FEDERAL EMPLOYEES Credit-card abuse continues

The GAO says there is weak oversight and a lack of strict disciplinary action.
WASHINGTON POST
WASHINGTON -- Federal employees wielding government credit cards have improperly charged diamond rings, karaoke machines, a mounted deer head, cars, laptop computers, access to Internet porn and gambling, and other goods and services, agency investigators said Wednesday.
Despite increased attention to the problem, agencies across the government remain vulnerable to millions of dollars in fraudulent and improper purchases because of weak oversight of card programs and little follow-through to punish violators, according to the General Accounting Office, the investigative arm of Congress.
"The lack of consequences for misuse of government money does not create an effective control environment," Gregory Kutz, GAO director of financial management, said Wednesday at a hearing before the Senate Governmental Affairs Committee.
Agencies could save more than $300 million a year by cracking down on such transactions and by using the government's buying power to negotiate discounts from major vendors on legitimate purchases, said Kutz, co-author of a GAO report released Wednesday.
In defense of program
Neal Fox, an assistant commissioner at the General Services Administration, which manages the government-wide purchase card program, agreed more could be done. But he defended the program as the source of substantial savings over the past 15 years.
"Purchase card usage has reduced process costs, increased efficiency, and reduced the time it takes to obtain goods and services," said Fox, who testified before the Senate panel Wednesday.
The program began in 1989 with the goal of trimming transactions costs. Fox said the cards saved $1.4 billion in fiscal 2003 alone. The number of active cards peaked at more than 670,000 in fiscal 2000, but the figure has since dropped to about 315,000, Fox said. Spending with the cards grew from $1 billion in fiscal 1994 to $16.4 billion last year.
Most employees are honest and use the cards appropriately, GAO's Kutz said. But too often agency managers lack the data to properly oversee purchases, or simply "rubber-stamp" their approval, he said.
Disciplinary action
Sometimes the fraud reaches the managerial level. The Defense Department inspector general found that a graphics manager used her government card to make $1.7 million in fake purchases from a bogus company created by her brother. Both were sentenced to prison and made to pay restitution.
Often, though, strict disciplinary actions are lacking, Kutz said.
He said Defense officials disciplined only 20 of 120 card holders cited by GAO as making improper or questionable transactions in a limited audit of such purchases. The department revoked eight employees' cards, reprimanded three other employees, required seven to return items to the government and reprimanded two others while requiring them to return goods.
Defense officials said Wednesday that they were employing new "data-mining" tools to identify problem purchases. Auditors might scrutinize vendors used by only a few card holders, say, or look for repeated purchases near the individual's transaction limit.