II 109th CONGRESS 2d Session S. 3480 IN THE SENATE OF THE UNITED STATES June 8, 2006 Mr. Grassley (for himself and Mr. Coleman) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To prevent abuse of Government credit cards.

1.

Short title

This Act may be cited as the Government Credit Card Abuse Prevention Act of 2006.

2.

Management of purchase cards

(a)

Required safeguards and internal controls

The head of each executive agency that issues and uses purchase cards and convenience checks shall establish and maintain safeguards and internal controls to ensure the following: (1)That there is a record in each executive agency of each holder of a purchase card issued by the agency for official use, annotated with the limitations on single transaction and total credit amounts that are applicable to the use of each such card by that purchase cardholder. (2)That each purchase card holder is assigned an approving official other than the card holder with the authority to approve or disapprove expenditures. (3)That the holder of a purchase card and each official with authority to authorize expenditures charged to the purchase card are responsible for— (A)reconciling the charges appearing on each statement of account for that purchase card with receipts and other supporting documentation; and (B)forwarding such reconciliation to the designated official who certifies the bill for payment in a timely manner. (4)That any disputed purchase card charge, and any discrepancy between a receipt and other supporting documentation and the purchase card statement of account, is resolved in the manner prescribed in the applicable Governmentwide purchase card contract entered into by the Administrator of General Services. (5)That payments on purchase card accounts are made promptly within prescribed deadlines to avoid interest penalties. (6)That rebates and refunds based on prompt payment on purchase card accounts are monitored for accuracy and properly recorded as a receipt to the agency that pays the monthly bill. (7)That records of each purchase card transaction (including records on associated contracts, reports, accounts, and invoices) are retained in accordance with standard Government policies on the disposition of records. (8)That periodic reviews are performed to determine whether each purchase cardholder has a need for the purchase card. (9)That appropriate training is provided to each purchase cardholder and each official with responsibility for overseeing the use of purchase cards issued by an executive agency. (10)That the executive agency has specific policies regarding the number of purchase cards issued by various organizations and categories of organizations, the credit limits authorized for various categories of cardholders, and categories of employees eligible to be issued purchase cards, and that those policies are designed to minimize the financial risk to the Federal Government of the issuance of the purchase cards and to ensure the integrity of purchase cardholders. (11)That the executive agency utilizes technologies to prevent or identify fraudulent purchases, including controlling merchant codes and utilizing statistical machine learning and pattern recognition technologies that review the risk of every transaction. (12)That the executive agency invalidates the purchase card of each employee who— (A)ceases to be employed by the agency immediately upon termination of the employment of the employee; or (B)transfers to another unit of the agency immediately upon the transfer of the employee. (13)That the executive agency takes steps to recover the cost of any improper or fraudulent purchase made by an employee, including, as necessary, through salary offsets. (b)

Management of purchase cards

The head of each executive agency shall prescribe regulations implementing the safeguards and internal controls in subsection (a). The regulations shall be consistent with regulations that apply Governmentwide regarding the use of purchase cards by Government personnel for official purposes. (c)

Penalties for violations

The regulations prescribed under subsection (b) shall provide for appropriate adverse personnel actions or other punishment to be imposed in cases in which employees of an executive agency violate such regulations or are negligent or engage in misuse, abuse, or fraud with respect to a purchase card, including imposition of the following penalties: (1)In the case of an employee who is suspected by the executive agency to have engaged in fraud, referral of the case to the United States Attorney with jurisdiction over the matter. (2)In the case of an employee who is found guilty of fraud or found by the executive agency to have egregiously abused a purchase card, dismissal of the employee. (d)

Risk assessments and audits

The Inspector General of each executive agency shall— (1)periodically conduct risk assessments of the agency purchase card program and associated internal controls and analyze identified weaknesses and the frequency of improper activity in order to develop a plan for using such risk assessments to determine the scope, frequency, and number of periodic audits of purchase cardholders; (2)perform periodic audits of purchase cardholders designed to identify— (A)potentially fraudulent, improper, and abusive uses of purchase cards; (B)any patterns of improper cardholder transactions, such as purchases of prohibited items; and (C)categories of purchases that should be made by means other than purchase cards in order to better aggregate purchases and obtain lower prices; (3)report to the head of the executive agency concerned on the results of such audits; and (4)report to the Director of the Office of Management and Budget and the Comptroller General on the implementation of recommendations made to the head of the executive agency to address findings during audits of purchase cardholders. (e)

Definition of executive agency

In this section, the term executive agency has the meaning given such term in section 4(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(1)). (f)

Relationship to Department of Defense purchase card regulations

(1)Except as provided under paragraph (2), the requirements under this section shall not apply to the Department of Defense. (2)Section 2784(b) of title 10, United States Code, is amended— (A)in paragraph (8), by striking periodic audits and all that follows through the period at the end and inserting risk assessments of the agency purchase card program and associated internal controls and analyze identified weaknesses and the frequency of improper activity in order to develop a plan for using such risk assessments to determine the scope, frequency, and number of periodic audits of purchase cardholders.; and (B)by adding at the end the following new paragraphs: (11)That the Department of Defense utilizes technologies to prevent or identify fraudulent purchases, including controlling merchant codes and utilizing statistical machine learning and pattern recognition technologies that review the risk of every transaction. (12)That the Secretary of Defense— (A)invalidates the purchase card of each employee who ceases to be employed by the Department of Defense immediately upon termination of the employment of the employee; and (B)invalidates the purchase card of each employee who transfers to another agency or subunit within the Department of Defense immediately upon such transfer. .

