Procurement provision in hurricane aid bill raises eyebrows

By Amelia Gruber

September 9, 2005

The Office of Management and Budget is working to address concerns that a dramatic increase in the threshold for government credit card purchases, approved Thursday as part of Congress' $51.8 billion hurricane aid package, could spawn waste and abuse.

A provision in the emergency assistance bill (H.R. 3673) boosts the limit for emergency micropurchases from $15,000 to $250,000. Most micropurchases are made using government-issued credit cards and aren't subject to the competition requirements typically accompanying larger buys.

OMB's Office of Federal Procurement Policy, along with the General Services Administration, will issue guidance "shortly to address concerns that federal employees may misuse these flexibilities," said David Safavian, the OFPP administrator. The guidance may require senior contracting officers to sign off on any purchases of more than $50,000, according to a spokesman for Sen. Susan Collins, R-Maine.

Such a requirement would satisfy Collins, chairwoman of the Senate Homeland Security and Governmental Affairs Committee, the spokesman said. Collins, ranking member Sen. Joseph Lieberman, D-Conn., and Sen. Charles Grassley, R-Iowa, chairman of the Finance Committee, on Thursday sent a letter to colleagues seeking a "more reasonable limit, perhaps $50,000."

The $250,000 threshold leaves room for "abuse and misuse," the senators said. "The depth of the tragedy here seems overwhelming," they wrote. "At the same time, however, we should not allow the immediate needs of this disaster to trump the need for oversight and accountability for the spending that will occur on these purchase cards."

The provision, included in the White House's request for the supplemental funds, also encountered criticism in the House.

"The vast majority of federal employees are honest, upstanding people, but ability to buy up to $250,000 in any single purchase is a great temptation," said Rep. Henry Waxman, D-Calif., in a Sept. 8 letter to House Appropriations Committee Chairman Jerry Lewis, R-Calif. "In addition, most federal employees are not trained to make purchases of this magnitude to ensure that taxpayers get the best value for their money."

Safavian said he is working with Grassley and "others on the Hill" to ensure that the flexibilities are used properly. But he defended the increase, arguing that the move was necessary to "cut red tape and streamline deliveries."

"Given the scope of the disaster and the significant efforts by federal officials, we want to make sure that critical services and supplies can be acquired and delivered in the most expeditious manner possible," Safavian said. OFPP is encouraging agency acquisition chiefs to "fully utilize" emergency flexibilities in the Federal Acquisition Regulation, he added.

Lawmakers would have been wise to place a time limit on the authorities granted in the hurricane assistance bill, said Danielle Brian, executive director of the Project on Government Oversight, a Washington, D.C.-based watchdog group. Without a limit, use of the $250,000 threshold could extend beyond the time necessary to meet immediate assistance needs, she said.

An effort also should be made to ensure that micropurchases made under the threshold are transparent and later are subject to inspector general reviews, Brian said. She argued that the provision in the supplemental bill was well-meaning but unnecessary because the FAR already contains language granting flexibility to enter into noncompetitive contracts in emergency situations.

But Safavian said that legislative action was necessary to raise the threshold. He also noted that the aid package includes $15 million for the Homeland Security Department's inspector general to oversee spending related to Hurricane Katrina.

By Amelia Gruber

September 9, 2005