Report Template Update  = 04-30-05_rev.15  
Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

E R
MERGENCY  ESPONSE TO 

H K :  U
URRICANE  ATRINA SE OF 

G P
THE  OVERNMENT  URCHASE 

C
ARD

Daniel R. Levinson

Inspector General 

May 2007

OEI-07-06-00150
 Report Template Update  = 04-30-05_rev.15  
Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
the Department, Congress, and the public with timely, useful, and reliable information 
on significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  Report Template Update  = 04-30-05_rev.14 
  E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
1.	 To determine whether Government purchase card purchases 
related to Hurricane Katrina complied with selected requirements 
for the use of the card. 
2.	 To identify lessons learned from Hurricane Katrina purchases to 
assist in the administration of the Government purchase card 
program during future emergency situations. 
BACKGROUND 
The Government purchase card program was designed to save the 
Government money by avoiding costly paperwork and to expedite the 
process of making purchases.  According to U.S. Bank data, Department 
of Health and Human Services (HHS) cardholders used Government 
purchase cards to make 851,511 purchases, totaling approximately 
$458 million in calendar year (CY) 2005.   
On September 8, 2005, in response to Hurricane Katrina, Congress 
authorized agencies to streamline certain purchasing requirements for 
procurement of supplies or services to support rescue and relief 
operations. In response, the Office of Management and Budget and 
HHS issued guidance regarding management controls for implementing 
temporary changes to normal purchasing requirements.  Of the total 
CY 2005 purchases, HHS officials identified 1,139 purchases totaling 
$2,109,173 related to Hurricane Katrina for the period of August 28 
through December 14, 2005.  For a stratified sample of 243 of these 
Hurricane Katrina purchases, we assessed whether the purchases 
complied with selected requirements for the use of the card.  We 
interviewed 62 cardholders who made these 243 purchases to gather 
relevant documentation. 
FINDINGS 
Fifteen percent of purchases did not comply with selected purchase 
card requirements.  Instances of noncompliance included purchases 
that lacked proof of approving official review, purchases made by 
unauthorized persons, and purchases that lacked documentation.  Some 
purchases involved more than one area of noncompliance. 
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EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY
Cardholders had concerns regarding the legality and complexity of 
some purchases and over half of cardholders expressed the need 
for additional written guidance regarding emergency purchasing 
procedures. The Office of Inspector General did not find any Hurricane 
Katrina purchases that were fraudulent. However, some cardholders 
questioned whether purchases were allowable and desired further 
interpretations of HHS guidance. Less than half of cardholders 
reported receiving any written guidance specifically related to 
Hurricane Katrina purchasing. Cardholders expressed the need for 
general emergency guidance and more vendor information. 
Hurricane Katrina purchase data contained inaccuracies. The listing 
of Hurricane Katrina purchases provided to us did not identify the 
cardholder name or the account number associated with the purchases. 
After selecting the sample of 251 purchases, we dropped 8 purchases 
because, upon contacting cardholders, we found that the purchases either 
were not Katrina related or duplicated another purchase in the sample. 
RECOMMENDATIONS 
We recommend the following to the Assistant Secretary for 
Administration and Management (ASAM): 
Provide additional written guidance on emergency purchasing 
procedures. This guidance should include (1) examples of allowable 
and unallowable purchases in an emergency, (2) the way to ensure 
delivery to a location other than the cardholders office, and (3) advice 
on locating and communicating with vendors during an emergency. 
Require training on emergency purchasing procedures. Such 
training should be conducted for cardholders and approving officials 
initially when a Government purchase card is issued and during annual 
refresher training. Agencies could consider conducting mock scenarios 
in which cardholders are faced with making within a very short 
timeframe purchasing decisions on items that are significantly different 
from those normally requested. 
Develop a tracking system for monitoring Government purchase card 
purchases during emergency situations. This system should detail 
recordkeeping procedures on how to log, track, and report emergency 
purchases to ASAM, including cardholder name, exact vendor name, 
and exact dollar amount, so that the data can be used for the purpose of 
oversight among multiple users. The system should be communicated 
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E X E C U T I V E   S U M M A R Y  
to Government purchase card program coordinators and cardholders 
before purchases are made in support of an emergency. 
AGENCY COMMENTS 
ASAM concurred with our recommendations.  With regard to providing 
written guidance on emergency purchasing procedures, ASAM will add 
a separate appendix to existing purchase card guidance dedicated to the 
use of purchase cards during emergencies and develop a quick 
reference guide to aid cardholders during emergency and non-
emergency situations.  With regard to required training on emergency 
purchasing procedures, ASAM will revise the HHS University purchase 
card training course to encompass instructional content, mock 
scenarios, and roles and responsibilities designed specifically for 
emergency situations.  Finally, ASAM is exploring the feasibility of 
building a single system for processing and reporting purchase card 
spending during emergency and nonemergency situations. 
This evaluation was conducted in conjunction with the Presidents 
Council on Integrity and Efficiency (PCIE) as part of its examination of 
relief efforts provided by the Federal Government in the aftermath of 
Hurricanes Katrina and Rita.  As such, a copy of the report has been 
forwarded to the PCIE Homeland Security Working Group, which is 
coordinating Inspectors General reviews of this important subject. 
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  T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7

