[Congressional Record Volume 153, Number 39 (Wednesday, March 7, 2007)]
[Senate]
[Pages S2797-S2800]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. GRASSLEY (for himself, Mr. Lieberman, Ms. Collins, and Mr.
Coleman):
[[Page S2798]]
S. 789. A bill to prevent abuse of Government credit cards; to the
Committee on Homeland Security and Governmental Affairs.
Mr. GRASSLEY. Mr. President, it's time we put a stop to wasteful,
abusive, and fraudulent use of government credit cards. In fact, it's
overdue. For several years, I have been working with the Government
Accountability Office (GAO) to investigate misuse of government credit
cards and the lack of internal controls in agencies that breeds such
activity. We have found shockingly flagrant abuses like $2,443 in
taxpayers' money going to pay for a down payment on a sapphire ring at
a place called E-Z Pawn and $1,935 in taxpayers' money used to purchase
two LA-Z-Boy reclining rocking chairs with full lumbar support and
vibrator-massage features, all using government purchase cards.
Government travel cards, which are only to be used for legitimate
travel-related expenditures, have been used to pay for everything from
women's lingerie from Frederick's of Hollywood to tickets to the
Phantom of the Opera to a seven night Alaskan cruise for two. In each
report it has issued, the GAO has made recommendations about what kind
of controls need to be implemented to prevent such abuses from
occurring in the future. Our oversight work has helped shine a light on
this problem and has led to some improvements. Some agencies have moved
to fix the specific shortcomings highlighted by the GAO, and the Office
of Management and Budget has issued a circular to agencies that seeks
to bring about an improved control environment. However, I believe a
more comprehensive approach is needed. There is considerable
commonality between the control breakdowns the GAO found in the
agencies it investigated. The same controls were often missing or
inadequate, and therefore the same recommendations are repeated in
report after report. The OMB circular does not address many of these
recommendations and it makes no sense for the GAO to visit every agency
and bureau in the Federal Government to point out where they fall
short. We know what is needed to prevent waste, fraud, and abuse of
government credit cards and we must ensure that these internal controls
are implemented consistently across the federal bureaucracy. That is
why I am reintroducing the Government Credit Card Abuse Prevention Act,
along with Senators Lieberman, Collins, and Coleman. I should also
mention that Representative Joe Wilson will be reintroducing companion
legislation in the House of Representatives and I appreciate his help
and assistance as we've worked together on this legislation.
Based primarily on the recommendations of the GAO in numerous
reports, as well the work of agency inspectors general and my own
oversight work, my bill seeks to curtail waste, fraud, and abuse of
government purchase cards, government travel cards, and centrally
billed accounts. By way of background, government purchase cards are
essentially credit cards held by an agency that authorized individuals
use to purchase items necessary for the work of the agency. Since the
agency pays the bills directly, the American taxpayer is on the hook
when improper purchases slip through the cracks. That means hard
working American citizens are paying for someone else's Christmas
shopping, or at the very least items with little or no legitimate
public interest. Just like the parents' credit card in the hands of an
undisciplined teenager, government purchase cards in the hands of
poorly trained bureaucrats with inadequate oversight can lead to rash
and ill-considered impulse buys. Take for instance an incident
uncovered by the GAO when an individual at the Air Force Academy found
a dead deer alongside the road and decided to use a government purchase
card to pay for mounting the mule deer head to hang on the wall at the
office.
Centrally billed accounts are another credit product that federal
agencies use, primarily for purchasing transportation services. Like
purchase cards, the bill is sent to the government so it's the taxpayer
who pays when the bureaucrats let things slip through the cracks. For
instance, we've had repeated cases where government employees had
airplane tickets purchased on their behalf directly from a centrally
billed account, and then they sought and received reimbursement as
though they had paid for the ticket. In other words, the ticket was
paid for twice with the employee pocketing the cost the second time,
and no one would be the wiser if it weren't for the GAO. The GAO has
also found millions of dollars worth of fully refundable, unused
airline tickets that no one bothered to cash in. I was pleased to work
with Senator Coleman, then the Chairman of the Permanent Subcommittee
on Investigations, to bring these issues with centrally billed accounts
to light, as well as Senator Collins, who was at the time the Chairman
of the Government Affairs Committee. In addition to being co-requesters
of the GAO reports, they held hearings in their respective committees
and were kind enough to invite me to testify about our work.
Government travel cards, on the other hand, are not paid directly
with taxpayers' money like purchase cards and centrally billed
accounts, but they are only supposed to be used to pay for legitimate
expense while on official government travel. Failure by employees to
repay these cards results in the loss of millions of dollars in rebates
to the Federal Government. Also, when credit card companies are forced
to charge off bad debt, they raise interest rates and fees on everyone
else. Nevertheless, government travel cards with high credit limits
have been handed out like candy at a parade to individuals with abysmal
credit ratings who ordinarily would never be issued that kind of
credit. It's no surprise then when we learn that certain government
employees have abused their government travel cards to buy jewelry,
take in a New York Yankees game, or to fuel an internet gambling habit.
