[Senate Report 114-174]
[From the U.S. Government Publishing Office]
Calendar No. 315
114th Congress } { Report
SENATE
1st Session } { 114-174
_______________________________________________________________________
SAVING FEDERAL DOLLARS THROUGH
BETTER USE OF GOVERNMENT PURCHASE
AND TRAVEL CARDS ACT OF 2015
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1616
TO PROVIDE FOR THE IDENTIFICATION AND PREVENTION OF
IMPROPER PAYMENTS AND THE IDENTIFICATION OF STRATEGIC
SOURCING OPPORTUNITIES BY REVIEWING AND ANALYZING THE USE OF FEDERAL
AGENCY CHARGE CARDS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 8, 2015.--Ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
59-010 WASHINGTON : 2015
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Keith B. Ashdown, Staff Director
Christopher R. Hixon, Chief Counsel
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Gabrielle D'Adamo Singer, Deputy Chief Counsel for Governmental Affairs
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Mary Beth Schultz, Minority Chief Counsel
Peter P. Tyler, Minority Senior Professional Staff Member
Laura W. Kilbride, Chief Clerk
Calendar No. 315
114th Congress } { Report
SENATE
1st Session } { 114-174
======================================================================
SAVING FEDERAL DOLLARS THROUGH BETTER USE OF GOVERNMENT PURCHASE AND
TRAVEL CARDS ACT OF 2015
_______
December 8, 2015.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 1616]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1616) to provide
for the identification and prevention of improper payments and
the identification of strategic sourcing opportunities by
reviewing and analyzing the use of Federal agency charge cards,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................4
IV. Section-by-Section Analysis......................................4
V. Evaluation of Regulatory Impact..................................5
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............7
I. PURPOSE AND SUMMARY
S. 1616 establishes an office within the General Services
Administration (GSA) to review and analyze the use of charge
cards by employees of the Federal government to identify trends
of abuses of charge and travel cards as well as opportunities
for strategic sourcing. The legislation also requires the
Office of Management and Budget (OMB) to issue new guidance to
agencies for the oversight and administration of Federal charge
cards. In addition, S. 1616 also establishes an interagency
task force to develop and share best practices, requires the
development of an interagency library of analytics tools and
data sets for use in managing charge card transactions, and
sets requirements for GSA and other agencies to report to
Congress on implementation of the bill.
II. BACKGROUND AND THE NEED FOR LEGISLATION
The use of Federal agency purchase cards and travel cards
poses ongoing challenges and opportunities. Improved oversight,
controls and analysis of Federal charge card use could result
in reduced improper payments and misuse. The Federal government
could also improve the identification of strategic sourcing
opportunities by analyzing charge card use for potential
savings.
Federal charge cards have been the subject of congressional
hearings, Government Accountability Office reports\1\ and
Office of Inspector General (OIG) reviews highlighting their
misuse. For example, the misuse of government travel cards by
the Department of Defense (DOD) employees at casinos and adult
entertainment establishments was the subject of a DOD OIG
report earlier this year.\2\ That OIG report detailed specific
steps needed for improved oversight by the DOD, many of which
could also be adopted by other agencies. Similar problems at
the DOD spurred a 2006 Committee hearing,\3\ and a subcommittee
of the House Oversight and Government Reform Committee also
held a hearing on the use of Federal charge cards for high-end
gym memberships, gift cards, and hair salons.\4\ The misuse of
Federal purchase cards within the Department of Veterans
Affairs, where cardholders at the agency appeared to have
avoided using competitive bidding by breaking up large
purchases into many smaller ones, was also the topic of news
articles and a congressional hearing.\5\
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\1\See, e.g., Gov't Accountability Office, GAO-08-333,
Governmentwide Purchase Cards: Actions Needed to Strengthen Internal
Controls to Reduce Fraudulent, Improper, and Abusive Purchases (2008),
available at http://www.gao.gov/new.items/d08333.pdf.