Some purchases did notcomply with selected requirements  . . . . .  7

Cardholders had concerns regarding the legality and complexity 

of some purchases and expressed the need for guidance. . . . . . . . .  9

Purchase data contained inaccuracies. . . . . . . . . . . . . . . . . . . . . .  12

R E C O MMEN D A T ION S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

A: 	Purchases That Did Not Comply With Selected Purchase 

Card Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

B: 	Confidence Intervals for Purchases That Did Not Comply 

With Selected Purchase Card Requirements. . . . . . . . . . . . . .  17

C:	  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
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  I N T R O D U C T I O N  

OBJECTIVE 
1.	 To determine whether Government purchase card purchases 
related to Hurricane Katrina complied with selected requirements 
for the use of the card. 
2.	 To identify lessons learned from Hurricane Katrina purchases to 
assist in the administration of the Government purchase card 
program during future emergency situations. 
BACKGROUND 
Hurricane Katrina hit the Gulf Coast on August 29, 2005.  On 
September 8, 2005, Public Law 109-62 authorized agencies to 
streamline certain purchasing requirements for procurement of supplies 
or services to support rescue and relief operations.  On the same day, 
Senators Grassley, Collins, and Lieberman wrote a letter to Senate and 
House of Representatives leadership raising questions about whether 
this action might lead to fraud or other questionable purchases. 
According to U.S. Bank data, the Department of Health and Human 
Services (HHS) cardholders used Government purchase cards to make 
851,511 purchases, totaling approximately $458 million in calendar year 
2005. HHS cardholders reported to the Office of Acquisition 
Management and Policy (OAMP) that they made 1,139 purchases 
totaling $2,109,173 related to Hurricane Katrina for the period of 
August 28 through December 14, 2005. 
In a prior study, International Merchant Purchase Authorization Card 
Program:  Review of Calendar Year 2001 Transactions 
(OEI-07-02-00510), which examined purchases using the Government 
purchase card, the Office of Inspector General (OIG) identified 
44 percent of purchases that did not comply with requirements for the 
use of the card.  In addition, cardholders either did not follow 
established purchasing procedures or did not know or understand the 
procedures.  
Government Purchase Card Program Guidance 
The Government purchase card program was designed in 1989 to save 
the Government money by avoiding costly paperwork and to expedite 
the process of making purchases.  To protect against unauthorized or 
fraudulent use of purchase cards, the Treasury Financial Manual, 
Vol. 1, Part 4, section 4525, requires each agency to have its own 
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I N T R O D U C T I O N  
internal procedures for using purchase cards. When the Government 
purchase card program came into effect, HHS issued guidelines for its 
agencies to use in developing their individual operating procedures.1 
HHS guidelines require that cardholders take precautions to prevent 
others from using their cards, that approving officials review purchases 
prior to forwarding the monthly statement for payment, and that 
purchasers maintain a paper trail that will support all purchases and be 
available to anyone auditing the process.  In addition, cardholders 
should instruct vendors not to charge sales tax on purchases.  HHS 
guidelines require that agency procedures not be less restrictive than 
departmental guidelines. Table 1 shows the date of issuance of 
Government purchase card guidance that was in effect for the 
Hurricane Katrina-related purchases reviewed in this study. 
Table 1:  Issue Dates of Agency Procedures in Effect During 
Hurricane Katrina 
Guidance Issue 
HHS Agency 
Date 
Centers for Disease Control and Prevention  October 2004 
Food and Drug Administration  July 2005 
Health Resources and Services Administration  January 2004 
National Institutes of Health  February 2002 
Program Support Center  July 2003 
Substance Abuse & Mental Health Services Administration          August 2001 
Source:  Office of Inspector General, 2006. 
In addition to HHS guidelines and agency operating procedures, three 
other documents contain guidance pertaining to Government purchase 
cards: the Federal Acquisition Regulation (FAR); Title 5, section 
1315.12 of the Code of Federal Regulations; and the contract between 
the Government and U.S. Bank (the card-issuing bank for HHS).  
Government purchase cards are generally used for small purchases, also 
1 Policy Guidelines for the Use of U.S. Government Bankcards, Department of Health 
and Human Services, September 12, 1989.  The 1989 guidelines were in effect during the 
time of this study. Subsequent to our review, in May and November 2006, the Assistant 
Secretary for Administration and Management issued Purchase Card Guide, Versions 1 
and 2. 
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called micro-purchases.  The FAR defines a micro-purchase as an 
acquisition of supplies or services not exceeding $2,500.2 
Appendix B of the Office of Management and Budget (OMB) Circular 
A-123 states that all Government purchase card cardholders must be 
trained prior to appointment and that they must take refresher 
training, at a minimum, every 3 years.  The training must provide 
general information on how to use a charge card and must inform 
cardholders of Federal procurement laws and regulations, agency 
procedures, and proper card use. 
Guidance Related to Hurricane Katrina Purchases 
Section 101(2) of the Second Emergency Supplemental Appropriations 
Act To Meet Immediate Needs Arising From the Consequences of 
Hurricane Katrina, 2005 (the Act) (Public Law 109-62), enacted on 
September 8, 2005, raised the micro-purchase threshold from $2,500 to 
$250,000 for procurement of supplies or services to support Hurricane 
Katrina rescue and relief operations. 
On September 13, 2005, OMB issued a memorandum to Federal chief 
acquisition officers and chief financial officers that outlined 
management controls for implementing the increased micro-purchase 
threshold.  The guidance applied to all micro-purchases, but made 
specific references to purchases made with the Government purchase 
card.  The guidance stated that there was no blanket increase of 
cardholder authority:  each agency had to identify in writing those 
individuals who were authorized to use the higher threshold and those 
individuals had to be working directly on Hurricane Katrina-related 
acquisitions. Agencies were required to notify U.S. Bank to raise 
