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Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

EMERGENCY RESPONSE TO 


HURRICANE KATRINA: USE OF 


THE GOVERNMENT PURCHASE 


CARD


Daniel R. Levinson


Inspector General 


May 2007


OEI-07-06-00150

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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. 
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Δ EXECUTIVE SUMMAR 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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EXE CUTIVE S U MMAR Y

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 cardholder’s 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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EXE CUTIVE S U MMAR 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 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. 

This evaluation was conducted in conjunction with the President’s 

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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Δ T ABLE OF CONTENTS 

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

INTR O D U C T I ON ........................................... 1

FINDI NGS ................................................. 7

Some purchases did not comply 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

RECOM M E NDATI O NS ..................................... 14

 Agency Comments...................................... 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: Agency Comments ................................... 18

ACKN O W LEDGMENTS .................................... 20
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Δ INTRODU C TION 

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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INTROD UCT ION 

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 

HHS Agency 

Guidance Issue 

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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INTROD UCT ION 

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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INTROD UCT ION 

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 cardholder’s 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. 

 OE I-07-06-00 150 

METHODOLOGY 

We requested and received from OAMP a listing of each agency’s 

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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 INTROD UCT ION

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 4—38 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 

Strata Definition Population 

Size Sample Size Adjusted 

Population Size 

Adjusted 

Sample Size 

1. Purchases between $25.00 and $499.99 

2. Purchases between $500.00 and $2,499.99 

3. Purchases between $2,500.00 and $9,999.99 

4. Purchases over $10,000.00 and purchases that 

appeared atypical or questionable 

544 

341 

101 

76 

40 

60 

75 

76 

544 

341 

98 

70 

40 

60 

73 

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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INTROD UCT ION 

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 President’s Council on Integrity and 

Efficiency and the Executive Council on Integrity and Efficiency. 

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ΔF I NDING S  FINDINGS

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 NDING 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. 

 OE I-07-06-00 150 

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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F I NDING S 

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. 

Cardholders had concerns regarding the legality 

and complexity of some purchases and over half 

expressed the need for additional written guidance 

regarding emergency purchasing procedures 

We did not find any Hurricane 

Katrina purchases that were 

fraudulent. However, some 

purchases that cardholders made 

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 NDING 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 NDING S 

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 NDING 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 Government’s 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 “Café 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 NDING 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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Δ RECOMME NDA TIONS 

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 cardholder’s 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 MMENDA 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 ASAM’s comments, please 

see Appendix C. 

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Δ APPENDIX ~ 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 

Purchases Made by an Unauthorized Person 

Purchases That Lacked Documentation 

Purchases That Lacked Proof of Approving Official Review and Were 

Made by an Unauthorized Person 

Purchases That Lacked Proof of Approving Official Review and Lacked 

Documentation 

36 

16 

9 

8* 

3* 

*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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ΔAPP E N D I X A  APPENDIX ~ 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 

Purchase Card Requirements 15.5% 9.3% - 21.7% $550,116 $507,670 - $592,562 

Purchases That Lacked Proof of 

Approving Official Review 12.7% 6.8% - 18.6% $483,242 $449,128 - $517,356 

Source: Office of Inspector General analysis of purchases, 2006. 

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Δ APPENDIX ~ C 

Agency Comments 

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APP E N D I X ~ C 

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APPENDIX~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. 

Δ ACKNOWLEDGMENTS