\2\Department of Defense Office of Inspector General, DoD
Cardholders Used Their Government Travel Cards for Personal Use at
Casinos and Adult Entertainment Establishments (2015), available at
http://www.dodig.mil/pubs/documents/DODIG-2015-125.pdf.
\3\DHS Purchase Cards: Credit without Accountability: Hearing
Before the Comm. on Homeland Security and Governmental Affairs, 109th
Cong. (2006), available at http://www.hsgac.senate.gov/hearings/dhs-
purchase-cards-credit-without-accountability.
\4\Gym Memberships, Gift Cards and Hair Salons: Examining the
Misuse of Government-Supplied Credit Cards: Hearing Before the H.
Subcomm. on Government Operations, 113th Cong. (2014), available at
https://oversight.house.gov/hearing/gym-memberships-gift-cards-hair-
salons-examining-misuse-government-supplied-credit-cards/.
\5\Lisa Rein, The mysterious case of $54 million VA spent on
prosthetics in $24,999 payments, The Washington Post (June 16, 2015),
available at http://www.washingtonpost.com/blogs/federal-eye/wp/2015/
06/16/the-mysterious-case-of-54-million-va-spent-on-prosthetics-in-
24999-payments/; Waste, Fraud, and Abuse in the VA Purchase Card
Program: H. Comm. on Veterans Affairs, 114th Cong. (2015), available at
https://veterans.house.gov/hearing/waste-fraud-and-abuse-in-va-s-
purchase-card-program.
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The oversight of Federal purchase cards also has been a
focus of recent legislation. In 2012, the Committee favorably
reported the Government Charge Card Abuse Prevention Act,
sponsored by Senator Charles Grassley, which was signed into
law later that year.\6\ The law requires agencies to establish
safeguards and internal controls for charge cards, including
use of systems and technologies to identify illegal, improper,
or erroneous purchases. The law also requires annual reporting
by Federal agencies and OMB, as well as periodic risk
assessments by Inspectors General of agency purchase card
programs..
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\6\Pub. L. No. 112-94.
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The White House and OMB have taken action to strengthen
Federal charge card oversight during the past several years.
The President signed Executive Order 13681, Improving the
Security of Consumer Financial Transactions, which included the
promotion of more secure charge card operations for Federal
agencies.\7\ Also, the OMB Circular A-123 Appendix B, Improving
the Management of Government Charge Card Programs, detailed
improved policies and procedures for federal charge card
programs.\8\
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\7\Exec. Order No. 13681, available at https://www.whitehouse.gov/
the-press-office/2014/10/17/executive-order-improving-security-
consumer-financial-transactions.
\8\OMB Circular A-123, App. B, available at https://
www.whitehouse.gov/sites/default/files/omb/assets/agencyinformation--
circulars--pdf/a123--appendix--b.pdf.
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However, there is still a clear need for strengthening and
improving Federal oversight and administration by Federal
agencies of charge card programs. While agencies are required
to individually develop new oversight techniques to detect
misuse, there is no consistent method for Federal agencies to
quickly share the identified fraud schemes or oversight
techniques, such as those identified this year by the DOD
OIG.\9\ In addition, not all government agencies have
established robust data mining, or anti-waste and fraud
analytics, for their charge card programs. The Federal
government could also do a better job surveying agency-wide
purchase card data to identify ways to improve efficiency, as
well as taking aggressive efforts to recover inappropriately
spent dollars.
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\9\Department of Defense Office of Inspector General, DoD
Cardholders Used Their Government Travel Cards for Personal Use at
Casinos and Adult Entertainment Establishments (2015), available at
http://www.dodig.mil/pubs/documents/DODIG-2015-125.pdf.
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Of the two types of credit cards, travel cards and purchase
cards, purchase cards present the greater risk to taxpayers. In
most cases, individual employees are only reimbursed for
authorized charges on travel cards and must pay for any
unauthorized charges using their own personal funds. On the
other hand, in most cases, agencies pay the entire monthly bill
for purchase cards and can only identify unauthorized charges
after they have already been paid.
