II 

109TH CONGRESS 

2D SESSION S. 3480 

To prevent abuse of Government credit cards. 

IN THE SENATE OF THE UNITED STATES 

JUNE 8, 2006 

Mr. GRASSLEY (for himself and Mr. COLEMAN) introduced the following bill; 

which was read twice and referred to the Committee on Homeland Security and Governmental Affairs 

A BILL 

To prevent abuse of Government credit cards. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Government Credit 

5 Card Abuse Prevention Act of 2006’’. 

6 SEC. 2. MANAGEMENT OF PURCHASE CARDS. 

7 (a) REQUIRED SAFEGUARDS AND INTERNAL CON8 TROLS.—The head of each executive agency that issues 

9 and uses purchase cards and convenience checks shall es10 tablish and maintain safeguards and internal controls to 

11 ensure the following: 


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1 (1) That there is a record in each executive 

2 agency of each holder of a purchase card issued by 

3 the agency for official use, annotated with the limi4 tations on single transaction and total credit 

5 amounts that are applicable to the use of each such 

6 card by that purchase cardholder. 

7 (2) That each purchase card holder is assigned 

8 an approving official other than the card holder with 

9 the authority to approve or disapprove expenditures. 

10 (3) That the holder of a purchase card and 

11 each official with authority to authorize expenditures 

12 charged to the purchase card are responsible for— 

13 (A) reconciling the charges appearing on 

14 each statement of account for that purchase 

15 card with receipts and other supporting docu16 mentation; and 

17 (B) forwarding such reconciliation to the 

18 designated official who certifies the bill for pay19 ment in a timely manner. 

20 (4) That any disputed purchase card charge, 

21 and any discrepancy between a receipt and other 

22 supporting documentation and the purchase card 

23 statement of account, is resolved in the manner pre24 scribed in the applicable Governmentwide purchase 


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1 card contract entered into by the Administrator of 

2 General Services. 

3 (5) That payments on purchase card accounts 

4 are made promptly within prescribed deadlines to 

5 avoid interest penalties. 

6 (6) That rebates and refunds based on prompt 

7 payment on purchase card accounts are monitored 

8 for accuracy and properly recorded as a receipt to 

9 the agency that pays the monthly bill. 

10 (7) That records of each purchase card trans11 action (including records on associated contracts, re12 ports, accounts, and invoices) are retained in accord13 ance with standard Government policies on the dis14 position of records. 

15 (8) That periodic reviews are performed to de16 termine whether each purchase cardholder has a 

17 need for the purchase card. 

18 (9) That appropriate training is provided to 

19 each purchase cardholder and each official with re20 sponsibility for overseeing the use of purchase cards 

21 issued by an executive agency. 

22 (10) That the executive agency has specific poli23 cies regarding the number of purchase cards issued 

24 by various organizations and categories of organiza25 tions, the credit limits authorized for various catVerDate Aug 31 2005 00:28 Jun 10, 2006 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3480.IS S3480

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1 egories of cardholders, and categories of employees 

2 eligible to be issued purchase cards, and that those 

3 policies are designed to minimize the financial risk 

4 to the Federal Government of the issuance of the 

5 purchase cards and to ensure the integrity of pur6 chase cardholders. 

7 (11) That the executive agency utilizes tech8 nologies to prevent or identify fraudulent purchases, 

9 including controlling merchant codes and utilizing 

10 statistical machine learning and pattern recognition 

11 technologies that review the risk of every trans12 action. 

13 (12) That the executive agency invalidates the 

14 purchase card of each employee who— 

15 (A) ceases to be employed by the agency 

16 immediately upon termination of the employ17 ment of the employee; or 

18 (B) transfers to another unit of the agency 

19 immediately upon the transfer of the employee. 

20 (13) That the executive agency takes steps to 

21 recover the cost of any improper or fraudulent pur22 chase made by an employee, including, as necessary, 

23 through salary offsets. 

24 (b) MANAGEMENT OF PURCHASE CARDS.—The head 

25 of each executive agency shall prescribe regulations impleVerDate Aug 31 2005 00:28 Jun 10, 2006 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3480.IS S3480

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1 menting the safeguards and internal controls in subsection 

2 (a). The regulations shall be consistent with regulations 

3 that apply Governmentwide regarding the use of purchase 

4 cards by Government personnel for official purposes. 

5 (c) PENALTIES FOR VIOLATIONS.—The regulations 

6 prescribed under subsection (b) shall provide for appro7 priate adverse personnel actions or other punishment to 

8 be imposed in cases in which employees of an executive 

9 agency violate such regulations or are negligent or engage 

10 in misuse, abuse, or fraud with respect to a purchase card, 

11 including imposition of the following penalties: 

12 (1) In the case of an employee who is suspected 

13 by the executive agency to have engaged in fraud, 

14 referral of the case to the United States Attorney 

15 with jurisdiction over the matter. 

16 (2) In the case of an employee who is found 

17 guilty of fraud or found by the executive agency to 

18 have egregiously abused a purchase card, dismissal 

19 of the employee. 

