October 8th, 2002
By Tanya N. Ballard
Govexec.com
A House lawmaker wants the government to investigate fraud by vendors
in the federal purchase and travel card programs.
During a hearing Tuesday before the House Government Reform Subcommittee
on Government Efficiency, Financial Management and Intergovernmental Relations,
the Navy’s purchase and travel card use was called into question for the
third time since July 2001, after a General Accounting Office study said
the agency’s internal controls were insufficient to root out fraud, waste
and abuse.
“Vendors are submitting charges against cards where no goods or services
were provided,” said Rep. Janice Schakowsky, D-Ill., as she asked GAO officials
to investigate the pervasiveness of that practice.
Purchase cards allow federal workers to avoid the government’s lengthy
procurement process for government purchases by allowing officials to charge
up to $2,500 without going through the paperwork required for major acquisitions.
The 1998 Travel and Transportation Reform Act requires federal employees
to use government charge cards, instead of personal credit cards, for travel
expenses. In fiscal 2001, Defense Department employees put $6.1 billion
on purchase cards and another $3.4 billion on travel cards.
“Government credit cards can work in the right kind of environment,”
Sen. Charles Grassley, R-Iowa, testified during the hearing.
But the Navy, which has seen widespread abuse of the cards at its Space
and Naval Warfare Systems Center (SPAWAR) and Navy Public Works Center,
has yet to get it right, lawmakers said Tuesday.
“Once again, the bottom line is the same: no controls, extensive abuse
and no accountability,” Grassley said. “If the Defense Department wants
this program to succeed, then the Defense Department needs to get on the
stick and make the controls work.”
Over the past two years, Grassley and Rep. Stephen Horn, R-Calif.,
have hammered away at the Defense Department for its travel and purchase
card delinquency, abuse and fraud rates, citing cases where employees used
the cards to pay for prostitutes, lap dances, golf outings, clothes, compact
discs, leather goods, jewelry, flowers, food and other unauthorized purchases
and services. In some cases, vendors and cardholders are working together
to defraud the government, GAO found.
“I find the lack of control on this issue shameful and embarrassing,”
Schakowsky said. “This is a management failure.”
Navy and Pentagon officials have implemented stringent controls for
the cards in the past few months, including limiting the number of cards
issued, reducing credit limits and requiring training in the use of purchase
and travel cards, said Rear Admiral Robert Cowley, deputy for acquisition
and business management in the Navy’s research development and acquisition
office.
But Gregory Kutz, director of financial management and assurance at
GAO, said those changes and the agency’s current internal control measures
might not prevent additional fraud and abuse.
“The high failure rate-80 percent to 98 percent-of cardholder reconciliation
and approving official review is of particular concern because it is perhaps
the most important control by providing reasonable assurance that purchases
are appropriate and for a legitimate government need,” Kutz told lawmakers,
though he noted that the agency was trying to implement GAO’s recommendations.
Schakowsky was less forgiving.
“We keep having these hearings and we keep hearing the same thing over
and over again,” she said. “I’m ready for somebody to come back … and say
‘We have punished this many cases, disciplined this many people,’ rather
than talk about process.”
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