Still, travel card data presents insight into the travel
patterns of agencies and can help GSA identify excess
conference spending, first-class travel, and travel charges
incurred near the employee's home. Many of these charges may
not be fraudulent, and likely were approved by supervisors.
Similarly, purchase cards--due to the structured,
electronic nature of the transactions--provide government-wide
insight into small-dollar spending patterns that is not
available elsewhere, such as USAspending.gov. GSA analysts can
use this information to find ways to save money.
The Saving Federal Dollars Through Better Use of Government
Purchase and Travel Cards Act of 2015 would improve anti-waste
and fraud analysis and facilitate the sharing of information
about charge card abuse and best practices among federal
agencies. The legislation would also establish procedures to
identify strategic sourcing opportunities through analysis of
Federal charge card transactions.
The bill instructs the GSA to review charge card purchases.
GSA already collects charge card transaction data in its
administrative role of overseeing federal agency charge card
programs. S. 1616 is intended to require GSA to assist agencies
in their ongoing oversight responsibilities through the
analysis of the transaction data.
S. 1616 builds on the 2012 Government Charge Card Abuse
Prevention Act, which required agencies to establish certain
types of control and oversight over the agency's charge card
usage.\10\ Under S. 1616, GSA would assist agencies by
conducting sophisticated, government-wide analysis for
potential waste and fraud, without relieving agencies of the
need to conduct their own scrutiny. Federal agencies would also
share information about fraud schemes, high-risk sellers and
other risks of charge card misuse. This way, agencies will
learn from one another's successes and mistakes.
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\10\Pub. L. No. 112-94.
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Finally, the legislation would facilitate analysis of
government-wide purchase card data spending patterns to better
leverage Federal government purchasing power when buying in
bulk. This is often called ``strategic sourcing,'' and has
become a proven way to save taxpayer funds.\11\
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\11\Gov't Accountability Office, GAO-13-417, Strategic Sourcing:
Leading Commercial Practices Can Help Federal Agencies Increase Savings
When Acquiring Services (2013), available at http://www.gao.gov/
products/GAO-13-417.
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III. LEGISLATIVE HISTORY
Ranking Member Tom Carper, Chairman Ron Johnson, and
Senators Charles Grassley and Claire McCaskill, introduced S.
1616 on June 18, 2015, and the bill was referred to the
Committee.
The Committee considered S. 1616 at a business meeting on
June 24, 2015. The Committee adopted the bill by voice vote.
Members present for the vote on the bill were Senators Johnson,
McCain, Lankford, Ayotte, Ernst, Sasse, Carper, Tester,
Baldwin, and Heitkamp.
IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED
Section 1. Short title
This section establishes the bill's title as the ``Saving
Federal Dollars Through Better Use of Government Purchase and
Travel Cards Act of 2015.''
Section 2. Definitions
This section establishes definitions for ``Strategic
Sourcing'' and ``Improper Payment.''
Section 3. Office of Federal Charge Card Analytics and Review
This section instructs GSA to establish an Office of
Federal Charge Card Analytics and Review to use the charge card
data it currently possesses to identify ways to save money. The
bill is intended to provide flexibility for GSA to organize
this function into an existing division, such as the Data
Management division.
Section 4. Guidance on improving information sharing to curb improper
payments
This section instructs that, not later than 180 days after
the date of the bill's enactment, the Director of OMB, in
consultation with the Administrator of GSA, agency heads, and
the GSA task force created by Section 3, to issue guidance on
carrying out Section 3 which shall include: requiring agencies
to identify and share information about high-risk merchants;
(2) ensuring agencies are reviewing the reports of concerning
transactions; (3) ensuring agencies are sharing information
about fraud schemes with GSA's task force and other agencies;
and (4) any other requirements necessary to carry out the
directives of the bill.
Section 5. Interagency task force
This section establishes an interagency task force to
identify best practices related to charge card oversight by
federal agencies.
