GAO: Millions in suspect purchases
Federal workers spent lavishly with their government credit cards, the agency said.
WASHINGTON - Federal employees used government credit cards to pay for lingerie, gambling, iPods, Internet dating services, and a $13,000 steak-and-liquor dinner, according to a new audit from the Government Accountability Office, which found widespread abuses in a purchasing program meant to improve bureaucratic efficiency.
The study, released yesterday by Senate lawmakers, found that nearly half the "purchase card" transactions it examined were improper, either because they were not authorized correctly or did not meet requirements for the cards' use. The overall rate of problems "is unacceptably high," the audit found.
The GAO also found that agencies could not account for nearly $2 million worth of items identified in the audit - including laptops, digital cameras and, at the Army, more than a dozen computer servers worth $100,000 each.
Sen. Norm Coleman (R., Minn.), who requested the study along with Sen. Carl Levin (D., Mich.), said that money "intended to pay for critical infrastructure, education and homeland security is instead being spent on iPods, lingerie and socializing."
"Too many government employees have viewed purchase cards as their personal line of credit," Coleman said. "It's time to cut up their cards and start over."
The audit is the culmination of a series of GAO reports over a decade that have uncovered improper use of government-issued purchase cards at agencies, including the Defense and Homeland Security Departments. Government employees spent nearly $20 billion last year using "SmartPay" cards and related convenience checks, for items ranging from pencils to computers to utility trucks.
Purchase cards, used by about 300,000 government employees in 2007, are essentially the federal government's equivalent of corporate credit cards. Issued by five major banks, they are primarily for transactions under $2,500 but can be used for larger contract payments. All transactions are supposed to comply with federal purchasing guidelines, including proper authorization and documentation.
The latest study used scientific sampling to gauge problems with the cards across numerous federal agencies from July 2005 to September 2006. The report singles out incidents for special criticism as either "abusive," "improper" or "fraudulent."
In the fraudulent category, a longtime employee of the U.S. Forest Service in Oregon, Debra Durfey, wrote convenience checks worth more than $640,000 from 2000 to 2006 to a live-in boyfriend, who used the money for gambling, car expenses and mortgage payments, according to the GAO and the Justice Department.
The fraud went undetected until a whistleblower forwarded a tip to the Agriculture Department's inspector general. Durfey, who headed her unit's purchasing office, pleaded guilty last year and was sentenced to 21 months in prison and restitution.
In a written response to the GAO, acting Controller Danny Werfel of the Office of Management and Budget said that the administration was "extremely concerned with the incidences of purchase card abuse highlighted in GAO's report," and that it had agreed to increase oversight to lower the number of problems.
OMB spokeswoman Jane Lee also said the White House supported proposed Senate legislation aimed at reducing "inappropriate purchase-card transactions." The Government Credit Card Abuse Prevention Act would require regular audits and other steps to cut down on credit-card fraud and abuse.