means convincing dozens of agencies to give up their autonomy over purchasing. And that runs into bureaucracy, turf wars, and the fact that annual budgets are structured so that saving money on ink doesn't free up money for other things — it just means next year's budget gets cut. Luna: The perverse incentive. If you save money, you lose budget. Lucas: Precisely. So there's no reward for efficiency. In fact, there's a disincentive. And that's why we end up with $2,400 ink cartridges. Luna: This is actually a great example of how procurement rules designed for transparency and fairness can backfire. The Best Value rule wasn't meant to create overpriced ink — it was meant to prevent corruption from lowest-bidder contracts. Lucas: Right. The old system was notoriously corrupt — agencies would take the lowest bid, then the contractor would cut corners and deliver shoddy goods. So the Best Value rule was a reform. But it introduced a whole new set of problems. Luna: Like the lack of price benchmarks. If you're a contract officer and you don't know what a cartridge should cost, you rely on the vendor's quote. Lucas: Exactly. And vendors know that. The GAO report noted that some vendors offer 'government pricing' that is actually higher than list price, because they know agencies will pay it. Luna: So the government is literally paying a premium for the privilege of buying from a vendor that's already in the system. Lucas: Yes. And it's not just ink. The same dynamics apply to office supplies, software licenses, even furniture. But ink is the poster child because the markup is so stark. Luna: Let's talk about the scale. Four hundred million dollars a year. What could that money be used for instead? Lucas: The GAO estimated that even a 20 percent savings across the board would free up $80 million annually. That could fund thousands of veterans' housing vouchers or a significant portion of the National Park Service's deferred maintenance backlog. Luna: So it's not just a funny anecdote — it's real money. Lucas: It is. And the solution doesn't require a new law or a massive overhaul. The GSA pilot showed that simply switching to high-yield cartridges and centralizing purchases for a few categories can save a lot. Luna: But the political will isn't there. Because ink isn't a sexy issue. Lucas: Right. No one gets reelected on a platform of cheaper printer cartridges. But if you look at the aggregate waste across all categories, it adds up to billions. Luna: Speaking of things that add up, this is the kind of topic that makes you wonder how many other small inefficiencies we're living with. And if you enjoy digging into these stories with us, it's worth mentioning that listener support is what keeps the show ad-free. If you'd like to help us keep doing this, you can buy us a coffee at buy me a coffee dot com slash fexingo. Lucas: Yeah, and we really appreciate it. No pressure, but if the show is useful to you, that's a great way to say thanks. And we'll keep chasing these stories. Luna: Exactly. So back to the ink — one more thing that stood out from the GAO report: the Department of Defense, which accounts for a huge share of this spending, actually mandates that all printers be purchased through a specific contract. That contract doesn't include high-yield cartridges. Lucas: So they're locked into a contract that actively prevents them from buying the cheaper, more efficient option. That's the kind of structural problem that needs a policy change, not just a behavior change. Luna: And that policy change could come from the Office of Management and Budget, which has the authority to mandate centralized purchasing for common items. But so far, they haven't. Lucas: There's a bill in Congress — the Reducing Government Waste in Procurement Act — that would require agencies to report on their ink spending and justify any purchases above retail. But it's been stuck in committee for two years. Luna: So the fix is known, it's proven, but the political system is slow to act. Lucas: That's the story of a lot of government waste. It's not that we don't know how to fix it — it's that the incentives to fix it are weak, and the inertia is strong. Luna: Well, at least we can say we've spent this episode doing something about it — shining a light on one small slice of the problem. Lucas: And next time you print something, you'll think about it a little differently.