PERSPECTIVE ON THE PUBLIC TRUST : Psst, Wanna Buy 5 Acres for $100? : The virtual giveaway of federal land is just one example of bureaucratic coziness with the private sector at our expense.

Five acres of prime California development land for $100! Sounds too good for the 20th Century, but such a deal actually went down, in the Santa Clarita Valley, just two years ago. Five acres for $100--when surrounding property owners were asking $75,000 to $100,000 for just one acre. At that price, of course, somebody got ripped off. Who was it? You.

Those five acres were owned by an agency of the U.S. government. The big losers were America’s taxpayers.

This case illustrates a troublesome challenge for the new Administration in tough economic times: getting the most out of America’s precious assets, when career federal officials are virtually giving those assets away. More broadly, how can the massive federal bureaucracy be made responsive to the mandate for change?

The appointment of 3,000 or so new policy-makers at the highest levels won’t do the job, even with tough ethical standards to discourage 1,100 hungry Washington insiders who might be on the take. Most federal bureaucrats are protected from the President-elect by civil-service tenure, and they often seem to operate on their own, sometimes contrary to what the public welfare seems to require.

The five federal acres were sold for $100--without competitive bid--by the Interior Department’s Bureau of Land Management, which owns or administers almost a fourth of the nation’s land. The winner was a local developer who owned two parcels adjoining the five acres. By the time a neighbor appealed, it was too late to reverse the transaction, although--with classic bureaucratic understatement--an Interior Department administrative judge wrote, “the United States did not receive a competitive price for the parcel.”

But BLM’s California leadership defends the sale to this day. After all, it went through channels: A BLM appraiser (since retired and unavailable for comment) put the land’s value at $100; the project manager, who admits he does not understand appraisals, says “somebody else” approved it.

And that was that.

The bonanza has been explained as part of former Interior Secretary James Watt’s “Asset Management Plan,” designed in the first Reagan Administration to quickly privatize government holdings to help pay off the national debt. The program was discredited by a new high command at Interior after Watt was fired. In fact, when the five-acre sale was consummated, Watt was long gone. So why were lower-level functionaries still selling federal land at fire-sale prices?

“I’d be disappointed if my footprints had faded,” Watt says. “We rewrote the rules and manuals, and very few have been changed since.”

If Watt’s footprints are still visible in the loyalty of former underlings torejected programs, that’s not all that’s wrong at BLM. In land trades with nonprofit conservation groups. BLM has repeatedly undervalued federal property--in one case ignoring the presence of $1 million worth of recoverable minerals and essentially donating them to a private company. Repeatedly, Interior’s inspector general has recommended second appraisals--to give taxpayers another chance at getting what their property is worth--but BLM has refused.

Yet another case reveals California BLM officials administering a potentially lucrative contract first to favor one bidder, then another. BLM’s failure to collect penalties for non-performance by the ultimate winner has caused a former agency official to charge that laws were being broken by its own administrators.

Clinton’s new appointees could do worse than listen to whistle-blowers within BLM, who insist that the concept of public service is out of date at that agency. They have compiled records, complained to supervisors and talked to reporters. But instead of being protected and honored, they’ve been assailed as troublemakers and intimidated by an internal agency spy system. The latest inspector general’s investigation was diverted to other matters, leading a congressional staffer to say of BLM: “They’re not watchdogs, they’re lap dogs.”

Yet the whistles are not being heard elsewhere on Capitol Hill, where the bargain-basement disposal of public property seems of limited concern. Just this year, Rep. Mike Synar (D-Okla.) announced his discovery that the Stillwater Mining Co. would receive 1,700 acres of U.S. forest in Montana for $35,000--to mine platinum and palladium for an expected gross of $36 billion. A 120-year-old mining law makes such deals legal by permitting purchase of taxpayer-owned land for $2.50 an acre. But even the paltry payment to taxpayers of just $1 for every $1 million mined did not move Synar’s colleagues to make any change.

So the new President will be on his own in keeping his promise to end abuses of public trust and assuage widespread outrage and contempt for government. But while conflict-of-interest rules at the highest levels are reassuring, they won’t save the vast cost of incompetence, overfriendliness with the private sector--or more sinister behavior--down the line.

There are hundreds--perhaps thousands--of lower-level players that the President-elect will not be allowed to replace--the permanent, supervisorial bureaucrats essential to implementing new policies at agencies like the BLM. This Hush-Puppy army can cost American taxpayers as much or more than a whole Cabinet of former lawyer-lobbyists wearing $1,000 suits and alligator shoes.