monthly and single purchase limits and ensure that cardholders had 
sufficient training for the increased limit.  The guidance also stated that 
agencies were required to establish and communicate policies and 
procedures for determining whether a transaction was in support of 
Hurricane Katrina rescue and relief operations and therefore allowable 
under section 101(2) of the Act. 
2 At the time of our review, section 2.101(b) of the FAR stated that the micro-purchase 
threshold was $2,500 except for certain construction purchases and purchases to support a 
contingency operation or to facilitate defense against, or recovery from, nuclear, biological, 
chemical, or radiological attack.  Federal Acquisition Circular 2005-13, issued on 
September 28, 2006, amended the FAR to raise the micro-purchase threshold to $3,000. 
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OAMP issued a memorandum on September 19, 2005, outlining the 
responsibilities for Hurricane Katrina purchasing for agency heads.  
The memorandum emphasized that increasing the micro-purchase 
threshold was not the same as increasing purchase card limits, and 
reiterated the September 13, 2005, OMB guidance regarding 
management controls for implementing the increased micro-purchase 
threshold. On September 21, 2005, OAMP issued guidance to 
cardholders deployed along the Gulf Coast.  The guidance stressed that 
purchases must still be made in accordance with the policies and 
procedures of the cardholders operating division and that receipts and 
records must be maintained as directed and to the extent practicable.  
On October 3, 2005, OMB issued guidance to Federal agencies that 
returned the micro-purchase threshold to the pre-Hurricane Katrina 
level of $2,500. 
Assistance to HHS Cardholders During Hurricane Katrina 
OAMP established an operations center staffed by procurement officials 
12 hours per day for approximately 3 weeks following Hurricane 
Katrina. The purpose of the operations center was to respond to 
questions and interpret guidance on Hurricane Katrina Government 
purchase card purchases, particularly the OAMP memoranda described 
above.  Personnel in the operations center also made Government 
purchase card purchases based on agency requests. 
Previous Office of Inspector General Work 
OIG completed a study of the Government purchase card program 
across HHS entitled International Merchant Purchase Authorization 
Card Program:  Review of Calendar Year 2001 Transactions, 
(OEI-07-02-00510).  This study found that 44 percent of purchases did 
not fully comply with requirements for using the Government purchase 
card, as described in departmental and agency guidance.  This included 
lack of approving official review, lack of purchase documentation, and/or 
lack of object class code.  These results were based on projections using 
a random sample of 400 purchases and a review of internal controls. 
METHODOLOGY 
We requested and received from OAMP a listing of each agencys 
self-reported Government purchase card purchases related to Hurricane 
Katrina for the period August 28 to December 14, 2005 (1,139 purchases 
totaling $2,109,173).  We excluded all purchases less than $25 because 
of low risk to HHS and transaction fees, because they did not represent 
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actual purchases (77 charges totaling $4,133.46). This left 
1,062 purchases totaling $2,105,039.52. 
To produce estimates of both the amount and percentage of purchases 
that did not comply with requirements for using the Government 
purchase card, we selected a stratified sample of 251 purchases in 
4 strata. Prior to selecting the sample, we examined the entire 
population for purchases that appeared atypical or questionable (e.g., a 
purchase that involved an unfamiliar vendor) and combined those with 
all purchases over $10,000. This combination created stratum 4. There 
were a total of 76 purchases in stratum 438 were purchases under 
$10,000 that appeared to be atypical or questionable, and 38 were 
purchases over $10,000. The remaining purchases were then stratified 
by dollar amount into strata 1, 2, and 3. We dropped 8 purchases from 
the sample after we learned during fieldwork that they were reported as 
Hurricane Katrina purchases in error, leaving 243 purchases. A 
description of the 4 strata, with their population and sample sizes, is 
shown in Table 2 below. 
Table 2: Population and Sample Sizes 
Population  Adjusted  Adjusted 
Strata Definition  Sample Size 
Size  Population Size  Sample Size 
1.  Purchases between $25.00 and $499.99  544  40  544  40 
2.  Purchases between $500.00 and $2,499.99  341  60  341  60 
3.  Purchases between $2,500.00 and $9,999.99  101  75  98  73 
4.  Purchases over $10,000.00 and purchases that 
appeared atypical or questionable  76  76  70  70 
Total  1,062  251  1,053  243 
Source: Office of Inspector General, 2006. 
We used U.S. Bank data for all HHS Government purchase card 
purchases occurring between August 28 and December 14, 2005, to 
determine the name and location of each cardholder associated with the 
sampled purchases. The majority of cardholders that made Hurricane 
Katrina purchases were located in the Atlanta, Georgia, and 
Washington, DC, metro areas. 
We conducted onsite visits with cardholders in these locations, 
gathering documentation to determine compliance with 3 requirements 
for using the purchase card: (1) evidence that the purchase was made 
by the authorized cardholder, (2) sufficient documentation to support 
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I N T R O D U C T I O N  
the purchase, and (3) evidence of approving official review. We also 
conducted structured interviews with cardholders.  For cardholders in 
locations other than Atlanta, Georgia, and Washington, DC, or those 
unavailable at the time of our onsite visits, we collected documents via 
mail and conducted telephone interviews.  In total, we interviewed 
62 cardholders regarding the 243 purchases, representing a 100-percent 
response rate.  Because some cardholders did not have complete 
information on the decisionmaking process surrounding the purchases, 
we also interviewed other agency officials as appropriate. 
For this report, the sampling frame was comprised of purchases made 
by HHS cardholders during our review period.  Because the sampling 
unit was a purchase and the cardholder could have made several 
purchases, our estimates are of the population of purchases and not 
cardholders. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the Presidents Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
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  F I N D I N G S

