a

GAO

United States General Accounting Office

Report to Congressional Committees

December 2003 PURCHASE CARDS

Steps Taken to 

Improve DOD 

Program Management, 

but Actions Needed to 

Address Misuse

GAO-04-156
DOD has initiated actions to implement all of the requirements in the 

National Defense Authorization Act for fiscal year 2003 and the DOD 

Appropriations Act for fiscal year 2003. While it has largely completed 

revamping its policies and other requirements, it still had considerable work 

to complete in order to implement managerial and oversight mechanisms, 

such as strategic sourcing, monitoring, and auditing. However, to implement 

the legislative requirement that DOD evaluate credit worthiness prior to 

issuing a purchase card, DOD is allowing cardholders to self-certify their 

credit worthiness rather than conducting credit checks on cardholders, as is 

typically done in the private sector.

DOD started actions to implement nearly all of the 109 GAO 

recommendations, some of which may closely relate to the legislative 

provisions. DOD and the military services have taken disciplinary actions 

against cardholders whom a court of law determined had fraudulently used 

their purchase cards. They have also started to educate cardholders and 

approving officials on the proper use of the purchase card. 

The military services have not taken strong disciplinary actions against 

cardholders GAO identified as making improper and abusive or questionable 

purchase card acquisitions. The military services determined that many of 

these purchases did not directly violate existing policies. Consequently, the 

services modified these policies to provide a basis for disciplinary actions 

for similar purchases in the future. 

Disciplinary Actions Taken for Improper and Abusive or Questionable Purchases 

Improper and abusive or questionable 

transactions Army Navy

Air 

Force Total

Number of transactions GAO identified 34 59 27 120

Value of transactions (in thousands) $999 $1,103 $961 $3,062

Fired 0 0 0 0

Suspended from work 0 0 0 0

Repay for cost of improper charge 1 0 2 3

Give item to government 0 0 6 6

Written reprimand 2 0 0 2

Verbal reprimand 1 1 1 3

Credit card revocation 1 4 2 7

Credit card suspension 1 0 0 1

Required to take training 8 20 11 39 

Questionable but authorized by service policy 0 0 3 3

Still under investigation/review 0 3 0 3

No action taken 27 36 5 68

Source: Responses provided by the Army, Navy, and Air Force. 

Note: Total actions taken exceed transactions identified because multiple actions were taken for 

some transactions. 

This study responds to a legislative 

mandate, which directs the 

Comptroller General to review the 

actions taken by the Department of 

Defense (DOD) to implement 

provisions included in the Bob 

Stump National Defense 

Authorization Act for fiscal year 

2003 (Public Law 107-314) 

concerning management of the 

purchase card program. This study 

also discusses DOD efforts to 

implement provisions in the DOD 

Appropriations Act for fiscal year 

2003 (Public Law 107-248) as well 

as recommendations and the status 

of disciplinary actions taken 

against individuals identified in 

prior GAO reports as having used 

the government purchase card for 

potentially fraudulent, improper, 

and abusive or questionable 

purposes. 

This report provides the Congress 

with status of actions taken, and 

recommends that the military 

services monitor whether the 

disciplinary guidelines established 

in response to the fiscal year 2003 

Bob Stump National Defense 

Authorization Act are properly 

implemented. DOD was pleased 

that the report recognized the 

department’s efforts to address 

previously cited managerial and 

internal control deficiencies. DOD 

did not comment on GAO’s 

recommendations. 

www.gao.gov/cgi-bin/getrpt?GAO-04-156.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Gregory Kutz, 

(202) 512-9505, or kutzg@gao.gov. 

