FOR THE HEADS OF DEPARTMENTS AND AGENCIES
E. Daniels, Jr.
Government Purchase and Travel Cards
- Recent reports
by the General Accounting Office and Inspectors General, as well
as congressional hearings and press reports, have raised serious
concerns regarding the adequacy of internal control systems that
monitor the use of the more than 2.5 million government credit
cards now in circulation. To date, millions of dollars of fraudulent
and unauthorized expenditures have been made using these cards.
Such abuse is unacceptable and requires prompt and effective remedial
action by the departments and agencies.
- In some
ways, the purchase and travel card programs have increased efficiency
in the federal acquisition process, but they have also created
large, new opportunities for fraud and abuse. Listed below are
just a few examples of violations documented so far:
- An employee
and his supervisor conspired to purchase electronic planners,
leather organizers, a digital camera, a scanner/printer, and
cellular telephone accessories for personal use. Both employees
resigned, and no criminal action was ever taken against them.
- An employee
charged over $12,000 for personal items such as computers,
gift certificates, groceries, and airline tickets.
for over $439,000 were processed after card accounts were
no longer approved for use at one agency. Many of these purchases
were for Internet accounts.
- To conceal
$14,000 in personal purchases, an employee used the names
of legitimate companies doing business with the agency and
submitted falsified invoices to the agency.
$4 million in inappropriate transactions by employees at one
agency appear to have been made with businesses such as pawn
shops, jewelry stores, and antique shops.
purchase cards were unused for over 6 months at an agency,
raising the question whether the cards should have been issued.
- Our review
of the fraud and abuse associated with the purchase and travel
cards will continue. I am requesting that each agency review the
adequacy of internal controls for purchase and travel card expenditures.
Effective improvements to internal control systems must be made,
if the programs are to continue. I also request that you take
immediate administrative action against any employees found to
have abused the purchase or travel card privileges. In cases involving
possible fraud, appropriate referrals for civil and criminal investigation
should be made.
- Please prepare
separate remedial action plans for your purchase and travel card
programs. Your plans should detail the problems your agency has
identified and the internal controls (e.g., management oversight
and review, authorized spending limits, and training) your agency
will use to manage risk associated with these programs. Your plans
should also include an examination of the number of cards issued
at your agency. One step that may prove useful would be to deactivate
all current cards and reactivate them selectively for a smaller
number of cardholders, based on demonstrated necessity. Your plans
should give consideration to this approach. To facilitate your
review, I have attached a breakdown of the purchase and travel
cards now outstanding at your agency.
- Your remedial
action plans (both for the purchase and travel card programs)
should be submitted, no later than June 1, 2002, to Mr. Robert
Burton, Office of Federal Procurement Policy (OFPP). Plans may
be sent by electronic mail (email@example.com)
or by facsimile (202-395-5105). OFPP will review the purchase
card plans, and the Office of Federal Financial Management will
review the travel card plans submitted by your agency.