DOD mines data to detect abuse

Summary Report on the Joint Review of Selected DOD Purchase Card Transactions

Defense Department officials have gathered data on the misuse of government purchase cards, and they hope to create policies based on that data.

Col. William Kelley, program director of the Army's data-mining division in the inspector general's office, said government credit card users could be misspending millions of taxpayer dollars.

Agency officials issue the cards, which look and function like ordinary credit cards. Employees use them for purchases less than $2,500. Most card purchases are for office supplies or building materials, Kelley said.

Studies that Kelley's office conducted in 2002 and 2003 looked at 1,357 cardholders flagged by data-mining tools. The cardholders accounted for 13,052 flagged transactions out of 562,499 transactions available for review.

Officials identified 182 cardholders who had used their cards fraudulently or who warranted further investigation.

Kelley has been working on developing computer systems to mine data from various defense agencies that often cannot share data easily. He favors developing policies to continuously track purchase card use to spot abuses when they occur.

"The difficulty we have is that all of this is new work," Kelley said. "Nobody ever designed these systems before."

Kelley's other challenge is using the information he gathers. "We could look at all of [the purchase card transactions], but we don't have the resources to take action on all of them," he said.

Ideally, Kelley said, he would like to develop a system that automatically flags suspicious transactions and alerts appropriate officials by e-mail.

It would also generate reports for the Government Accountability Office, Congress or other officials interested in the information.

Kelley testified before the Senate Governmental Affairs Committee last year on the work his office has done. Sen. Susan Collins (R-Maine), the committee chairwoman, is concerned about the misuse of purchase cards.

"I am strongly considering reintroducing legislation to fix the problem of waste and abuse of the purchase card program," she said. "The American people have the right to expect the federal government to spend their tax dollars carefully and wisely."

Based on the congressional interest, Kelley said, he would like to see his office's work extended to civilian agencies. "It's bigger than just DOD," he said. "Why would we want to build a solution set just for DOD?"

GAO investigators have found similar problems at some civilian agencies, including the Energy Department's national laboratories.

General Services Administration officials do not oversee a unified purchase card program for the civilian side of government. Each agency is responsible for establishing and managing purchase card programs, a GSA spokeswoman said.

Kelley uses a data-mining program from ACL Services, whose original focus was creating technology for auditors, said Harald Will, the company's president and chief executive officer.

Will and company leaders broadened ACL's focus beyond professional auditors in 2000 and repackaged their tools for use in other government and commercial settings.

That ease of use fit what Kelley was trying to do, said Jim Ferguson, ACL's federal government sales executive. "Col. Kelley and the DOD inherently recognized that one of the risk areas in their business was the card program," he said.

However, some political leaders argue that it may not be necessary to eradicate card abuse. Rep. Tom Davis (R-Va.), chairman of the House Government Reform Committee, said it's important for efficiency to give the "person at the window" — the employees who interact with the public — some discretion.

"I'm willing to give people credit cards and let them go to" an office supply store, Davis said in an interview with Federal Computer Week.

"When you empower people to make decisions on their own, there are going to be mistakes," but it can still be a net gain for government if the savings are greater, he added.

Chip Mather, senior vice president at Acquisition Solutions, suggested that government card holders are under much greater control than company credit card users.

"In industry, they accept a certain amount of fraud, waste and abuse because of the savings the cards generate," Mather said. "The cost is greatly reduced compared to having to go through a contracting office. If there's 1 or 2 percent abuse, that's the cost of doing business. It's

OK. In government, it's not OK. A lot of times we spend a million dollars chasing a dollar."