Agencies reviewing purchase cards

Oversight and Management of the Government Purchase Card Program Hearing

Regardless of whether or not they have been cited for abuses, all federal agencies have until June 1 to submit a review and remedial plans for government credit card use to the Office of Management and Budget.

OMB sent out a memorandum April 18 requesting the plans and will use the information to determine the next course of action. The call comes after months of negative publicity surrounding the SmartPay cards because of much-publicized abuses at certain agencies, said Joseph Kull, deputy controller of OMB's Office of Federal Financial Management.

Speaking May 7 at the 2003 Visa Government Forum in Washington, D.C., Kull said the now notorious example of a cardholder at the Space and Naval Warfare Systems Command using a government-issued card to buy breast implants for his girlfriend "brings tremendous pressure on the program" and paints a picture of an "irresponsible government," even though the cards mostly have benefited agencies since the program's launch in 1989.

The federal government spent almost $14 billion in fiscal 2001 with the cards — known as "purchase cards" — which lessen agencies' workloads and help them earn rebates from the issuing banks in the process.

OMB will be reviewing the agencies' plans, which could become part of the government's management guide in the future, but it's too soon to tell if quarterly reports on the purchase cards will be required in the future, Kull said. He added that he'd like to see agencies with good programs rewarded, since only a few agencies have troubled programs.

"Not everyone should bear the same level of burden," he said, adding that agencies with well-run programs not being forced to submit reports would be an "incentive for good management."

Sue McIver, director of the General Services Administration's Services Acquisition Center, which oversees the SmartPay program, said she agreed with the actions of agencies, such as the Defense Department, that publicize egregious card abuses and prosecute offenders with fines or imprisonment because that "lets others know those actions won't be tolerated."

The House Energy and Commerce Committee's Oversight and Investigations Subcommittee held a May 1 hearing on purchase card abuse, and members and witnesses "unanimously agreed that oversight is the most important element" of a successful purchase card program, McIver said.

To facilitate that oversight, GSA recommends that agencies appoint agency/organization planning coordinators (A/OPC), whose primary duty is reviewing official purchases. McIver said the A/OPCs should be knowledgeable, independent and responsible for no more than 10 cardholders.

GSA offers Internet-based training for SmartPay users and is developing a similar offering for A/OPCs, which should be available later this year, she said, adding that oversight begins with the coordinators, but must go to the most senior management levels of an agency to be truly successful.

Michael Dreyer, senior vice president of product development at Visa USA, said the government market is a core component of the company's commercial business and noted that for fiscal 2001, Visa hosted more than 73 percent of SmartPay purchases and more than 84 percent of travel card use.

Visa teamed with Deloitte and Touche LLP and Deloitte Consulting to study procurement and payment trends for large and mid-size companies; the findings were released at the forum. A similar study, focused on the government, is in the works, Dreyer said.