OMB Gets Tough on Misuse of Government Credit Cards

By Stephen Barr
Thursday, April 10, 2008

A crackdown on the misuse of government credit cards is underway.

The Office of Management and Budget said yesterday that it would welcome Congress's help in disciplining federal employees who misuse their cards, pointing to a Senate bill that would authorize agencies to fire employees for egregious abuse of government credit cards. Employees suspected of fraud would have their cases referred to federal prosecutors.

"The vast majority of civilian employees, government employees, use the cards responsibly. At the same time, I would say there is abuse, and the goal is zero, and we need to make it zero," said Clay Johnson III, deputy director for federal management issues at the OMB.

An investigative report released by senators Tuesday showed that government employees used their credit cards in 2005 and 2006 to buy cameras, laptop computers, iPods, high-end suits, lingerie, and steak and booze dinners.

The inquiry by the Government Accountability Office was not the first to discover abuse in federal credit card and travel programs. Previous reports by the GAO and inspectors general have documented federal employees using their government cards to buy baseball tickets, jewelry, cellphones, escort services and, in one instance, breast enhancement surgery for a girlfriend.

"Here We Go Again," was the headline yesterday on a news release from the Project on Government Oversight, a nonprofit group that investigates corruption in government. It noted that the group uncovered similar problems in 2002.

The GAO findings, reported by Washington Post staff writer Dan Eggen yesterday, sparked a flurry of comments on Federal Diary Live at "As a current fed I just wanted to say that this misuse of government credit cards is exactly the sort of thing that gives working for the federal government a bad reputation," one person wrote.

Johnson and Danny Werfel, the OMB's deputy controller, said yesterday that the president's budget director, Jim Nussle, will issue a memo reminding agencies of rules prohibiting the abuse and fraudulent use of government credit cards by federal employees.

The OMB issued a memo in 2005 directing agencies to tighten internal accounting controls to monitor credit-card use by their employees. Werfel said the OMB is working with Sen. Charles E. Grassley (R-Iowa) on legislation that would put "the force of law" behind the 2005 requirements. Congress can also institute penalties that are tougher than what the OMB can impose on employees, Werfel said.

In general, the "purchase card" programs were set up to permit employees to buy as much as $2,500 worth of goods and services that are necessary and reasonable for the operation of their agencies. The government contracts with five banks for credit cards in exchange for favorable interest rates and rebates. In fiscal 2007, the banks provided the government with more than $170 million in refunds, the GAO said.

There are several types of government credit cards, but the GAO report focused on "purchase cards." Bills for charges on these cards are sent to the agencies for payment, although the cards are assigned to employees and carry their names, the OMB said.

In theory, having an employee's name on a card permits an agency to track the account and spot improper purchases. Although the agencies pay the credit-card bills, the employees are required to reimburse the agencies for any improper purchase.

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