Fifteen percent of purchases did 
Fifteen percent of purchases did not comply 
not comply with HHS guidelines 
with selected purchase card requirements 
and agency procedures related to 
three key elements.3  The 
elements of noncompliance include lack of approving official review, use 
of Government purchase cards by unauthorized persons, and 
insufficient purchase documentation.  The most prevalent element of 
noncompliance was those purchases lacking approving official review; 
however, some purchases involved more than one element of 
noncompliance. More than one-quarter of the dollar amount ($550,116 
of $2,105,039) of Hurricane Katrina purchases did not comply with 
purchase card requirements.  Because some of these purchases involved 
more than one element of noncompliance, an estimate of the population 
is given for purchases that lacked approving official review, but only the 
sample data are given for the other two elements of noncompliance. 
Appendix A provides the number of purchases in our sample for each 
element of noncompliance.  Appendix B provides the confidence 
intervals for the projected number and dollar amount of purchases that 
did not comply with selected purchase card requirements. These 
instances of noncompliance are not unique to Hurricane Katrina 
purchases (see the description of our prior study on page 4); however, 
we note that some Hurricane Katrina purchases also included the 
following aspects: high-dollar requests, unfamiliar vendors, atypical 
items, and remote cardholders. 
Purchases lacked proof of approving official review 
For 13 percent of purchases totaling $483,242, cardholders either did not 
obtain or maintain evidence of approving official review, even though this 
review was one of the fundamental methods of oversight in the 
Government purchase card program. HHS guidelines require approving 
officials to review accounts prior to forwarding information to their 
respective finance offices for payment.  Agency procedures for all of the 
agencies represented in our sample provide greater specificity on 
approving official review, including: (1) what approving officials must do 
(i.e., reviewing invoices, packing slips, or other appropriate purchase 
3 HHS guidelines broadly define requirements of the Government purchase card 
program.  Agency procedures operationalize these requirements by further describing 
administrative responsibilities (e.g., maintaining specific documents to support purchases).  
Hereinafter, we refer to purchase card requirements to include both HHS guidelines and 
agency procedures. 
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F I N D I N G S  
documentation) and (2) how they must do it (i.e., signing the bottom of 
card statements or using electronic automated systems to document 
review). Approving officials maintain the integrity of the Government 
purchase card program by monitoring cardholder actions and ensuring the 
proper use of the Government purchase card.  A lack of approving official 
review may increase the likelihood that improper or fraudulent purchases 
will go undetected. 
Unauthorized persons made Government purchase card purchases 
For 16 of the 243 sampled purchases (8 of which also lacked approving 
official review), four individuals other than the authorized cardholders 
made the purchases.4  HHS guidelines expressly prohibit anyone other 
than the cardholder from making purchases.5  When we requested 
detailed information regarding these purchases, the authorized 
cardholders were unable to provide complete information about the 
purchases, including the necessity of the purchase and vendor selection. 
Examples of purchases made by unauthorized persons included:  
15 printers ($7,350 total), a business card scanner ($220), magnetized 
signs ($290), and computer software ($535).  In addition, one of the 
unauthorized persons paid sales tax totaling $192.77 on three 
purchases, which should not have been paid.   
Purchases lacked documentation 
For 9 of the 243 purchases (3 of which also lacked approving official 
review), cardholders could not provide sufficient documentation 
(e.g., invoice, receipt) to support the purchases.6  HHS guidelines state 
the need to maintain a paper trail . . . that will support all purchases 
and be available to anyone auditing the process.7  Agency procedures 
implement this by requiring cardholders or approving officials to obtain 
charge slips, cash register receipts, packing slips, or invoices or to 
include a statement in the files explaining why such documentation 
does not exist and what steps were taken to collect the missing 
documentation.  
4 Because of the low number of cases, we do not project these purchases to the universe. 
5 Policy Guidelines for the Use of U.S. Government Bankcards, Department of Health 
and Human Services, September 12, 1989. 
6 Because of the low number of cases, we do not project these purchases to the universe. 
7 Policy Guidelines for the Use of U.S. Government Bankcards, Department of Health 
