On Tuesday, July 31, 2012, the House is scheduled to consider S. 300, the Government Charge Card Abuse Prevention Act of 2011, under a suspension of the rules requiring a two-thirds majority vote for approval.  S. 300 was introduced by Sen. Chuck Grassley (R-IA) on February 8, 2011, and was approved by the Senate on July 22, 2012.  The bill was referred to the Committee on Oversight and Government Reform on July 25, 2012. 

S. 300 would require agencies establish and maintain safeguards and internal controls for purchase cards, including: (1) keeping a record of each card holder and associated transaction limits; (2) requiring approval and reconciliation of transactions; (3) ensuring timely and accurate payment; (4) providing appropriate training to cardholders and administrators; and (5) recovering erroneous, improper, or illegal purchases.  The bill would require that the Office of Management and Budget (OMB) review existing guidance and prescribe additional guidance as necessary.

The bill would require agencies to take appropriate adverse personnel actions, including dismissal, for employees who violate purchase card guidelines or make erroneous, improper, or illegal purchases.

S. 300 would require that agencies with annual purchase card transactions totaling more than $10 million must report to the OMB on purchase card violations.  The report must be jointly submitted with the agency inspector general on a semi-annual basis.  Agency inspectors general would be required to conduct periodic assessments of purchase card programs, report to the agency head on the findings, and report to OMB on implementation of any agency recommendations based on the findings.

The bill would require the Department of Defense to remain subject to existing statutory guidance for purchase card use with additional internal controls similar to those proposed for other agencies in the bill.  The Department of Defense Inspector General would be required to conduct periodic assessments of purchase card use, reporting jointly with the Secretary of Defense to OMB.

S. 300 would require that agencies establish and maintain internal controls for travel cards, including: (1) keeping a record of each card holder and associated transaction limits; (2) ensuring appropriate credit of rebates and refunds for prompt payment and transaction volume; (3) providing appropriate training to cardholders and administrators; and (4) evaluating the creditworthiness of employees before issuance.  OMB would be required to establish a minimum credit score for determining the creditworthiness of an employee.  The bill would allow agencies to issue a restricted use travel card to an employee who lacks a credit history or has a credit score below the OMB minimum.  

The bill would require that agencies with annual travel card transactions totaling more than $10 million report to OMB on purchase card violations.  The report would be jointly submitted with the agency inspector general on a semi-annual basis.  Agency inspectors general would be required to conduct periodic assessments of travel card programs, report to the agency head on the findings, and report to OMB on implementation of any agency recommendations based on the findings.

The bill would require that agencies with employees who use centrally billed travel cards are to establish and maintain internal controls to guard against duplicate payment of charges and secure refunds of fully or partially used airline tickets.  OMB would be required to review existing guidance and prescribes additional guidance as necessary.

According to House Report 112-376, “Executive Order 12352 directed agencies to develop programs simplifying the procurement of relatively lower-cost goods and services.  Executive Order 12931 directed agency heads to expand the use of government purchase cards.  Each agency is responsible for establishing its own purchase card program, within Office of Management and Budget (OMB) guidance, using services negotiated by the General Services Administration (GSA).  The Federal Government’s purchase card program is designed to streamline the purchase of goods and services.

“Since 1988, federal employees have been required to use government charge cards for expenses associated with official government travel.  Each agency is responsible for establishing its own travel card program, which includes both individually and centrally billed accounts.  Centrally billed accounts are held by the agency, while individually held accounts are held by employee cardholders.

“While government charge cards have streamlined micropurchases and travel expenses, government auditors have over the years documented fraudulent and questionable purchases made by federal workers, including kitchen appliances, cruises, and even the tab at gentlemen’s clubs.  In 2008, GAO estimated that nearly 41 percent of purchase card transactions failed to meet basic internal control standards.

“The Committee believes the Federal Government must improve the way it manages charge cards used by federal employees.  S. 300, based largely on GAO’s recommendations, requires agencies to improve their internal controls for government charge cards, including the use of appropriate disciplinary action for employees who abuse charge card privileges.  The legislation also will help ensure the Federal Government benefits from prompt payment rebates available from charge card vendors.”

The Congressional Budget Office (CBO) estimates that implementing S. 300 would cost less than $500,000 a year, subject to the availability of appropriated funds.  The bill also could affect direct spending by agencies not funded through annual appropriations, such as the Tennessee Valley Authority and the Bonneville Power Administration; therefore, pay-as-you-go procedures apply.  CBO estimates, however, that any net increase in spending by those agencies would not be significant. Enacting S. 300 would not affect revenues.

Under current law, agencies are required to manage the use of government credit cards by establishing policies and procedures, conducting oversight, and penalizing unauthorized use of government cards.  Most of the provisions of S. 300 would codify those current policies and practices.  Based on information from the Office of Management and Budget (which sets procurement policy), the General Services Administration (the contract administrator for federal credit cards), and several agency IGs, CBO estimates that implementing the bill would lead to a small increase in the administrative costs to oversee the use of government charge cards.

S. 300 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local, or tribal governments.