[Congressional Record Volume 157, Number 19 (Tuesday, February 8, 2011)]
[Senate]
[Pages S629-S630]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Lieberman, and Ms. Collins):
  S. 300. A bill to prevent abuse of Government charge cards; to the 
Committee on Homeland Security and Governmental Affairs.
  Mr. GRASSLEY. Mr. President, we often use the metaphor of credit 
cards to talk about uncontrolled government spending, but in some 
cases, wasteful government spending is quite literally enabled by the 
use of charge cards in the hands of government bureaucrats. That is why 
I am reintroducing the Government Charge Card Abuse Prevention Act. 
This legislation will ensure that Federal departments and agencies have 
in place, and keep in place, the kinds of safeguards necessary to 
prevent waste, fraud, and abuse with government issued charge

[[Page S630]]

cards. We have made a lot of progress since I first started shining the 
spotlight on this issue with the help of the Government Accountability 
Office, GAO. This legislation will secure the gains we have made to 
prevent any backsliding while adding in extra mechanisms to prevent and 
detect misuse of government charge cards.
  In 1998, the General Service Administration, GSA, entered into a 
contract with a set of commercial banks to utilize charge cards, not 
unlike those used by businesses large and small and millions of 
consumers worldwide. This is called the SmartPay program. These 
government charge cards include government purchase cards, which are 
used for acquisition of commercial goods and services by agencies and 
paid directly by the agency, and government travel cards, which are 
used to pay for individual government travel expenses and issued in the 
name of individual government employees.
  Government charge cards were intended as a low cost method to 
streamline government acquisition and travel processes. The whole idea 
was to adopt the best practices of the commercial sector. In the 
business sector, charge cards have been a success. They save time and 
money. The main reason they work so well is because the control 
environment in the private sector is rock solid and accountability is a 
fact of life. When a business is spending its own money, it is going to 
be sure that it accounts for every penny or it won't stay in business. 
As a result, corporate America, if an employee is caught abusing a 
card, they'll lose it or get fired.
  It is certainly a good idea for government to learn lessons from the 
business sector. However, there are certain fundamental differences 
between the private sector and the governmental sector that call for 
extra vigilance, mainly the fact that government spends other people's 
money. Human nature being what it is, most people are not nearly as 
careful spending other people's money as they would be spending their 
own.
  Sure enough, when the SmartPay program was first implemented, 
Federal departments and agencies did not take near the care that a 
private business would when handing out company charge cards. When I 
started looking into this with the GAO, we uncovered blatant examples 
of wasteful spending. Government employees were using their government-
issued charge cards to bypass any authorization and approval procedures 
and purchase items that had nothing to with their official duties. We 
are talking about LA-Z-Boy reclining chairs, kitchen appliances, and 
even a sapphire ring being paid for with government purchase cards, and 
with the American taxpayer paying the bill no questions asked.
  Government travel cards have been used for gambling, sporting events, 
concerts, cruises, and even gentlemen's clubs and legalized brothels. 
While travel cards are not paid directly with taxpayers' money like 
purchase cards, 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.
  A series of GAO reports over the last decade have identified an 
inadequate and inconsistent control environment across numerous Federal 
agencies with respect to both government purchase cards and government 
travel cards. This has led to millions of dollars in taxpayers' money 
wasted. In some cases purchases were outright fraudulent, and others 
were of questionable need or were unnecessarily expensive. 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. In many cases, the same controls were often 
missing or inadequate, and therefore the same recommendations are 
repeated in report after report. One agency would promise to clean up 
its act, but then we would find the exact same problems with another. 
That is why I worked to develop legislation that would incorporate 
GAO's recommendations regarding some of the most basic controls needed 
in every agency to prevent abuse of government charge cards.
  As a result of the pressure applied by the relentless oversight of 
Congress, the GAO, and agency Inspectors General, we have seen some 
progress toward establishing a better control environment. In fact, the 
Office of Management and Budget has issued to Federal agencies a 
circular that seeks to bring about many of the controls we identified. 
However, this progress would not have been possible without the 
continual spotlight being shone on the problem and the threat of 
congressional action.
  In addition to requiring the most important internal controls across 
the government, the bill requires all Federal agencies to establish 
penalties for violations, including dismissal when circumstances 
warrant. This is necessary not only so that taxpayers know that those 
who would squander their money are held accountable, but also to send a 
message to other government employees that such behavior will not be 
tolerated. The bill also increases oversight by providing that each 
agency Inspector General periodically conduct risk assessments and 
audits to identify fraud and improper use of government charge 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.
  This legislation has been revised a number of times with considerable 
input from the GAO as well as the Inspector General community and other 
stakeholders. In crafting the very carefully thought out bill before us 
today, I have appreciated the help and support provided by Chairman 
Lieberman and Ranking Member Collins, who have again joined me as 
original cosponsors of this bill. The version I have introduced today 
is the same bill that passed the Senate in the last Congress and I look 
forward to seeing it pass both houses of Congress and enacted into law 
in the very near future. That day, the American taxpayers will be able 
to rest just a little easier knowing that at least one avenue to 
potentially waste their hard earned money has been blocked.
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