[House Report 115-692]
[From the U.S. Government Publishing Office]


115th Congress    }                                    {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                    {      115-692

======================================================================



 
          VETERANS AFFAIRS PURCHASE CARD MISUSE MITIGATION ACT

                                _______
                                

  May 21, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Roe of Tennessee, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 5215]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 5215) to amend title 38, United States Code, to 
direct the Secretary of Veterans Affairs to prohibit employees 
found to have knowingly misused Department of Veterans Affairs 
purchase cards from serving as purchase card holders or 
approving officials, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Subcommittee Consideration.......................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Statement of General Performance Goals and Objectives............     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Earmarks and Tax and Tariff Benefits.............................     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Statement on Duplication of Federal Programs.....................     6
Disclosure of Directed Rulemaking................................     6
Section-by-Section Analysis of the Legislation...................     6
Changes in Existing Law Made by the Bill as Reported.............     7

                          Purpose and Summary

    H.R. 5215, the ``Veterans Affairs Purchase Card Misuse 
Mitigation Act,'' would mitigate the potential for purchase 
card misuse by requiring the Secretary of Veterans Affairs to 
revoke the purchase card or purchase card approval authority 
from any employee who is found to have knowingly misused it. 
This is a safeguard designed to stop further misuse while 
existing penalties, ranging from suspension to demotion to 
removal, are considered. Representative Jack Bergman of 
Michigan introduced H.R. 5215 on March 8, 2018.

                  Background and Need for Legislation

    The Government Purchase Card Program provides charge cards, 
linked to centrally billed accounts, to federal agencies in 
order to make small-dollar purchases efficiently by minimizing 
paperwork and administrative burden. Purchase cards are one 
element of the larger Government Charge Card Program, which 
also includes the travel and fleet card programs. The concept 
originated with Executive Order 12352, entitled, ``Federal 
Procurement Reforms,'' of March 17, 1982, and Government 
Purchase Cards came into widespread use by federal agencies in 
the late 1980s. The General Services Administration oversees 
the Government Charge Card Program. Today, purchase card 
spending by the Department of Veterans Affairs (VA) exceeds $4 
billion annually.
    In March 2008, the Government Accountability Office (GAO) 
released a report entitled, ``Governmentwide Purchase Cards: 
Actions Needed to Strengthen Internal Controls to Reduce 
Fraudulent, Improper, and Abusive Purchases.'' The GAO tested 
purchase card transaction data from a range of federal agencies 
and found over 40 percent of purchases failed to meet basic 
internal control standards, as well as incidents of wanton 
abuse and embezzlement. The Government Charge Card Abuse 
Prevention Act of 2012 (P.L. 112-194), which was informed in 
part by the March 2008 GAO report, required agency heads to 
attest to the adequacy of internal controls and policies to 
prevent charge card misuse, instituted penalties for employees 
committing misuse, directed inspectors general to conduct 
annual risk assessments of misuse, and instituted other 
safeguards.
    The most recent risk assessment by the VA Office of 
Inspector General (OIG), published March 6, 2017 regarding 
fiscal year 2016, found the VA Government Purchase Card Program 
to pose medium risk, while VA's travel and fleet card programs 
pose low risk. Additionally, the OIG found 13 percent of VA's 
purchase card transactions to be unauthorized commitments and 
noted that the office continues to identify misuse of purchase 
cards. An earlier report by the OIG, entitled, ``Review of 
Alleged Unauthorized Commitments,'' which was published May 21, 
2014, estimated about 15,600 potential unauthorized commitments 
valued at approximately $85.6 million. A similar OIG report 
entitled, ``Veterans Health Administration: Audit of Purchase 
Card Use to Procure Prosthetics,'' which was published 
September 29, 2017, specifically examined the buying of 
prosthetics using purchase cards. In this report, the OIG found 
that of 87,100 purchase card transactions for prosthetics in 
fiscal year 2015, 53,400 or 61 percent, representing $520.7 
million, were improper payments and unauthorized commitments.
    While improper payments and unauthorized commitments do not 
necessarily indicate purchase card misuse, they are indicators 
of risk for potential misuse. VA and its OIG continue to 
identify incidents of intentional misuse. The Committee is 
concerned that, although internal controls over the purchase 
card program have been strengthened in recent years, there are 
still organizational components of the Department where 
managerial attention and policy adherence lapse, creating an 
environment in which employees begin misusing purchase cards, 
and this conduct may continue unfettered. While VA policy 
prescribes penalties for purchase card misuse ranging from 
admonishment to removal, and the Department of Veterans Affairs 
Accountability and Whistleblower Protection Act of 2017 (P.L. 
115-41), among other purposes, expedited the removal of VA 
employees for misconduct, including purchase card misuse, there 
is nonetheless a substantial period of time, typically months, 
from when an employee is found to have misused a purchase card 
to the time when that employee is actually removed. 
Alternately, the employee may not be removed at all. The 
Committee is concerned that there is currently no certainty 
that, after an employee begins to willfully misuse a purchase 
card, the employee's purchase card will be revoked to eliminate 
the propensity for further misuse, pending other disciplinary 
procedures.
    Further, in light of the increase of the Micro-Purchase 
Threshold, from the prevailing $3,500 to $10,000, enacted in 
section 806 the Fiscal Year 2018 National Defense Authorization 
Act (P.L. 115-91), the volume and dollar value of purchase card 
spending is expected to increase significantly, throughout 
federal agencies including VA. This may stress internal 
controls and exacerbate the potential for or magnitude of 
misuse. A proactive approach to stop any intentional purchase 
card misuse when it begins is necessary.