Highlights of GAO-04-156, a report to 

congressional committees 

December 2003

PURCHASE CARDS

Steps Taken to Improve DOD Program 

Management, but Actions Needed to 

Address Misuse 
Page i GAO-04-156 Purchase Cards

Contents

Letter 1

Results in Brief 2

Background of the Purchase Card Program 4

DOD Has Taken Actions to Implement the Requirements of Public 

Laws 107-314 and 107-248 9

Status of Our Recommendations to Improve Purchase Card 

Operations 12

Conclusions 16

Recommendations for Executive Action 16

Agency Comments and Our Evaluation 16

Appendixes

Appendix I: Objectives, Scope, and Methodology 19

Appendix II: Status of Army Actions to Implement GAO 

Recommendations 21

Appendix III: Status of Navy Actions to Implement GAO 

Recommendations 25

Appendix IV: Status of Air Force Actions to Implement GAO 

Recommendations 37

Appendix V: Comments from the Department of Defense 47

Appendix VI: GAO Contacts and Staff Acknowledgments 49

GAO Contacts 49

Acknowledgments 49

Tables Table 1: Number and Value of Fiscal Year 2002 Purchase Card 

Transactions 4

Table 2: Legislative Mandates in the Fiscal Year 2003 National 

Defense Authorization and DOD Appropriations Acts 8

Table 3: Sample Schedule of Potential Charge Card Offenses and 

Remedies/Penalties 11

Table 4: Status of Recommendations Made to the Military Services 

to Improve the Management of the Purchase Card 

Program 12

Table 5: Disciplinary Actions Taken Against Cardholders 14
Page ii GAO-04-156 Purchase Cards

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Page 1 GAO-04-156 Purchase Cards

United States General Accounting Office

Washington, D.C. 20548

A

December 2, 2003 Letr

Congressional Committees

In the past few years, the use of purchase cards has dramatically increased 

as federal agencies have sought to eliminate the lengthy process and 

paperwork long associated with making small purchases. The Department 

of Defense (DOD), in particular, accounts for a large percentage of the 

federal government’s purchase card use. For fiscal year 2002, DOD 

reported that an average of about 207,000 cardholders used purchase cards 

to make about 11 million transactions at a cost of nearly $7 billion. In prior 

years, the DOD purchase card program at DOD has not been well managed. 

As we stated in various testimonies1

 and reports2 issued between July 2001 

and December 2002, significant breakdowns in internal controls over the 

Army, Navy, and Air Force management of the purchase card program left 

the services vulnerable to fraud, waste, and abuse. To address the issues 

identified, we made over 100 recommendations targeted at improving the 

design and implementation of controls over card use and establishing 

guidelines for disciplining those who misused their government purchase 

cards. 

In response to these concerns, the Bob Stump National Defense 

Authorization Act for Fiscal Year 2003 (National Defense Authorization 

Act), Section 1007, required DOD to improve the management of the 

purchase card program. As directed by the conference report3

1

U.S. General Accounting Office, Purchase Cards: Control Weaknesses Leave Two Navy 

Units Vulnerable to Fraud and Abuse, GAO-01-995T (Washington, D.C.: July 30, 2001); 

Purchase Cards, Continued Control Weaknesses Leave Two Navy Units Vulnerable to 

Fraud and Abuse, GAO-02-506T (Washington, D.C.: Mar. 13, 2002); Purchase Cards: Control 

Weaknesses Leave Army Vulnerable to Fraud, Waste, and Abuse, GAO-02-844T

(Washington, D.C.: July 17, 2002); Purchase Cards: Navy Vulnerable to Fraud and Abuse 

but Is Taking Action to Resolve Control Weaknesses, GAO-03-154T (Washington, D.C.: Oct. 

8, 2002). 

2

U.S. General Accounting Office, Purchase Cards: Control Weaknesses Leave Two Navy 

Units Vulnerable to Fraud and Abuse, GAO-02-32 (Washington D.C.: Nov. 30, 2001); 

Purchase Cards: Control Weaknesses Leave Army Vulnerable to Fraud, Waste, and Abuse, 

GAO-02-732 (Washington, D.C.: Jun. 27, 2002); Purchase Cards: Navy Is Vulnerable to 

Fraud and Abuse but Is Taking Action to Resolve Control Weaknesses, GAO-02-1041

(Washington D.C.: Sept. 27, 2002); Purchase Cards: Control Weaknesses Leave the Air Force 

Vulnerable to Fraud, Waste, and Abuse, GAO-03-292 (Washington, D.C.: Dec. 20, 2002). 

3

H.R. Conf. Rep. No. 107-772, at 686 (2002).
Page 2 GAO-04-156 Purchase Cards

accompanying the act, this report provides a status of DOD actions to 

comply with the requirements of Section 1007. Additionally, this report 

summarizes the actions taken by the Army, Navy, and Air Force to respond 

to the legislative mandates in the DOD Appropriations Act, 2003. The 

report also provides the status of DOD efforts to implement the 

recommendations we made in the reports issued during fiscal years 2002 

and 2003 aimed at improving the military service’s management of the 

purchase card program. Finally, we list any action the military services 

took against individuals we identified in our testimonies and reports as 

having made or authorized potentially fraudulent, improper, abusive, or 

questionable purchase card transactions. 

