II Calendar No. 933 110th CONGRESS 2d Session S. 789 [Report No. 110–437] IN THE SENATE OF THE UNITED STATES March 7, 2007 Mr. Grassley (for himself, Mr. Lieberman, Ms. Collins, Mr. Coleman, Mrs. McCaskill, Mr. Levin, Mr. Carper, and Mr. Kerry) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs August 1, 2008 Reported by Mr. Lieberman, with an amendment Strike out all after the enacting clause and insert the part printed in italic 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 2007.
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)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)Each purchase cardholder is assigned an approving official other than the cardholder with the authority to approve or disapprove expenditures. (3)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)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)Payments on purchase card accounts are made promptly within prescribed deadlines to avoid interest penalties. (6)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)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)Periodic reviews are performed to determine whether each purchase cardholder has a need for the purchase card. (9)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)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)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)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)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)
In general
Except as provided by the amendments made by paragraph (2), the requirements under this section shall not apply to the Department of Defense. (2)
Exception
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)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)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)Periodic reviews are performed to determine whether each travel charge cardholder has a need for the travel charge card. (D)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)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)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)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)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)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)
Assessments
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)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)The executive agency submits requests for refunds for unauthorized purchases to the holder of the applicable contract for a centrally billed account. (3)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.
1.
Short title
This Act may be cited as the Government Credit Card Abuse Prevention Act of 2008.
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)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)Each purchase cardholder is assigned an approving official other than the cardholder with the authority to approve or disapprove expenditures. (3)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 in a timely manner to enable the designated official to ensure that the Federal government ultimately pays only for valid charges. (4)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 and in accordance with all laws and executive agency regulations. (5)Payments on purchase card accounts are made promptly within prescribed deadlines to avoid interest penalties. (6)Rebates and refunds based on prompt payment on purchase card accounts are monitored for accuracy, unless otherwise provided by law, and properly recorded as a receipt to the agency that pays the monthly bill. (7)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)Periodic reviews are performed to determine whether each purchase cardholder has a need for the purchase card. (9)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)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)The executive agency utilizes technologies to prevent or identify fraudulent purchases. (12)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 unless the units are covered by the same purchase card authority. (13)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)
Guidance on management of purchase cards
Not later than 180 days after the date of the enactment of this Act, the Director of the Office of Management and Budget shall prescribe guidance governing the implementation of the safeguards and internal controls required by subsection (a) by executive agencies. (c)
Penalties for violations
(1)
In general
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: (A)In the case of an employee who is suspected by the executive agency to have engaged in fraud, referral to the Inspector General of the agency for investigation, and, upon determination by the Inspector General that a crime may have occurred, referral of the case to the United States Attorney with jurisdiction over the matter. (B)In the case of an employee who is found guilty of fraud or found by the Inspector General of the agency to have egregiously abused a purchase card knowingly and willingly, dismissal of the employee. (2)
Reports on violations
The regulations prescribed under subsection (b) shall require each head of an executive agency, and each Inspector General of an executive agency, on a semi-annual basis, to submit to the Director of the Office of Management and Budget a report on violations or other actions covered by paragraph (1) by employees of such executive agency. At a minimum, the report shall set forth the following: (A)A description of each violation or other action covered by the report. (B)A description of any adverse personnel action, punishment, other action taken against the employee for such violation or other action. (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 card transactions 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)), except as provided under subsection (f)(1). (f)
Relationship to Department of Defense purchase card regulations
(1)
In general
The requirements of subsection (a) through (d) shall not apply to the Department of Defense. (2)
Conforming amendments
Section 2784 of title 10, United States Code, is amended— (A)in subsection (b), by adding at the end the following new paragraphs: (11)That each purchase cardholder is assigned an approving official other than the cardholder with the authority to approve or disapprove expenditures. (12)That the Department of Defense utilizes technologies to prevent or identify fraudulent purchases. (13)That the Department of Defense takes appropriate steps to invalidate the purchase card of each employee who— (A)ceases to be employed by the Department of Defense immediately upon termination of the employment of the employee; or (B)transfers to another unit of the Department of Defense immediately upon the transfer of the employee unless the units are covered by the same purchase card authority. (14)That the Department of Defense takes appropriate steps to recover the cost of any improper or fraudulent purchase made by an employee, including, as necessary, through salary offsets. (15)That the Inspector General of the Department of Defense conducts periodic risk assessments of purchase card programs and associated internal controls and analyzes identified weaknesses and the frequency of improper activity and uses such risk assessments to develop appropriate corrective actions. ; and (B)by adding at the end the following new subsection: (d)
Semi-annual report
The Secretary of Defense shall submit to the Director of the Office of Management and Budget on a semi-annual basis a report on misuse, abuse, or fraud with respect to purchase cards by employees of the Department of Defense. At a minimum, the report shall include the following: (1)A description of each incident covered by the report. (2)A description of any adverse personnel action, punishment, or other action taken against the employee in connection with each such incident. (3)A description of actions taken by the Department of Defense to address recommendations made to address findings arising out of risk assessments and audits conducted pursuant to this section. .
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)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)Rebates and refunds based on prompt payment on travel charge card accounts are monitored for accuracy and, unless otherwise provided by law, properly recorded as a receipt of the agency that employs the cardholder. (C)Periodic reviews are performed to determine whether each travel charge cardholder has a need for the travel charge card. (D)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)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)Each executive agency negotiates with the holder of the applicable travel card contract 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 or pre-paid card when the individual lacks a credit history or has a credit score below the minimum credit score established by the Office of Management and Budget). The Director of the Office of Management and Budget 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. (G)Each executive agency utilizes technologies to prevent or identify fraudulent purchases. (H)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)Each executive agency utilizes, where appropriate, direct payment to the holder of the travel card contract. (2)
Guidance on management of travel charge cards
The Director of the Office of Management and Budget shall prescribe guidance governing the implementation of the safeguards and internal controls in paragraph (1) by executive agencies. (3)
Penalties for violations
(A)
In general
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. (B)
Reports on violations
The regulations prescribed under paragraph (2) shall require each head of an executive agency, and each Inspector General of an executive agency, on a semi-annual basis, to submit to the Director of the Office of Management and Budget a report on violations or other actions covered by paragraph (1) by employees of such executive agency. At a minimum, the report shall set forth the following: (i)A description of each violation or other action covered by the report. (ii)A description of any adverse personnel action, punishment, or other action taken against the employee for such violation or other action. (4)
Assessments
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 travel cardholders; (B)perform periodic audits of travel card purchases 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
(a)
Required 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)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)The executive agency disputes unauthorized charges and tracks the status of the disputed transactions to ensure appropriate resolution. (3)The executive agency submits requests for refunds for fully or partially unused tickets to the airlines and tracks the status of unused tickets to ensure appropriate resolution. (b)
Guidance
The Director of the Office of Management and Budget shall prescribe guidance implementing the requirements of subsection (a) not later than 180 days after the date of the enactment of this Act.
August 1, 2008 Reported with an amendment