Statements On Introduced Bills And Joint Resolutions

Floor Speech

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By Mr. GRASSLEY (for himself, Mr. Lieberman, and Ms. Collins):

S. 942. A bill to prevent the abuse of Government charge cards; to the Committee on Homeland Security and Governmental Affairs.

Mr. GRASSLEY. Mr. President, today, I am reintroducing the Government Charge Card Abuse Prevention Act to ensure that federal departments and agencies do not take the eye off the ball when it comes to spending the taxpayers' money. I have put in a lot of time and effort to call attention to instances of waste, fraud, and abuse using government charge cards while agencies were looking the other way. Now I want to make sure that they stay on top of this issue.

In 1998, the General Service Administration's, GSA, entered into a contract with a set of commercial banks to utilize charge cards, not unlike those used by businesses large and small and millions of consumers worldwide. This is called the SmartPay  program. These Government charge cards include government purchase cards, which are used for acquisition of commercial goods and services by agencies and paid directly by the agency, and Government travel cards, which are used to pay for individual Government travel expenses and issued in the name of individual government employees.

Government charge cards were intended as a low cost method to streamline government acquisition and travel processes. The whole idea was to adopt the best practices of the commercial sector. In the business sector, charge cards have been a success. They save time and money. The main reason they work so well is because the control environment in the private sector is rock solid and accountability is a fact of life. When a business is spending its own money, it is going to be sure that it accounts for every penny or it would not stay in business. As a result, in corporate America, if an employee is caught abusing a card, they'll lose it or get fired.

This was not the case when the Federal Government began using charge cards. Federal agencies did not put in place the necessary controls to make sure that all spending on charge cards was legitimate. When I started looking into this with the Government Accountability Office, GAO, we uncovered blatant examples of wasteful spending like LA-Z-Boy reclining rocking chairs, kitchen appliances, and even a sapphire ring being paid for with Government purchase cards, with the American taxpayer paying the bill.

Government travel cards have been used for gambling, sporting events, concerts, cruises, and even gentlemen's clubs and legalized brothels! While travel cards are not paid directly with taxpayers' money like purchase cards, failure by employees to repay these cards results in the loss of millions of dollars in rebates to the federal government. Also, when credit card companies are forced to charge off bad debt, they raise interest rates and fees on everyone else.

A series of GAO reports over the last decade have identified an inadequate and inconsistent control environment across numerous federal agencies with respect to both government purchase cards and Government travel cards. This has led to millions of dollars in taxpayers' money wasted. In some cases purchases were outright fraudulent, and others were of questionable need or were unnecessarily expensive. In each report it has issued, the GAO has made recommendations about what kind of controls need to be implemented to prevent such abuses from occurring in the future. In many cases, the same controls were often missing or inadequate, and therefore the same recommendations are repeated in report after report. One agency would promise to clean up its act, but then we would find the exact same problems with another. That is why I worked to develop legislation that would incorporate GAO's recommendations regarding some of the most basic controls needed in every agency to prevent abuse of government charge cards.

As a result of the pressure applied by the relentless oversight of Congress, the GAO, and agency Inspectors General, we have seen some progress toward establishing a better control environment. In fact, the Office of Management and Budget has issued a circular to agencies that seeks to bring about many of the controls we identified. However, this progress would not have been possible without the continual spotlight being shone on the problem and the threat of congressional action. It is also clear that we still have a way to go in stamping out abuse of government charge cards as evidenced by a GAO report on the internal controls for purchase cards governmentwide that came out just last year.

That report found that a weak control environment led to government purchase cards being used for items like iPods at NASA, internet dating and pornographic sites at the Postal Service, women's lingerie from a place called ``Seduction Boutique'' at the State Department that was supposedly for use during jungle training'', and over $642,000 over six years in fraudulent payments at the USDA for the cardholder's live-in boyfriend. These funds went for personal expenditures like gambling, car loan and mortgage payments, and other retail purchases. Clearly we still have a problem and that's why I'm determined to make sure this situation is fixed once and for all.

In addition to requiring federal agencies to establish a series of basic and vital internal controls that the GAO has found lacking in many cases, my bill would also provide that each agency Inspector General periodically conduct risk assessments of agency purchase card and travel card programs and perform periodic audits to identify potentially fraudulent, improper, and abusive use of cards. We have had great success working with Inspectors General using techniques like data mining to reveal instances of improper use of government charge cards. Having this information on an ongoing basis will help maintain and strengthen a rigorous system of internal controls to prevent future instances of waste, fraud, and abuse with government charge cards.

My bill also requires agencies to establish penalties so that employees who abuse government charge cards will face real and consistent consequences. This is necessary not only so that taxpayers know that those who would squander their money are held accountable, but also to send a message to other government employees that such behavior will not be tolerated. In fact, these penalties must include dismissal in serious circumstances.

This legislation has been revised a number of times with considerable input from the GAO as well as the Inspector General community and other stakeholders. I am also glad to have Chairman Lieberman and Ranking Member Collins as original cosponsors of this bill. Their help, assistance, and support has been very much appreciated as this legislation has developed. The result is a carefully considered and targeted piece of legislation that I look forward to seeing become law. I know that will give me and a great many American taxpayers more peace of mind about how their money is being spent.

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