MEMORANDUM FOR THE HEADS OF DEPARTMENTS AND AGENCIES
Mitchell E. Daniels, Jr.
Increased Oversight for Government Purchase and Travel Cards
Nearly six months ago, Office of Management and Budget (OMB) Memorandum
02-05 requested agencies to effectively combat the increasing fraud and
abuse related to the use of government-issued purchase and travel cards.
Since then, agency plans to provide increased oversight have been submitted
and revised. Although there is a long way to go, a few agencies have made
some progress. Specifically:
Cards have been canceled. By the end of this month, the Department
of Defense (DoD) will have canceled approximately 400,000 travel cards,
or nearly 20 percent of the total issued by the government. The Department
of Energy has canceled 8 percent of purchase cards and over 5 percent
of travel cards.
Wages have been garnished from employees with long overdue bills
at DoD and the Department of Interior.
Delinquent accounts are down, in some cases, significantly. For example,
the number of delinquent bills charged by Department of Housing and
Urban Development employees dropped 96 percent in the past year. Government-wide
delinquency rates have fallen from double-digit figures to 7 percent,
according to the latest data.
Despite these gains, progress is uneven and isolated. All agencies should
be implementing these types of remedial actions.
Under OMB leadership, an interagency task force has been working to ensure
that charge card abuses are effectively addressed. Among the best practices
found, thus far, are:
Blocking of merchant category codes. The Department of Education,
for instance, has pre-emptively blocked transactions with roughly 300
types of businesses to prevent the use of government-issued cards for
casino visits, limousine rentals, veterinary services, and other questionable
goods and services.
Automated data mining. Computer-driven techniques to identify suspect
transactions are being applied at DoD and the Department of Education.
Periodic reviews of accounts for cancellation. DoD, for example,
will be reviewing cards twice a year to ensure that inactive card accounts
are canceled on an ongoing basis.
The task force will make recommendations and ensure the implementation
of best practices to prevent fraud and abuse. In the meantime, agencies
need to move forward expeditiously to implement their own remedial action
plans. Agencies should continue to take disciplinary actions and make
appropriate civil and criminal referrals for employees who violate the
public trust. We will monitor agencies progress as the 2004 Budget
You are requested to provide a quarterly report addressing your agencys
purchase and travel card programs to Mr. Robert Burton, Office of Federal
Procurement Policy (OFPP). The reports may be submitted by electronic
mail (firstname.lastname@example.org) or
by facsimile (202-395-5105). The first quarterly report should be submitted
to OFPP no later than January 15, 2003, and cover agency activities occurring
between October 1, 2002 and December 31, 2002.