Bill adds purchase card controls

A bill designed to prevent wasteful government spending on purchase cards has industry experts doubting its potential impact

Industry experts are doubtful that legislation geared toward halting wasteful government purchase card spending will help. Although supporters point to the need to combat wasteful spending, critics say the legislation only adds bureaucratic roadblocks to the use of the cards.

The Senate passed the Purchase Card Waste Elimination Act by unanimous consent June 6. The bill authorizes the Office of Management and Budget to create guidelines that would help agencies better manage purchases. The legislation also would require more analyses of purchase card spending.

Sen. Susan Collins (R-Maine), the bill’s sponsor, said a prime cause of waste is agencies’ lack of understanding of how their employees use the cards. “The lack of effective financial controls squanders precious financial resources and damages the public’s confidence in government,” she said.

Some procurement experts, however, doubt the bill will make much difference.

“It is ironic to have more bureaucratic hurdles for a tool that is supposed to streamline procurements,” said Olga Grkavac, an executive vice president at the Information Technology Association of America.

Warren Suss, president of Suss Consulting, questioned whether more requirements, oversight and reports to Congress would save resources. In the private sector, credit card companies accept a small amount of fraud as a cost of doing business, he said.

Purchase cards, which are similar to credit cards, allow designated federal employees to buy as much as $2,500 of common goods and services for the government in a single purchase. Lawmakers believe billions of dollars are spent using purchase cards annually, but experts have done little analysis on expenditures, Collins said.

The legislation would require cardholders to receive more training and would mandate spending analyses. It would direct the General Services Administration to negotiate discounts with vendors and provide agencies with more guidance about wasteful spending.

The bill would require OMB to deliver an annual report to Congress on improving the management of purchase cards and achieving savings. Collins said the guidance would reveal important information about trends and habits of purchase card use.

Chip Mather, a partner at Acquisition Solutions, said most purchase card transactions are done at standard retail prices. “Even a 5 percent overall discount against large numbers represents real savings,” he said.

“In much of industry, fraudulent use of expense cards are grounds for immediate dismissal,” Grkavac said. “Have employees been dismissed for their improper use of these purchase cards? Would this be a better deterrent than more reports?”

The House has not yet acted on the measure.

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