Defense beefs up purchase card oversight

The Defense Department is aiming to stem the abuse of purchase cards by its employees by adding more controls to the department's acquisition regulations.

A proposed rule, published Dec. 20 in the Federal Register, implements recommendations issued last June by Defense officials. The proposed controls include limiting the number of cards issued, not issuing cards to contractors and keeping users under the purchase card limit. The proposed rule also makes local commanders responsible for oversight of purchase card use at their facilities.

"I am heartened by the actions under way to curb these abuses by both the administration and the secretary of Defense," Rep. Stephen Horn, R-Calif., said in December. Horn, who retired from Congress last month, was chairman of the House Government Reform Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations. "Nevertheless, Congress must continue its vigilant oversight of these programs," he said.

The government uses purchase cards to circumvent the procurement process for relatively small, routine purchases, and transactions are supposed to be capped at $2,500. Since 1994, purchases cards have saved the Defense Department about $900 million. In fiscal 2001, Defense reported 207,506 purchase card transactions valued at $6.1 billion.

But several investigations by the General Accounting Office uncovered widespread abuse of government purchase cards among military and civilian personnel. The watchdog agency discovered that some employees were using the cards to pay for prostitutes, golf games, clothes, jewelry and other unauthorized purchases.

Horn and Sen. Charles Grassley, R-Iowa, demanded that the Defense Department get control of its program. Last year, Grassley and Sen. Robert Byrd, D-W.Va., added an amendment to the fiscal 2002 Defense appropriations bill limiting the use of government purchase cards by members of the military.

"The Defense Department has to stop handing out [purchase] cards like so many Christmas cookies," Grassley said. "I'll continue to work with the GAO and the Defense Department inspector general until card abuse stops."

In an Oct. 15 memorandum, Office of Management and Budget Director Mitch Daniels told all agency heads to start submitting quarterly progress reports on their efforts to overhaul their charge card programs. The first reports are due to OMB's Office of Federal Procurement Policy on Jan. 15 and will cover October through December.