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The Defense Department has not done nearly enough to punish military service members who abuse government purchase cards, which are essentially charge cards and are intended to simplify the process of buying inexpensive work supplies, the General Accounting Office concluded in a new report. The department's policy on discipline could be described as an "all or nothing approach," GAO said.

Officials in the military services took tough actions against employees that courts found guilty of purchase card abuse, according to the report (GAO-04-156), but did little to discipline numerous others who clearly used the cards to buy inappropriate items, but technically did not violate existing policies.

From research conducted between June and September 2003, GAO found that the military responded to most of 51 cases where courts said workers had made fraudulent purchases, by either fining the employees or sentencing them to jail time. The Navy fired six of 26 cardholders accused of making $1,342,000 worth of fraudulent purchases. Others were demoted or jailed from 14 to 60 months.

But in 120 separate cases where cardholders made "questionable" but not fraudulent purchases, the military services did not take drastic enough action, GAO said. Punishments usually involved sending the accused workers to purchase card training, the report said.

In response to the report, military officials said they did not hand down stronger punishments because they felt the rules had not been clear enough, leaving them with shaky grounds on which to justify harsh discipline. They told GAO that they had recently clarified their card usage guidelines so that they are better able to discipline employees who bend the rules. Navy officials said they had issued purchase card policy updates listing products employees are not allowed to buy with the cards.

"While clarifying purchase card policies and procedures is appropriate, failure to take any disciplinary actions against individuals who purchased or authorized the purchase of items that clearly exceed the needs of the government (designer briefcases) or were excessive in cost ($350 clock radios) does not serve as a deterrent to future abuse or the waste of tax dollars," GAO said.

Government purchase cards have been under increased scrutiny since a 2000 GAO survey revealed that Navy personnel systematically misused the cards to purchase expensive personal items, including clothes, cosmetics and compact discs. An October 2002 memorandum from the Office of Management and Budget directed agency heads to submit quarterly reports starting Jan. 15, 2003 on their progress toward overhauling their charge card programs.

Members of Congress have sponsored legislation designed to stem purchase card abuse. Sen. Charles Grassley, R-Iowa, and Rep. Joe Wilson, R-S.C., in mid-October introduced bills that would force agencies to conduct credit checks before issuing cards, and would ask each agency inspector general to routinely audit card programs. The fiscal 2004 omnibus appropriations bill, which the House plans to take up next week, also contains a provision mandating credit checks.

Spending and authorizing bills for 2003 require the Defense Department to check workers' credit before issuing cards, but GAO found that the department is operating under a "self-certification" policy, rather than mandating official credit checks. Defense officials told GAO that outside credit checks would conflict with the Fair Credit Reporting Act.

But self-checks are in "stark contrast to the standard industry practice of conducting credit checks on credit card applicants," the report noted.

COMMENTS

• First, this article is about purchase cards not travel credit cards. Secondly, I think that agencies should use more judgement when assigning these purchase cards to employees. If the employee have had issues with handling credit in their personal life, it's a pretty good bet that they will have problems with the proper use of these cards. It's like putting cocaine in the hands of a drug addict and telling them not to use it. GovExec.com reader Posted December 10, 2003 7:24 AM
• The problem is that the processing of travel pay was in effect contracted out by issuing credit cards in lieu of having personnel calculate and pay travel vouchers. The government then reassigned the workers or let them go and awarded a contract to a major credit card company. Since that time the government has been through several companies. At first the companies accepted the risk of bad accounts and now they have refused the business unless the government takes the risk back. Since we have dismantled the system we had in place we cannot return to that system. The contractors have taken the process and changed it to make the government liable for bad debts, another example of government improvement through contracting out functions. GovExec.com reader Posted December 9, 2003 8:44 AM
• Another example of bad management! There is no reason on earth that the DoD has to require everyone to use a government card to go TDY! I stopped going TDY and refused to get a government credit card because I knew that they are going to screwup the process and they have. GAO needs to address management and stop the issue of cards to everyone. Those that abused the card have no one to blame but themselves - they should be in jail or at least fired. One's credit rating has nothing to do with the card, if you owe the money you should pay it! If you do not pay it, the government should take it from your salary. This entire mess is a management problem. With pay for performance maybe the managers that require all of us to have a card will not get raises this year or until the balances are paid. GovExec.com reader Posted December 8, 2003 6:39 AM