Such abusive charges often occur when the cardholder is not even on
travel at all. In fact, government travel cards have been used to
provide cash advances in employees' hometowns. There are even examples
of charges at so called ``gentleman's clubs'' like Cheetah's Lounge and
Deja Vu Showgirls, and even at legalized brothels. Suffice it to say
that the GAO was able to determine that these charges were not for food
or other approved travel expenses. It also comes as no surprise when
the GAO found that employees issued government travel cards despite bad
credit often bounce checks when their bill comes due, sometimes
repeatedly and fraudulently. Common sense then leads us to the same
conclusion that the GAO came to through empirical analysis, namely that
a significant relationship exists between potential travel card fraud,
abuse, and delinquencies and individuals with substantial credit
history problems. That is why my legislation requires agencies to
perform credit checks for travel card holders and issue only restricted
cards for those with poor or no credit to reduce the potential for
misuse.
My bill would also require a series of common sense internal
controls, which the GAO has found to be lacking in many cases, to be
implemented in every federal agency. These include: maintaining a
record of each cardholder, including single transaction limits and
total credit limits so agencies can effectively manage their
cardholders; implementing periodic reviews to determine if cardholders
have a need for a card; properly recording rebates to the government
based on prompt payment; providing training for cardholders and
managers; utilizing available technologies to prevent or catch
fraudulent purchases; establishing specific policies about the number
of cards to be issued, the credit limits for certain categories of
cardholders, and categories of employees eligible to be issued cards;
invalidating cards when employees leave the agency or transfer;
establishing an approving official other than the purchase card holder
so employees cannot approve their own purchases; reconciling purchase
card charges on the bill with receipts and supporting documentation;
submitting disputed purchase card charges to the bank according to the
proper procedure; making purchase card payments promptly to avoid
interest penalties; retaining records of purchase card transactions in
accordance with standard government record keeping polices; utilizing
mandatory split disbursements when reimbursing employees for travel
card purchases to ensure that travel card bills get paid; comparing
items submitted on travel vouchers
[[Page S2799]]
with items already paid for with centrally billed accounts to avoid
reimbursing employees for items already paid for by the agency; and
submitting refund requests for unused airline tickets so the taxpayers
don't pay for tickets that were not used.
My bill would also provide that each agency Inspector General
periodically conduct risk assessments of agency purchase card and
travel card programs and perform periodic audits to identify
potentially fraudulent, improper, and abusive use of cards. We have had
great success working with Inspectors General using techniques like
data mining to reveal instances of improper use of government charge
cards. Having this information on an ongoing basis will help maintain
and strengthen a rigorous system of internal controls to prevent future
instances of waste, fraud, and abuse with government charge cards.
In addition, my bill requires penalties so that employees who abuse
government charge cards will not get away scot free. In fact, in cases
of serious misuse or fraud, the bill provides that employees must be
dismissed and suspected cases of fraud will also be referred to the
appropriate U.S. Attorney for prosecution under federal anti-fraud
laws. It is essential that we send a clear message that misuse and
fraudulent use of government credit cards will not be tolerated. The
lack of consistency in the past in applying punishments to those caught
abusing government charge cards has sent the wrong message and led to
an environment where misuse of government charge cards is more likely.
My bill will change that.
The American people expect us to be good stewards of their money and
their cynicism about government only builds when they read about
bureaucrats saying, ``Just put it on plastic'' willy nilly with their
hard earned dollars. Unfortunately, such incidents persist. In the wake
of Hurricane Katrina, Congress hastily passed a supplemental spending
bill containing an ill-advised provision to dramatically raise the
micro-purchase threshold for purchase cards. I worked with Senators
Collins and Lieberman, the leaders of the Homeland Security and
Governmental Affairs Committee, to reverse what amounted to an
invitation to misuse government purchase cards. Then, because of our
concerns and the concerns of other members of Congress about the
potential for fraud and abuse of purchase cards in the response to the
hurricanes in the Gulf Coast region, the GAO conducted an investigation
of purchase cards at the Department of Homeland Security. Just last
September, the GAO issued its report finding instances of abusive or
questionable government charge card transactions, including the
purchase of a beer brewing kit, a 63-inch plasma television with a
price tag of $8,000 that was found unused in its original box 6 months
later, and tens of thousands of dollars for training at golf and tennis
resorts. Clearly the abuse of government credit cards remains a problem
and Congress needs to act. My bill will establish the discipline needed
in government agencies to keep those credit cards in the wallet unless
needed. I am particularly glad to be joined in introducing this bill by
Chairman Lieberman and Ranking Member Collins as well as Senator
Coleman. Their leadership on this issue will continue to be invaluable.
I urge the rest of my colleagues to join us in this effort and put a
stop to the bureaucratic shopping spree.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 789
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Government Credit Card Abuse
Prevention Act of 2007''.
SEC. 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 card holder is assigned an approving
official other than the card holder 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
[[Page S2800]]
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 ognition 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.''.
SEC. 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.''.
SEC. 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.
SEC. 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.
______