Statements on Introduced Bills and Joint Resolutions - S. 2356

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Ms. COLLINS (for herself and Mr. FEINGOLD):

S. 2356. A bill to require the Director of the Office of Management and Budget to issue guidance for, and provide oversight of, the management of micropurchases made with Government-wide commercial purchase cards, and for other purposes; to the Committee on Governmental Affairs.

Ms. COLLINS. Mr. President, I rise today with my colleague, Senator RUSS Feingold, to introduce the "Purchase Card Waste Elimination Act of 2004," to help eliminate wasteful spending through the use of governmental credit cards.

Today, the Governmental Affairs Committee explored the federal government's use of "purchase cards," which are commercial charge cards used by federal agencies to buy billions of dollars worth of goods and services. The Committee heard the results of the General Accounting Office's investigation into waste, fraud, and abuse in the purchase card program.

The American people have the right to expect the federal government to spend their tax dollars carefully and wisely. While this is true at all times, it is never more so than today, when the government faces enormous fiscal pressures and a growing budget deficit.

The Governmental Affairs Committee has a mandate to help safeguard those tax dollars from waste, fraud, and abuse. To meet this mandate, the Committee has launched an initiative to root out government waste. Today's hearing was part of that effort and focused on wasteful, inefficient, and in some cases, fraudulent, transactions using purchase cards.

These cards were first introduced by the General Services Administration on a government-wide basis in 1989. Purchase cards are used primarily for making routine purchases such as office supplies, computers and copying machines. Purchase cards are similar to the personal credit cards we all carry, but with one important difference: The taxpayers pays the bill. Although the card is only supposed to be used for official purposes, the Federal Government is responsible for paying all charges by authorized cardholders, regardless of what was purchased.

While legitimate purchases are usually small, they nevertheless add up to big money. Purchase card use has soared during the past decade-from less than $1 billion in fiscal year 1994 to more than $16 billion in fiscal year 2003. There are more than 134,000 purchase cardholders in the Defense Department alone.

This explosive growth presents both challenges and opportunities. While there are many benefits to the purchase card, such as expediting purchases, cutting red tape, and saving administrative costs, the General Accounting Office and the Inspectors General have reported that inadequate controls over purchase cards leave agencies vulnerable to waste, fraud, and abuse.

The Governmental Affairs Committee heard testimony describing how smarter use of purchase cards could save taxpayers hundreds of millions of dollars. A GAO report that I requested along with Senator FEINGOLD and Congresswoman SCHAKOWSKY, which is being released today, highlights several wasteful purchasing practices.

The GAO concludes that many agency cardholders fail to obtain readily available discounts on purchase card buys. In too many cases, purchase cardholders are buying goods and services from vendors that already agreed to provide government discounts through the GSA schedule, yet cardholders often lack the information and training needed to obtain the discounted prices. As a result, GAO found numerous instances of cardholders paying significantly more for items for which discounts already had been negotiated. In light of the fact that conscientious shoppers often can obtain savings beyond the schedule discounts, these findings indicate that some federal agencies are substantially overpaying for routine supplies.

For example, an analysis of the Department of Interior's purchase card buys of ink cartridges found that most of the time the cardholder paid more than the government schedule price to which the vendors had already agreed. One vendor had agreed to a schedule price of $24.99 for a particular ink cartridge, yet of 791 separate purchases of this model,only two were at or below that price. Some purchasers paid $34.99 or about 40 percent more for the same item.

In conducting its investigation, the GAO examined six agencies that together account for over 85 percent of all government purchase card transactions. If the six agencies reviewed in this study negotiated automatic discounts of just 10 percent from major vendors, and if agency employees had used those discounts, GAO estimates annual savings of $300 million. Over 10 years, that's $3 billion. Pretty soon, as Senator Dirksen once observed, we're talking real money.

The GAO also found that agencies should be making greater efforts to collect and analyze data on purchase card transactions. This would help agencies to eliminate waste and to expose fraud and abuse.

We must assure taxpayers that the federal government is shopping carefully, wisely and honestly. That's why the legislation we introduce today would require the Office of Management and Budget to direct agencies to better train cardholders and to more effectively scrutinize their purchases. This legislation would also instruct the General Services Administration to increase its efforts to secure discount agreements with vendors and to better provide agencies with the tools needed to control wasteful spending. According to testimony by GAO, this legislation would be a strong first step to eliminating $300 million in wasteful spending.

The American people have the right to expect the federal government to spend their tax dollars carefully and wisely. I urge my colleagues to cosponsor this legislation and help eliminate wasteful purchase card spending.