and Human Services, September 12, 1989. 
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More than half of cardholders (36 of 62) arranged shipments of 
purchases to alternative locations. Of those 36 cardholders, 15 did not 
require the person who received the purchase to send packing slips or 
invoices back to the cardholder. In some cases, receivers either e-mailed 
or telephoned the cardholder to confirm receipt. In other instances, 
cardholders made an assumption that if the receiver did not indicate 
otherwise, the person received the item. For example, one cardholder 
purchased a $1,200 printer and arranged for it to be shipped to an 
out-of-State hotel room, where an epidemiologist was temporarily 
stationed. The cardholder attempted via cellular telephone to verify 
that the item had been received; however, the individual was not 
located and delivery of the item was not confirmed. Ultimately, the 
cardholder had no proof that the item was received. 
We did not find any Hurricane 
Cardholders had concerns regarding the legality 
Katrina purchases that were 
and complexity of some purchases and over half  fraudulent. However, some 
expressed the need for additional written guidance  purchases that cardholders made 
regarding emergency purchasing procedures  raised concerns regarding the 
legality of the purchases and other 
purchases demonstrate the complexity of making purchases in an 
emergency situation. Finally, many cardholders expressed the need for 
additional written guidance regarding emergency purchasing 
procedures. 
Cardholders had concerns regarding the legality of some purchases 
Food for call center volunteers: A cardholder purchased food for 
volunteers staffing a call center during the initial weekend following 
Hurricane Katrina. Because the cardholder was uncertain of the 
legality of making food purchases and the purchases needed to be 
accomplished quickly, the cardholder sought legal guidance before 
proceeding. 
Stress balls, pens, and shirts: Stress balls were purchased for 
emergency responders, pens were purchased for call center employees, 
and shirts were purchased to identify Federal staff deployed to the 
affected area. The cardholder did not seek legal guidance on these 
purchases before making them; the cardholder sought legal guidance 
only as a result of a Government purchase card audit. By that time, the 
stress balls, pens, and shirts had largely been distributed. 
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F  I N  D I N G  S  
Other purchases demonstrate the complexity of making purchases in an 
emergency situation 
Cardholders described their Hurricane Katrina purchasing experience 
as hectic and responding to immediate needs. Thirty-one percent of 
cardholders with whom we spoke (19 of 62) characterized purchasing for 
Hurricane Katrina as significantly different than normal operations. 
The following three purchases reported to us by cardholders illustrate 
challenging circumstances that occurred. 
Transportation of nurses: From a temporary hospital in Mississippi 
established to assist Hurricane Katrina evacuees, bus service was 
arranged to return nurses to their regular duty station in North 
Carolina.  However, the bus driver transported them to a different 
location than what was contracted.  The Government did not incur a 
loss because of this change, but the purpose of the transportation for 
which the contract was authorized was not fulfilled as ordered, creating 
confusion over how much was spent and for what purpose. 
Lease/purchase of boat: A boat was quickly needed to collect fish and 
shellfish samples from lakes in Louisiana.  The cardholder provided 
documentation to us indicating confusion about whether the agency was 
leasing or buying the boat from the vendor. Ultimately, the agency 
settled with the vendor whereby the title of the boat and related 
equipment were transferred to the agency for a lump sum payment of 
$5,000. 
Travel and per diem: A cardholder wrote convenience checks8 to two 
scientific grantees to provide for travel expenses and 10 days per diem 
in the Washington, DC, metro area so that research could continue after 
their New Orleans, Louisiana, laboratory was destroyed.  The 
cardholder explained to us that the grantees did not have access to bank 
accounts immediately after the hurricane, so they could not receive 
these funds via electronic funds transfer.  Writing convenience checks 
made payable to individuals is an atypical situation; however, rather 
than the grantees incurring expenses and then seeking reimbursement, 
these individuals received cash upfront for expenses that they may not 
have incurred. Also of concern, the cardholders records that provided a 
8 Convenience checks are a vehicle of payment to be used only in rare circumstances, 
such as when a merchant cannot accept purchase cards.  There are transaction fees 
associated with the use of convenience checks.  Agencies differ on the program guidance 
that applies to convenience checks (e.g., the types of purchases that can be made with 
