Bank of America delays cancellation of Army travel cards

Bank of America has delayed its decision to cancel travel credit cards issued to more than 400,000 Army Department employees, according to government and bank officials.

Earlier this month, Bank of America threatened to cancel its account with the Army by midnight on March 25 because of the agency's millions of dollars in outstanding debt. But last week, the bank told the General Services Administration that it would wait for GSA's response to the threat before canceling the Army accounts, said Sue McIver, director of GSA's services acquisition center. GSA, which oversees the government's travel contracts, has 60 days to respond.

Bank of America issued a statement saying it "continues and shall continue to provide card services to all of its customer agencies and organizations under the terms of the GSA Smart Pay program."

No other banks doing business with the Defense Department have threatened to cancel their accounts, according to McIver. Bank of America has the lion's share of Defense Department travel card accounts.

The 1998 Travel and Transportation Reform Act ordered GSA to require federal employees to use government charge cards, instead of personal credit cards, for travel expenses. In most cases, agencies reimburse employees for travel expenses and then the employees pay the bills, but late payments and allegations of card abuse in the government, particularly within the Defense Department, have tarnished the program's reputation.

"All too often, the cardholder simply pockets the money--tax dollars--leaving the bank holding the bag," Sen. Charles Grassley, R-Iowa, testified earlier this month during a House Government Reform subcommittee hearing on purchase and travel card abuse in the Navy. "And when the travel card is used to cover personal expenses, which happens with alarming regularity, those bills are paid late-very late-and sometimes never."

As of March 2001, federal employees were delinquent in paying more than $25 million on their travel card accounts, and agencies were late in repaying more than $12 million in travel expenses.

A bank has never cancelled an entire travel card account with the government, McIver said. "Employees are on travel all around the world," she said. "Credit cards are an important way the [government] does business."