Lawmaker pushes for stringent purchase card oversight

Catching federal employees who misuse government travel and purchase cards is a job best done by a contractor, a lawmaker said Wednesday during a House subcommittee hearing.

In the past year, instances of federal employees using government purchase and travel cards to buy clothes, jewelry, luggage, computer hardware and other items not related to government business were uncovered at seven federal agencies.

"Why aren't the internal management controls set up to oversee the purchase card programs detecting fraud?," asked Rep. James Greenwood, R-Pa., chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations. "In order to have a low rate of fraud, we are going to have to have a high rate of detection."

The 1998 Travel and Transportation Reform Act requires federal employees to use government charge cards, instead of personal credit cards, for travel expenses. Purchase cards were adopted across government to circumvent the procurement process for relatively small, routine purchases. Purchases card transactions are supposed to be capped at $2,500.

But witnesses at the hearing described incidents where employees used their purchase cards to buy thousands of dollars worth of personal items. One employee at the Energy Department abused a purchase card to the tune of $85,000, buying generators, clothing and welding equipment. Another employee at the Health and Human Services Department used a purchase card to buy laptop computers, digital cameras and other electronic equipment.

According to witnesses, managers aren't doggedly monitoring purchase card use, enabling purchase card abusers to avoid detection for long periods of time.

"What we know is that every purchase is not reviewed," said Johnnie Frazier, inspector general for the Commerce Department. One of Frazier's audits uncovered a contract specialist who bought $50,000 worth of clothing, jewelry, electronic equipment, furniture, airline tickets, sporting event tickets, concert tickets, household supplies and hotel accommodations with her purchase card before she was caught. "People know how to work the system," he said.

Frazier said federal managers are the first line of defense against charge card abuse and need more training in safeguarding their agencies' resources.

"These are the people who most often bring allegations of abuse to our attention," he said. But Greenwood suggested that contractors, not managers, should be responsible for protecting against abuse.

"This is going to require a completely new plan, we can't depend on these reviewers," Greenwood said. "Let's think out of the box and determine if there is a contractor who ought to do these things."

Greenwood recommended to Federal Procurement Policy Administrator Angela Styles that a single contractor be used to monitor purchase card use.

Agencies must come up with plans for revamping their purchase and travel card programs and send them to the Office of Management and Budget by June 1, according to an April 18 memo from OMB Director Mitch Daniels.