convenience checks). 
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F	 I N D I N G
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breakdown of expenses ($440 for travel and $1,660 for per diem, for a 
total of $2,100 for each scientist) did not equal the amounts of the 
checks written to the grantees. 
Over half of cardholders expressed the need for additional written guidance 
regarding emergency purchasing procedures 
Despite a 3-week presence at HHS headquarters by two individuals 
designated as the key contact persons for Hurricane Katrina purchasing, 
only one sampled cardholder was aware of and sought purchasing advice 
from these experts.  Had cardholders been aware of these contact persons, 
cardholders could have used the expertise of the designated persons to 
interpret HHS guidelines. Fifty-two percent of cardholders with whom we 
spoke (32 of 62) would have liked to receive additional written guidance 
concerning emergency purchasing procedures.  For Hurricane Katrina 
purchases, one-third of cardholders (21 of 62) noted that there were 
changes from established purchase card requirements.  For example, 
cardholders described increased micro-purchase or Government purchase 
card spending limits, the waiving of merchant cost comparison 
requirements, and the purchasing of items that are not usually acquired 
with the card (e.g., car rental).  Less than half of cardholders reported 
receiving any written guidance specifically related to Hurricane Katrina 
purchasing (e.g., memoranda from OMB and/or OAMP), and only one 
cardholder reported receiving training specific to Hurricane Katrina 
purchasing.  In our interviews, cardholders expressed the need for further 
guidance in the following areas: 
	 General emergency guidance. When asked what content areas 
should be included in written guidance on emergency purchasing 
procedures, 15 cardholders expressed interest in receiving 
additional information on how the processes for emergency 
purchasing differ from those for normal purchasing.  Nine 
cardholders specifically requested a list of items that can and 
cannot be purchased during an emergency. 
Underscoring the expressed need for general emergency guidance, 
10 cardholders reported that requests for some purchases made 
them feel uncomfortable, and 6 cardholders made at least some of 
these purchases.  As an example, one cardholder was requested to 
purchase board games and televisions for a recreational area 
within a temporary hospital. This cardholder decided not to make 
the purchase.  The temporary hospital went unused. 
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F	 I N D I N G S  
	 Vendor information. As previously mentioned, some cardholders 
characterized their purchasing for Hurricane Katrina as 
significantly different than normal operations. For example, 
nine cardholders cited that they had to purchase items that were 
significantly different from their regular purchasing (e.g., 
telephone calling cards, a commercial dishwasher).  Sixteen 
cardholders faced challenges with regard to locating a vendor 
that could deliver the requested item within the specified 
timeframe. Cardholders also mentioned challenges with vendors 
accepting the Government purchase card as a form of payment 
and honoring the Federal Governments tax-exempt status. 
OAMP formed a departmental 
Hurricane Katrina purchase data contained 
Hurricane Katrina Acquisition 
inaccuracies  
Working Group to ensure prudent 
stewardship of taxpayer funds in support of rescue and relief efforts.  To 
meet the information needs of various Government agencies, OAMP 
directed agency Government purchase card program coordinators to 
report Hurricane Katrina purchases on a weekly basis.  For cardholders 
supported by the Program Support Center, the first request for this 
information came on November 3, 2005, 2 months after Hurricane 
Katrina made landfall. 
We found that the listing of purchases contained inaccuracies.  After 
selecting the sample of 251 purchases, we dropped 8 because, upon 
contacting cardholders, we found that the purchases either were not 
Katrina related or duplicated another purchase in the sample. For 
example, a purchase of $822 was originally in the universe of Hurricane 
Katrina purchases. However, the purchase was for a training class 
related to procurement; it was not in support of or response to 
Hurricane Katrina.  Additionally, the agency-reported listing indicated 
Dalmation Systems as the vendor name for another purchase.  After 
attempting to verify this with U.S. Bank data, we found the vendor 
name was actually Datamation Systems.  Similarly, a vendor 
identified as Cafe Express.com was actually Cafepress.com, a 
company that sold customized apparel. 
Although agencies provided Government purchase card purchase data 
as OAMP requested, the information was insufficient for the purpose of 
oversight among multiple users.  OAMP did not require the cardholder 