3.

Management of travel cards

Section 2 of the Travel and Transportation Reform Act of 1998 (Public Law 105–264; 5 U.S.C. 5701 note) is amended by adding at the end the following new subsection: (h)

Management of travel charge cards

(1)

Required safeguards and internal controls

The head of each executive agency that has employees that use travel charge cards shall establish and maintain safeguards and internal controls over travel charge cards to ensure the following: (A)That there is a record in each executive agency of each holder of a travel charge card issued by the agency for official use, annotated with the limitations on amounts that are applicable to the use of each such card by that travel charge cardholder. (B)That rebates and refunds based on prompt payment on travel charge card accounts are properly recorded as a receipt of the agency that employs the cardholder. (C)That periodic reviews are performed to determine whether each travel charge cardholder has a need for the travel charge card. (D)That appropriate training is provided to each travel charge cardholder and each official with responsibility for overseeing the use of travel charge cards issued by an executive agency. (E)That each executive agency has specific policies regarding the number of travel charge cards issued by various organizations and categories of organizations, the credit limits authorized for various categories of cardholders, and categories of employees eligible to be issued travel charge cards, and that those policies are designed to minimize the financial risk to the Federal Government of the issuance of the travel charge cards and to ensure the integrity of travel charge cardholders. (F)That the head of each executive agency negotiates with the holder of the applicable travel card contract, or a third party provider of credit evaluations if such provider offers more favorable terms, to evaluate the creditworthiness of an individual before issuing the individual a travel charge card, and that no individual be issued a travel charge card if the individual is found not creditworthy as a result of the evaluation (except that this paragraph shall not preclude issuance of a restricted use travel charge card when the individual lacks a credit history or the issuance of a pre-paid card when the individual has a credit score below the minimum credit score established by the agency). Each executive agency shall establish a minimum credit score for determining the creditworthiness of an individual based on rigorous statistical analysis of the population of cardholders and historical behaviors. Notwithstanding any other provision of law, such evaluation shall include an assessment of an individual’s consumer report from a consumer reporting agency as those terms are defined in section 603 of the Fair Credit Reporting Act. The obtaining of a consumer report under this subsection is deemed to be a circumstance or purpose authorized or listed under section 604 of the Fair Credit Reporting Act. (G)That each executive agency utilizes technologies to prevent or identify fraudulent purchases, including controlling merchant codes and utilizing statistical machine learning and pattern recognition technologies that review the risk of every transaction. (H)That each executive agency ensures that the travel charge card of each employee who ceases to be employed by the agency is invalidated immediately upon termination of the employment of the employee. (I)That each executive agency utilizes mandatory split disbursements for travel card purchases. (2)

Regulations

The Administrator of General Services shall prescribe regulations governing the implementation of the safeguards and internal controls in paragraph (1) by executive agencies. (3)

Penalties for violations

The regulations prescribed under paragraph (2) shall provide for appropriate adverse personnel actions or other punishment to be imposed in cases in which employees of an executive agency violate such regulations or are negligent or engage in misuse, abuse, or fraud with respect to a travel charge card, including removal in appropriate cases. (4)The Inspector General of each executive agency shall— (A)periodically conduct risk assessments of the agency travel card program and associated internal controls and analyze identified weaknesses and the frequency of improper activity in order to develop a plan for using such risk assessments to determine the scope, frequency, and number of periodic audits of purchase cardholders; (B)perform periodic audits of travel cardholders designed to identify potentially fraudulent, improper, and abusive uses of travel cards; (C)report to the head of the executive agency concerned on the results of such audits; and (D)report to the Director of the Office of Management and Budget and the Comptroller General on the implementation of recommendations made to the head of the executive agency to address findings during audits of travel cardholders. (5)

Definitions

In this subsection: (A)The term executive agency means an agency as that term is defined in section 5701 of title 5, United States Code, except that it is in the executive branch. (B)The term travel charge card means the Federal contractor-issued travel charge card that is individually billed to each cardholder. .

4.

Management of centrally billed accounts

The head of an executive agency that has employees who use a centrally billed account shall establish and maintain safeguards and internal controls to ensure the following: (1)That items submitted on an employee's travel voucher are compared with items paid for using a centrally billed account to ensure that an employee is not reimbursed for an item already paid for through a centrally billed account. (2)That the executive agency submits requests for refunds for unauthorized purchases to the holder of the applicable contract for a centrally billed account. (3)That the executive agency submits requests for refunds for fully or partially unused tickets to the holder of the applicable contract for a centrally billed account.

5.

Regulations

(a)

In general

Not later than 180 days after the date of the enactment of this Act— (1)the head of each executive agency shall promulgate regulations to implement the requirements of sections 2 and 4; and (2)the Administrator of General Services shall promulgate regulations required pursuant to the amendments made by section 3. (b)

Best practices

Regulations promulgated under this section shall reflect best practices for conducting purchase card and travel card programs.