Navy defends purchase card use

Control Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse

Reports of purchase card fraud at two Navy facilities are overblown, Navy officials told a House subcommittee July 30, but they said they are moving quickly to ensure that money is being spent correctly.

However, a General Accounting Office report released July 30 found that too many people at two Navy centers in San Diego have government-issued purchase cards, thereby making it difficult to institute proper monitors and controls. The lack of controls in some cases enabled personnel to buy computers, flat-panel monitors and high-end Coach briefcases.

The GAO report said that 36 percent of personnel at the Space and Naval Warfare Systems Center and 16 percent of personnel at the Navy Public Works Center were given the purchase cards, which are credit cards that can be used for official government purchases of less than $2,500.

"This purchase card proliferation resulted in a virtually impossible span-of-control issue at Spawar" with only one official responsible for certifying the 700 statements for the nearly 1,526 purchase card holders, said Gregory Kutz, director of GAO's financial management and assurance division.

Furthermore, GAO reported that the two centers exercised few controls over the $68 million in purchase card buys in fiscal 2000.

Purchase cards have streamlined ordering processes by eliminating reams of paperwork for small-ticket items.

Navy officials defended the purchase cards and the employees that use them.

Vice Adm. Keith Lippert, who recently left the position that is responsible for the Navy and Marine Corps credit card program, said the rate of abuse and misuse of the Navy-issued cards is less than half the commercial benchmark of 0.06 percent to 0.09 percent of dollars spent.

Capt. Ernest Valdes, commanding officer of the Spawar Systems Center in San Diego, argued that the problems are the exception. GAO used an automated tool to review some 50,000 transactions and found only 78 that were suspicious, and only five were cases of cardholder misuse.

"Every dollar is important," he said. But, he added, "I do not feel we have a serious abuse and misuse problem. [Some] 99.98 percent of our purchases are for legitimate government use."

Capt. John Surash, commander of the Navy Public Works Center, said he recently instituted reforms of the center's purchase card program.

"It is much improved over what the GAO saw when they did their review," he told lawmakers. As part of that review, he said he has cut the number of employees with purchase cards by 31 percent since last year. The center also has instituted new controls that require the cardholder, a supervisor and another official to sign off on each monthly statement before it is paid.

Furthermore, Navy officials argued that some of the items that GAO listed as unnecessary can be justified. Flat-panel monitors, for example, use less space on already-crowded ships and use less energy in power-starved California, officials said.

Although there were some problem purchases the Coach briefcase, for example those have been addressed, they said.

GAO officials said they will broaden their investigation to look at the rest of the Defense Department and travel cards as well.

Rep. Stephen Horn (R-Calif.) chairman of the House Government Reform Committee's Government Efficiency, Financial Management and Intergovernmental Relations Subcommittee, asked GAO officials to come back by Nov. 1 to provide an update on the two facilities.

"We're not going to just let this drop," Horn said.

About the Author

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine,, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


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