to identify the cardholder name or account number associated with each 
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F I N D I N G S  
purchase.  To contact cardholders for this evaluation, we had to match 
the listing with U.S. Bank data for all HHS Government purchase card 
purchases. This matching process proved difficult because the listing of 
purchases contained incorrect amounts and incorrect vendor names, the 
primary fields available to identify cardholders. 
We contacted the agency Government purchase card program 
coordinators to identify the cardholders associated with some purchases.  
One agency program coordinator was unable to provide accurate 
information.  This agency program coordinator attributed five separate 
purchases, each in the amount of $1,234.15, to Dell Computer to a 
single cardholder.  When we contacted this cardholder, the cardholder 
did not recognize the purchases, so we recontacted the agency program 
coordinator.  The coordinator then provided the name of another 
cardholder. This cardholder indicated making only two of the five 
purchases of $1,234.15.  We then consulted the U.S. Bank data for all 
HHS Government purchase card purchases occurring on the reported 
date and found that yet another cardholder in the same agency had 
made one purchase of $1,234.15 and a second purchase for twice that 
amount ($2,468.30). 
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Because of the urgency of the purchases requested of cardholders for 
Hurricane Katrina, cardholders had to act swiftly to provide needed 
supplies or services to emergency responders.  In many cases, 
cardholders were largely untrained in, and did not report receiving 
guidance pertaining to, Hurricane Katrina purchasing.  In addition, the 
listing of HHS Hurricane Katrina purchases contained inaccuracies. 
This study, similar to our earlier review of the calendar year 2001 HHS 
Government purchase card program, found that some cardholders made 
purchases that did not comply with purchase card requirements, 
specifically that they made purchases lacking approving official review 
and purchase documentation.  Additionally, unauthorized persons made 
purchases in some instances.  Noncompliance with purchase card 
requirements increases the potential risk of fraud or misuse. 
Some cardholders raised concerns regarding the legality and complexity 
of some Hurricane Katrina purchases.  In addition, over half of 
cardholders expressed the need for additional emergency purchasing 
guidance.  Our findings identify areas of improvement for future 
emergency purchasing situations. We therefore recommend the 
following to the Assistant Secretary for Administration and 
Management (ASAM): 
Provide additional written guidance on emergency purchasing 
procedures 
This guidance should include (1) examples of allowable and unallowable 
purchases in an emergency, (2) the way to ensure delivery to a location 
other than the cardholders office, and (3) advice on locating and 
communicating with vendors during an emergency.   
Require training on emergency purchasing procedures 
Such training should be conducted for cardholders and approving 
officials initially when a Government purchase card is issued and 
during annual refresher training.  Agencies could consider conducting 
mock scenarios in which cardholders are faced with making within a 
very short timeframe purchasing decisions on items that are 
significantly different from those normally requested. 
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R E C O M M E N D A T I O N S  
Develop a tracking system for monitoring Government purchase card 
purchases during emergency situations 
This system should detail recordkeeping procedures on how to log, track, 
and report emergency purchases to ASAM, including cardholder name, 
exact vendor name, and exact dollar amount, so that the data can be used 
for the purpose of oversight among multiple users.  The system should be 
communicated to Government purchase card program coordinators and 
cardholders before purchases are made in support of an emergency. 
AGENCY COMMENTS 
ASAM concurred with our recommendations.  With regard to providing 
written guidance on emergency purchasing procedures, ASAM will add a 
separate appendix to existing purchase card guidance dedicated to the use 
of purchase cards during emergencies and develop a quick reference 
guide to aid cardholders during emergency and nonemergency situations.  
With regard to required training on emergency purchasing procedures, 
ASAM will revise the HHS University purchase card training course to 
encompass instructional content, mock scenarios, and roles and 
responsibilities designed specifically for emergency situations.  Finally, 
ASAM is exploring the feasibility of building a single system for processing 
and reporting purchase card spending during emergency and 
nonemergency situations.  For the full text of ASAMs comments, please 
see Appendix C. 
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  A P P E N D I X   ~   A  

