Purchase card use defended

Procurement official calls for sensitivity, but asserts that the cards fill a need in an era of dwindling human resources

Despite recent reports about the abuse of government credit cards, federal managers will continue to use them because the cards help meet employees' needs in an era of dwindling human resources, a top procurement official for the Agriculture Department said Jan. 29.

The federal government spent almost $14 billion in fiscal 2001 with the cards — known as "purchase cards" — and earned rebates from the issuing banks in the process, David Shea, chief of the Procurement Policy Division in USDA's procurement office, said at a conference on electronic procurement held in Washington, D.C.

"We're savings taxpayers millions of dollars with these cards. But since taxpayer funds are involved, our sensitivity must be higher," Shea said. "We need to be very concerned about how these cards are used."

Part of that heightened sensitivity stems from a General Accounting Office report released in July 2001 that found that too many people at two Navy centers in San Diego had the cards, making it difficult to institute proper controls over purchases.

Purchase cards were introduced several years ago to make it easier for federal employees to buy items that fall below the $2,500 "micropurchase" threshold established by the Federal Acquisition Streamlining Act of 1994. Because records of the purchases are consolidated in monthly statements provided by the issuing banks, the cards also make it easier for managers to keep track of employees' small purchases. But abuses have cropped up, said Gregory Kutz, director of financial management and assurance for GAO. In one case, a federal employee had bought computer equipment via a purchase card and accidentally left the equipment inside his car, Kutz said. When the equipment was stolen from the vehicle, the employee filed a claim through his personal insurance carrier and pocketed the proceeds. GAO investigators discovered the incident and forced the employee "to send the Treasury Department a check," he added. Although there have been rumblings on Capitol Hill about shutting the purchase card program down, Shea and Kutz said they don't believe that will happen. Members of Congress recognize that the purchase card program is bringing about significant savings and efficiencies in government, Kutz said. "For the most part, I think our clients on Capitol Hill want to see this program tightened down and made more effective," he added. As an aid to federal managers who oversee purchase card programs, Shea offered a series of tips gleaned from agencies with successful card programs, including:

* Managers should control how many cards are in use. Too many cards sitting idle costs money.

* Cardholders must be trained in how to use the cards before — not after — they are issued.

* Managers must be involved in reviewing transactions on a regular basis.

* Reviewers should watch for improper reconciliation — via the use of wrong account numbers or budget object codes, for example.

* Cardholders should beware of vendor databases that retain credit card numbers, because such databases can be hacked and the numbers stolen.

* Managers should verify the bank's calculation of any rebate the agency receives for using purchase cards issued by the bank.

* Managers should separate review and reconciliation duties.

* Agencies should ensure that when a cardholder leaves the agency, the card is destroyed and the account closed, lest the bank issue a new card to the former employee without the agency's knowledge.

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