DOD 'serious' about ending card misuse
The head of the Space and Naval Warfare Systems Command (Spawar) has revoked the government-issued purchase cards at Spawar sites worldwide after continuing reports of waste, fraud and abuse — particularly at the Spawar Systems Center.
Spawar will reactivate the cards for mission-critical uses as management and oversight of the program are improved.
Spawar, under intense scrutiny and pressure from the Pentagon, Congress and auditors, took the dramatic action after a review of just a small number of the cards showed personnel had purchased items including groceries, Lego robots and designer luggage. One Defense Department employee even used the card to pay for his girlfriend's breast enlargement operation.
"I am serious about remedying this clearly unacceptable situation. I intend to personally verify that the situation has improved and report findings to you by the end of May," said Deidre Lee, director of Defense procurement at a March 13 hearing held by the House Government Reform Committee's Government Efficiency, Financial Management and Intergovernmental Relations Subcommittee.
The House hearing comes just eight months after Navy officials told lawmakers that reports of fraud were overblown and that they would take steps to ensure that money was being spent correctly.
Procurement officials have said that purchase cards — which are government-issued credit cards — have streamlined ordering processes by eliminating reams of paperwork for small-ticket items. Rep. Tom Davis (R-Va.) put forward a bill that would raise the definition of small-ticket items from $2,500 to $25,000.
"If the [purchase limit] goes up, new cars and homes are next," said Sen. Charles Grassley (R-Iowa), ranking member on the Senate Finance Committee, at the hearing.
"The benefits of the purchase card may be substantially reduced if controls are not in place to ensure its proper use," said Gregory Kutz, the General Accounting Office's director of financial management and assurance.
Lawmakers were incensed that they were having to review this issue again and that so little had been done since a July 2001 hearing on the same problem. Rep. Stephen Horn (R-Calif.), the subcommittee chairman, said the testimony "dismisses congressional oversight as merely a nuisance that must be endured but can then be ignored."
The Spawar Systems Center and the Navy Public Works Center, both based in San Diego and the subject of GAO audits, have new leadership. Capt. Patricia Miller, commanding officer of the Spawar Systems Center, and Capt. James Barrett, commanding officer of the Navy Public Works Center, both said they were instituting measures that would ensure proper procedures were followed.
"I'm personally committed to changing the culture at my command to permanently improve this important and vital program," Miller testified. "We agree there was a command climate that permitted these abuses."
Procurement experts said that the purchase cards are part of the foundation of procurement reform and have saved agencies millions of dollars, but they also said that the federal government had largely failed to use them in the most effective way.
"I'm a big proponent of the cards. I'm not a big proponent of how they are currently being used," said Chip Mather, senior vice president of Acquisition Solutions Inc. and a former Air Force senior procurement official. "They're trying to use it as a purchasing system rather than a payment system."
The purchase card program, in fact, raises the ire of some senior government officials because it often enables large numbers of people to buy hardware and software. Those buys are made without a view of the agency's enterprise architecture or whether those buys can be aggregated to save money.
But Mark Amtower, founding partner of Amtower and Co., a direct market specialist and manager of several federal credit card databases, noted that purchase cards have saved the government about $75 on each transaction compared with the previous paper-based purchasing system.
That amounts to a large sum of money, considering government employees made about 24 million purchases in fiscal 2001, he said.
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