[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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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..
---------------------------------------------------------------------------
    \6\Pub. L. No. 112-94.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \10\Pub. L. No. 112-94.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

                        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).

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2016       2017       2018       2019       2020    2016-2020
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level.................         10         15         15         15         10         65
Estimated Outlays.............................          9         15         15         15         11         65
----------------------------------------------------------------------------------------------------------------

    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]