20 (d) RISK ASSESSMENTS AND AUDITS.—The Inspec21 tor General of each executive agency shall— 

22 (1) periodically conduct risk assessments of the 

23 agency purchase card program and associated inter24 nal controls and analyze identified weaknesses and 

25 the frequency of improper activity in order to deVerDate Aug 31 2005 00:28 Jun 10, 2006 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3480.IS S3480

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1 velop a plan for using such risk assessments to de2 termine the scope, frequency, and number of peri3 odic audits of purchase cardholders; 

4 (2) perform periodic audits of purchase card5 holders designed to identify— 

6 (A) potentially fraudulent, improper, and 

7 abusive uses of purchase cards; 

8 (B) any patterns of improper cardholder 

9 transactions, such as purchases of prohibited 

10 items; and 

11 (C) categories of purchases that should be 

12 made by means other than purchase cards in 

13 order to better aggregate purchases and obtain 

14 lower prices; 

15 (3) report to the head of the executive agency 

16 concerned on the results of such audits; and 

17 (4) report to the Director of the Office of Man18 agement and Budget and the Comptroller General 

19 on the implementation of recommendations made to 

20 the head of the executive agency to address findings 

21 during audits of purchase cardholders. 

22 (e) DEFINITION OF EXECUTIVE AGENCY.—In this 

23 section, the term ‘‘executive agency’’ has the meaning 

24 given such term in section 4(1) of the Office of Federal 

25 Procurement Policy Act (41 U.S.C. 403(1)). 


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1 (f) RELATIONSHIP TO DEPARTMENT OF DEFENSE

2 PURCHASE CARD REGULATIONS.— 

3 (1) Except as provided under paragraph (2), 

4 the requirements under this section shall not apply 

5 to the Department of Defense. 

6 (2) Section 2784(b) of title 10, United States 

7 Code, is amended— 

8 (A) in paragraph (8), by striking ‘‘periodic 

9 audits’’ and all that follows through the period 

10 at the end and inserting ‘‘risk assessments of 

11 the agency purchase card program and associ12 ated internal controls and analyze identified 

13 weaknesses and the frequency of improper ac14 tivity in order to develop a plan for using such 

15 risk assessments to determine the scope, fre16 quency, and number of periodic audits of pur17 chase cardholders.’’; and 

18 (B) by adding at the end the following new 

19 paragraphs: 

20 ‘‘(11) That the Department of Defense utilizes 

21 technologies to prevent or identify fraudulent pur22 chases, including controlling merchant codes and uti23 lizing statistical machine learning and pattern rec24 ognition technologies that review the risk of every 

25 transaction. 


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1 ‘‘(12) That the Secretary of Defense— 

2 ‘‘(A) invalidates the purchase card of each 

3 employee who ceases to be employed by the De4 partment of Defense immediately upon termi5 nation of the employment of the employee; and 

6 ‘‘(B) invalidates the purchase card of each 

7 employee who transfers to another agency or 

8 subunit within the Department of Defense im9 mediately upon such transfer.’’. 

10 SEC. 3. MANAGEMENT OF TRAVEL CARDS. 

11 Section 2 of the Travel and Transportation Reform 

12 Act of 1998 (Public Law 105–264; 5 U.S.C. 5701 note) 

13 is amended by adding at the end the following new sub14 section: 

15 ‘‘(h) MANAGEMENT OF TRAVEL CHARGE CARDS.— 

16 ‘‘(1) REQUIRED SAFEGUARDS AND INTERNAL

17 CONTROLS.—The head of each executive agency that 

18 has employees that use travel charge cards shall es19 tablish and maintain safeguards and internal con20 trols over travel charge cards to ensure the fol21 lowing: 

22 ‘‘(A) That there is a record in each execu23 tive agency of each holder of a travel charge 

24 card issued by the agency for official use, anno25 tated with the limitations on amounts that are 


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1 applicable to the use of each such card by that 

2 travel charge cardholder. 

3 ‘‘(B) That rebates and refunds based on 

4 prompt payment on travel charge card accounts 

5 are properly recorded as a receipt of the agency 

6 that employs the cardholder. 

7 ‘‘(C) That periodic reviews are performed 

8 to determine whether each travel charge card9 holder has a need for the travel charge card. 

10 ‘‘(D) That appropriate training is provided 

11 to each travel charge cardholder and each offi12 cial with responsibility for overseeing the use of 

13 travel charge cards issued by an executive agen14 cy. 

15 ‘‘(E) That each executive agency has spe16 cific policies regarding the number of travel 

17 charge cards issued by various organizations 

18 and categories of organizations, the credit limits 

19 authorized for various categories of cardholders, 

20 and categories of employees eligible to be issued 

21 travel charge cards, and that those policies are 

22 designed to minimize the financial risk to the 

23 Federal Government of the issuance of the trav24 el charge cards and to ensure the integrity of 

25 travel charge cardholders. 