                                Hearings

    On March 7, 2018, the Subcommittee on Oversight and 
Investigations held a legislative hearing that included a 
discussion of a draft bill regarding purchase card misuse, 
which would later be introduced as H.R. 5215.
    The following witnesses testified:
          The Honorable Cathy McMorris Rodgers, U.S. House of 
        Representatives, 5th District, Washington; Fred Mingo, 
        Director of Program Control, Program Executive Office, 
        Electronic Health Record Modernization Program, U.S. 
        Department of Veterans Affairs, accompanied by Ricky 
        Lemmon, Acting Deputy Chief Procurement Officer, 
        Veterans Health Administration, U.S. Department of 
        Veterans Affairs, John Adams, Director of Corporate 
        Travel, Office of Management, U.S. Department of 
        Veterans Affairs, and Katrina Tuisamatatele, Health 
        Portfolio Director, Office of Information and 
        Technology, U.S. Department of Veterans Affairs; Louis 
        Celli, Jr., Director, Veterans Affairs & Rehabilitation 
        Division, The American Legion; and Scott Denniston, 
        Executive Director National Veterans Small Business 
        Coalition.
    Statements for the record were provided by:
          The Honorable Cathy McMorris Rodgers, U.S. House of 
        Representatives, 5th District, Washington; and Veterans 
        of Foreign Wars.

                       Subcommittee Consideration

    There was no Subcommittee markup of H.R. 5215.

                        Committee Consideration

    On May 8, 2018, the full Committee met in open markup 
session, a quorum being present, and ordered H.R. 5215 
favorably reported to the House of Representatives by voice 
vote. A motion by Representative Tim Walz of Minnesota to 
report H.R. 5215 favorably to the House of Representatives was 
adopted by voice vote.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, there were no recorded votes 
taken on amendments or in connection with ordering H.R. 5215 
reported to the House. A motion by Representative Tim Walz of 
Minnesota to report H.R. 5215 favorably to the House of 
Representatives was adopted by voice vote.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are to ensure VA takes necessary steps to 
ensure those employees found to have knowingly misused purchase 
cards cannot continue to do so while appropriate accountability 
actions are being taken.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                  Earmarks and Tax and Tariff Benefits

    H.R. 5215 does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI of the Rules of the House of 
Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
5215 prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.