Purchases That Did Not Comply With Selected Purchase Card  Requirements 
Description of Problem(s)  Number of Purchases 
Purchases That Lacked Proof of Approving Official Review  36 
Purchases Made by an Unauthorized Person  16 
Purchases That Lacked Documentation  9 
Purchases That Lacked Proof of Approving Official Review and Were 
8* 
Made by an Unauthorized Person 
Purchases That Lacked Proof of Approving Official Review and Lacked 
3* 
Documentation 
*These numbers include two problems and are also included in the single problem counts. 
Source:  Office of Inspector General analysis of purchases, 2006. 
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A P P E N D I X   A  
  A P P E N D I X   ~   B  
The following estimates are given at the 95-percent confidence level.  
Confidence Intervals for Purchases That Did Not Comply With Selected Purchase Card 
Requirements 
Weighted Percentage of Purchases  Weighted Dollar Amount of Purchases 
Point Estimate  Confidence Interval Point Estimate  Confidence Interval 
Purchases That Did Not Comply With 
15.5%  9.3% - 21.7%  $550,116  $507,670 - $592,562 
Purchase Card Requirements 
Purchases That Lacked Proof of 
12.7%  6.8% - 18.6%  $483,242  $449,128 - $517,356 
Approving Official Review 
Source:  Office of Inspector General analysis of purchases, 2006. 
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  A P P E N D I X   ~   C  
Agency Comments 
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A P P E N D I X   ~   C  

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A P P E N D I X ~ A  
This report was prepared under the direction of Brian T. Pattison, 
Regional Inspector General for Evaluation and Inspections in the 
Kansas City regional office, and Gina C. Maree, Deputy Regional 
Inspector General.   
Tricia Fields served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Kansas City regional 
office who contributed to the report include Elander Phillips and Dennis 
Tharp; other regional and central office staff who contributed include 
Mary-Elizabeth Harmon, Mark Richardson, and Barbara Tedesco.  
 
 
   
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