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1 ‘‘(F) That the head of each executive agen2 cy negotiates with the holder of the applicable 

3 travel card contract, or a third party provider 

4 of credit evaluations if such provider offers 

5 more favorable terms, to evaluate the credit6 worthiness of an individual before issuing the 

7 individual a travel charge card, and that no in8 dividual be issued a travel charge card if the in9 dividual is found not creditworthy as a result of 

10 the evaluation (except that this paragraph shall 

11 not preclude issuance of a restricted use travel 

12 charge card when the individual lacks a credit 

13 history or the issuance of a pre-paid card when 

14 the individual has a credit score below the min15 imum credit score established by the agency). 

16 Each executive agency shall establish a min17 imum credit score for determining the credit18 worthiness of an individual based on rigorous 

19 statistical analysis of the population of card20 holders and historical behaviors. Notwith21 standing any other provision of law, such eval22 uation shall include an assessment of an indi23 vidual’s consumer report from a consumer re24 porting agency as those terms are defined in 

25 section 603 of the Fair Credit Reporting Act. 


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1 The obtaining of a consumer report under this 

2 subsection is deemed to be a circumstance or 

3 purpose authorized or listed under section 604 

4 of the Fair Credit Reporting Act. 

5 ‘‘(G) That each executive agency utilizes 

6 technologies to prevent or identify fraudulent 

7 purchases, including controlling merchant codes 

8 and utilizing statistical machine learning and 

9 pattern recognition technologies that review the 

10 risk of every transaction. 

11 ‘‘(H) That each executive agency ensures 

12 that the travel charge card of each employee 

13 who ceases to be employed by the agency is in14 validated immediately upon termination of the 

15 employment of the employee. 

16 ‘‘(I) That each executive agency utilizes 

17 mandatory split disbursements for travel card 

18 purchases. 

19 ‘‘(2) REGULATIONS.—The Administrator of 

20 General Services shall prescribe regulations gov21 erning the implementation of the safeguards and in22 ternal controls in paragraph (1) by executive agen23 cies. 

24 ‘‘(3) PENALTIES FOR VIOLATIONS.—The regu25 lations prescribed under paragraph (2) shall provide 


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1 for appropriate adverse personnel actions or other 

2 punishment to be imposed in cases in which employ3 ees of an executive agency violate such regulations 

4 or are negligent or engage in misuse, abuse, or fraud 

5 with respect to a travel charge card, including re6 moval in appropriate cases. 

7 ‘‘(4) The Inspector General of each executive 

8 agency shall— 

9 ‘‘(A) periodically conduct risk assessments 

10 of the agency travel card program and associ11 ated internal controls and analyze identified 

12 weaknesses and the frequency of improper ac13 tivity in order to develop a plan for using such 

14 risk assessments to determine the scope, fre15 quency, and number of periodic audits of pur16 chase cardholders; 

17 ‘‘(B) perform periodic audits of travel 

18 cardholders designed to identify potentially 

19 fraudulent, improper, and abusive uses of travel 

20 cards; 

21 ‘‘(C) report to the head of the executive 

22 agency concerned on the results of such audits; 

23 and 

24 ‘‘(D) report to the Director of the Office of 

25 Management and Budget and the Comptroller 


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1 General on the implementation of recommenda2 tions made to the head of the executive agency 

3 to address findings during audits of travel card4 holders. 

5 ‘‘(5) DEFINITIONS.—In this subsection: 

6 ‘‘(A) The term ‘executive agency’ means an 

7 agency as that term is defined in section 5701 

8 of title 5, United States Code, except that it is 

9 in the executive branch. 

10 ‘‘(B) The term ‘travel charge card’ means 

11 the Federal contractor-issued travel charge card 

12 that is individually billed to each cardholder.’’. 

13 SEC. 4. MANAGEMENT OF CENTRALLY BILLED ACCOUNTS. 

14 The head of an executive agency that has employees 

15 who use a centrally billed account shall establish and 

16 maintain safeguards and internal controls to ensure the 

17 following: 

18 (1) That items submitted on an employee’s 

19 travel voucher are compared with items paid for 

20 using a centrally billed account to ensure that an 

21 employee is not reimbursed for an item already paid 

22 for through a centrally billed account. 

23 (2) That the executive agency submits requests 

24 for refunds for unauthorized purchases to the holder 


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1 of the applicable contract for a centrally billed ac2 count. 

3 (3) That the executive agency submits requests 

4 for refunds for fully or partially unused tickets to 

5 the holder of the applicable contract for a centrally 

6 billed account. 

7 SEC. 5. REGULATIONS. 

8 (a) IN GENERAL.—Not later than 180 days after the 

9 date of the enactment of this Act— 

10 (1) the head of each executive agency shall pro11 mulgate regulations to implement the requirements 

12 of sections 2 and 4; and 

13 (2) the Administrator of General Services shall 

14 promulgate regulations required pursuant to the 

15 amendments made by section 3. 

16 (b) BEST PRACTICES.—Regulations promulgated 

17 under this section shall reflect best practices for con18 ducting purchase card and travel card programs. 

Æ 


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