               Congressional Budget Office Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
for H.R. 5215 provided by the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 9, 2018.
Hon. Phil Roe, M.D.,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5215, the Veterans 
Affairs Purchase Card Misuse Mitigation Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Logan Smith.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 5215--Veterans Affairs Purchase Card Misuse Mitigation Act

    H.R. 5215 would prohibit any employee of the Department of 
Veterans Affairs (VA) who is found to have knowingly misused a 
purchase card from serving as a purchase card holder or 
approving official. The bill would define actions considered to 
be misuse of a purchase card. Purchase cards are VA-issued 
charge cards used to procure authorized supplies and services 
for the agency.
    Existing VA policies limit purchase card access for 
employees found to have knowingly misused such cards. VA's 
Inspector General also monitors and reports on purchase card 
misuse. In addition, other federal policies and practices are 
designed to prevent purchase card misuse. Because of those 
ongoing activities, CBO estimates the bill would have no 
budgetary effect.
    Enacting H.R. 5215 would not affect direct spending or 
revenues, therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 5215 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 5215 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Logan Smith. The 
estimate was reviewed by Leo Lex, Deputy Assistant Director for 
Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 5215 prepared by the Director of the 
Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
5215.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, H.R. 5215 is authorized by Congress' power to 
``provide for the common Defense and general Welfare of the 
United States.''

                  Applicability to Legislative Branch

    The Committee finds that H.R. 5215 does not relate to the 
terms and conditions of employment or access to public services 
or accommodations within the meaning of section 102(b)(3) of 
the Congressional Accountability Act.

              Statement on Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that no provision 
of H.R. 5215 establishes or reauthorizes a program of the 
Federal Government known to be duplicative of another Federal 
program, a program that was included in any report from the 
Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017), 
the Committee estimates that H.R. 5215 contains no directed 
rulemaking that would require the Secretary to prescribe 
regulations.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 of the bill would establish its short title as 
the Veterans Affairs Purchase Card Misuse Mitigation Act.

Section 2. Misuse of Department of Veterans Affairs purchase cards by 
        department employees

    Section 2(a) of the bill would amend chapter 7 of title 38, 
U.S.C., by adding a new subsection 727 entitled, Misuse of 
Department purchase cards.''
          Subsection 727(a) would state that, in addition to 
        any other applicable penalty, the Secretary shall 
        prohibit any VA employee from serving as a purchase 
        card holder or approving official if the Inspector 
        General or Secretary find that employee has knowingly 
        misused a purchase card.
          Subsection 727(b) would define ``misuse'' for 
        purposes of this section as: (1) splitting purchases; 
        (2) exceeding applicable purchase card limits or 
        purchase thresholds; (3) purchasing any unauthorized 
        item; (4) using a purchase card without being an 
        authorized purchase card holder; or (5) violating 
        ethics standards.
    Section 2(b) of the bill would provide for a clerical 
amendment.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *



PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


                          CHAPTER 7--EMPLOYEES


                 SUBCHAPTER I --GENERAL EMPLOYEE MATTERS

Sec.
701. Placement of employees in military installations.
     * * * * * * *
727. Misuse of Department purchase cards.

           *       *       *       *       *       *       *


Sec. 727. Misuse of Department purchase cards

  (a) In General.--The Secretary shall prohibit any employee of 
the Department who the Secretary or the Inspector General of 
the Department determines has knowingly misused a purchase card 
from serving as a purchase card holder or approving official. 
Such a prohibition shall be in addition to any other applicable 
penalty.
  (b) Misuse.--For purposes of this section, the term 
``misuse'' means--
          (1) splitting purchases;
          (2) exceeding applicable purchase card limits or 
        purchase thresholds;
          (3) purchasing any unauthorized item;
          (4) using a purchase card without being an authorized 
        purchase card holder; or
          (5) violating ethics standards.

           *       *       *       *       *       *       *


                                  [all]