Section 6. Reporting requirements
This section requires GSA and each covered agency to submit
a report to Congress within one year on their compliance with
this bill.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill. The Committee
concurs with the Congressional Budget Office, which states that
the bill contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandate Reform Act and
would not affect state, local, and tribal governments. The
enactment of this legislation will not have significant
regulatory impact.
VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
August 12, 2015.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental
Affairs, U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1616, the Saving
Federal Dollars Through Better Use of Government Purchase and
Travel Cards Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall.
Enclosure.
S. 1616--Saving Federal Dollars Through Better Use of Government
Purchase and Travel Cards Act of 2015
Summary: S. 1616 would increase oversight of federal
agencies' use of purchase and travel cards. The legislation
would establish an Office of Federal Charge Card Analytics and
Review within the Government Services Administration (GSA) to
examine purchases made using federal charge cards. Under S.
1616, GSA also would establish an interagency task force to
facilitate the sharing of information and to promote best
practices to reduce fraud and improper payments. Finally, S.
1616 would require GSA to report to the Congress on the
effectiveness of those efforts.
Based on information from GSA regarding the current
government charge card program, CBO estimates that implementing
S. 1616 would cost $65 million over the 2016-2020 period,
assuming appropriation of the necessary amounts. Enacting S.
1616 would not affect direct spending or revenues; therefore,
pay-as-you-go procedures do not apply.
S. 1616 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1616 is shown in the following table.
The costs of this legislation fall within function 800 (general
government).
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By fiscal year, in millions of dollars--
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2016 2017 2018 2019 2020 2016-2020
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level................. 10 15 15 15 10 65
Estimated Outlays............................. 9 15 15 15 11 65
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Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted near the end of fiscal year 2015, that the
necessary amounts will be appropriated each year, and that
spending will follow historical patterns for federal salaries
and expenses.
Under current law and policy, agencies have many tools to
combat fraud and misuse related to charge cards. Agencies have
coordinators to oversee the use of charge cards; they also use
tools such as credit limits, blocks on merchants based on the
type of business, activity reports, and employee guides that
explain best practices for using federal charge cards. In
addition the 72 Inspector Generals (IG) and their 14,000
employees spend about $2.5 billion a year to detect and deter
fraud, waste, and mismanagement of government funds.
The legislation would expand the role of GSA in overseeing
government-wide use of charge cards by establishing the Office
of Federal Charge Card Analytics and Review. This new office
would examine all charge card purchases made by federal
employees and contractors with an aim to reduce improper
purchases.
Based on the costs to operate the Recovery Accountability
and Transparency Board (Recovery Board), which sought to detect
and prevent waste, fraud, and abuse of funds provided by the
American Recovery and Reinvestment Act of 2009, CBO estimates
that GSA would spend $65 million over the 2016-2020 period to
monitor government charge card spending. Including start-up
spending in 2016, those amounts would fund the creation of an
operations center with software to aggregate and analyze large
volumes of charge card data. CBO expects that some costs to
analyze the charge cards would diminish over time as some
standardized work was developed.
The proposed Office of Federal Charge Card Analytics and
Review may detect additional waste, fraud, and abuse beyond
what is already identified by similar efforts under current
law. Such efforts could result in savings. However, CBO has no
basis for predicting whether the efforts of the new office
would lead to a significant increase in the recovery of
fraudulent payments, or would significantly reduce future
instances of improper use of charge cards.
Pay-As-You-Go considerations: None.
Intergovernmental and private-sector impact: S. 1616
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Matthew Pickford;
Impact on state, local, and tribal governments: Paige Piper/
Bach; Impact on the private sector: Jon Sperl.
Estimate approved by: Theresa Gullo; Assistant Director for
Budget Analysis.
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
Because this legislation would not repeal or amend any
provision of current law, it would make no changes in existing
law within the meaning of clauses (a) and (b) of paragraph 12
of rule XXVI of the Standing Rules of the Senate.
[all]