A bill requiring federal agencies to place new controls on government charge cards and enforce more stringent penalties for violations by federal employees is on its way to President Obama for his signature, following final passage by Congress over the weekend.

The reform measure was sponsored by Senators Chuck Grassley, R-Iowa, Joe Lieberman, I-Conn., and Susan Collins, R-Maine, and it first won Senate approval in July 2011. The House passed it during the summer. The Senate needed to act again for final passage, which it did very early Saturday morning.

“This bill is about accountability,” Grassley said in a statement. “The public trust has been violated by abusive use of government charge cards. By putting some common-sense controls into the law, we can make certain the federal bureaucracy improves the way it responsibly manages the use of these cards.”

The bill was passed after a widely publicized scandal involving the General Services Administration’s lavish overspending on travel and conferences. Over the years, the Government Accountability Office and Inspectors General have identified many examples of fraudulent or illegal use of government charge cards, Lieberman pointed out. The GAO has documented fraudulent, questionable and overly expensive purchases made by federal workers with government purchase and travel cards, including kitchen appliances, jewelry, gambling, cruises, and even the tab at gentlemen’s clubs and legalized brothels.

“Even at the General Services Administration, which administers the charge card program for the entire federal government, a high-ranking employee was able to rack up tens of thousands of dollars in personal expenditures on a government charge card,” Lieberman said in a statement. "This legislation would impose stricter controls on charge cards to help reduce waste, fraud and abuse. It’s a common-sense way to keep the government accountable for taxpayer dollars."

The bill would require agencies to ensure that purchase and travel cards are used only for approved spending and to take action to prevent misuse of the cards. "While purchase and travel cards have been important tools in meeting the government’s procurement needs in a timely and cost-efficient manner, their use often has been subject to some malfeasance and inappropriate purchases by individual card holders," said Collins. "American taxpayers get the bill for these federal credit cards and they deserve complete assurance that their money is going to legitimate business purposes."

The senators’ effort to codify new controls and penalties responds to accounts of expensive purchases made with government charge cards, as well as independent analysis that found inadequate and inconsistent controls within government agencies. At issue are purchase cards, which are used by authorized federal employees for small-scale items needed for official business, such as office supplies, as well as travel cards, which are issued to federal employees to pay for official travel expenses.

The bill would require a number of safeguards and internal controls, such as performing credit checks for travel card holders and issuing restricted cards for those with poor or no credit to reduce the potential for misuse. Government agencies would need to maintain a record of each cardholder, including single transaction limits and total transaction limits so agencies can effectively manage their cardholders. They would also be required to conduct periodic reviews to determine if cardholders have a need for a card. Agencies would need to properly record rebates to the government based on prompt payment, sales volume, etc. They would also be required to provide training for cardholders and managers, and use effective systems, techniques, and technologies to prevent or catch fraudulent purchases.

Under the bill, agencies would be required to establish specific policies about the number of cards to be issued, the credit limits for certain categories of cardholders, and categories of employees eligible to be issued cards. Charge cards would need to be invalidated when employees leave an agency or transfer to another agency.  The bill would establish an approving official other than the purchase card holder so employees could not approve their own purchases. Agencies would need to reconcile the purchase card charges on the bill with receipts and supporting documentation. They would also need to reconcile disputed purchase card charges and discrepancies with the bank according to the proper procedure.

Agencies would be required to make purchase card payments promptly to avoid interest penalties, and retain records of purchase card transactions in accordance with standard government record keeping polices. They would also need to make direct payments to the bank when reimbursing employees for travel card purchases to ensure that travel card bills get paid. Agencies would be required to compare items submitted on travel vouchers with items already paid for with centrally billed accounts to avoid reimbursing employees for items already paid for by the agency. They would also be required to submit refund requests for unused airline tickets so the taxpayers don’t pay for tickets that were not used. In addition, agencies would need to dispute unauthorized charges and track the status of disputed charges until they are resolved.

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