To meet the objectives of this assignment, we requested that DOD and the 

military services provide us with the (1) status of DOD and the military 

services’ efforts in implementing the provisions of the National Defense 

Authorization Act for fiscal year 2003 and the DOD Appropriations Act, 

2003, (2) status of actions taken to implement the recommendations 

included in the four GAO reports, and (3) administrative or disciplinary 

actions taken against individuals we identified as having made potentially 

fraudulent, improper, and abusive or questionable transactions. While 

DOD and the military services provided evidence documenting actions 

taken to improve the purchase card program and to prevent individuals and 

companies from further obtaining fraudulent, improper, and abusive or 

questionable items with a DOD purchase card, we did not make any field 

visits to independently validate whether DOD had effectively implemented 

the reported changes.

We conducted our review from June through September 2003 in 

accordance with U.S. generally accepted government auditing standards. 

We requested comments on a draft of this report from the Secretary of 

Defense or his designee. We received written comments from the Director 

of DOD’s Purchase Card Joint Program Management Office, which are 

reprinted in appendix V. We have incorporated suggested changes as 

appropriate.

Results in Brief DOD and the military services have taken positive steps to improve the 

controls over the purchase card program in response to requirements in the 

fiscal year 2003 National Defense Authorization and DOD Appropriations 

acts. In general, DOD has made the most progress in establishing or 

modifying policies and procedures and has comparatively more to do in the 

managerial or oversight-related areas. The only area in which actions do 
Page 3 GAO-04-156 Purchase Cards

not seem to embrace the intent of the laws is that DOD is allowing 

cardholders to self certify their credit worthiness rather than obtaining 

credit reports, as is typical practice in private sector companies. 

As for implementing our recommendations, the military services have 

implemented or initiated actions to implement nearly all 109 of the 

recommendations we made, some of which are overall legislative 

requirements. The military services have issued revised purchase card 

policies and procedures, retrained cardholders and approving officials, and 

reduced the number of purchase card accounts and the credit limits on 

those accounts. These actions better articulate what the purchase card can 

and cannot be used for, and reduce the risks and financial exposure of the 

program. Understandably, some of the management-intensive efforts are 

not yet mature. The recommendations they have not yet implemented 

include obtaining discounts from frequently used vendors; establishing 

servicewide databases for data mining; investigating suspected and known 

fraud cases; and linking cardholders’, approving officials, and agency 

program coordinators’ performance appraisals to performance standards. 

The military services told us they plan on having most of the legislative 

provisions and our recommendations fully implemented by June 2004. 

Our reports and testimonies also raised concerns about the disciplinary 

actions against those who misused purchase cards. In general, the efforts 

to date could be characterized as an all or nothing approach. We found that 

the military services generally took strong disciplinary actions, such as jail 

time for military personnel or dismissal of civilian employees, if a court of 

law determined fraudulent use of the purchase cards. There was little 

indication, however, that the military services took disciplinary actions 

against those who made or authorized transactions that we characterized 

as being improper, abusive, or questionable. According to the military 

services, they did not take disciplinary actions because many of the 

improper and abusive or questionable purchases that we identified in the 

reports and testimonies were not in direct violation of then existing 

policies and procedures. Therefore, the military services told us that rather 

than disciplining cardholders and approving officials, the military services 

modified their purchase card policies and procedures to prohibit similar 

purchases in the future. 

This report contains three recommendations for DOD to monitor whether 

the disciplinary guidelines established in response to the fiscal year 2003 

National Defense Authorization Act are properly implemented. In 

response to this report, DOD was pleased that the report recognized the 
Page 4 GAO-04-156 Purchase Cards

department’s efforts to address previously cited managerial and internal 

control deficiencies. DOD did not comment on our recommendations. 

Background of the 

Purchase Card 

Program

The DOD purchase card program is part of the Governmentwide 

Commercial Purchase Card Program, which was established to streamline 

federal agency acquisition processes by providing a low-cost, efficient 

vehicle for obtaining goods and services directly from vendors. The 

purchase card can be used for both micropurchases and payment of other 

purchases. Although most cardholders have single purchase transaction 

limits of $2,500, some have limits of $25,000 or higher. The Federal 

Acquisition Regulation, Part 13, “Simplified Acquisition Procedures,” 

establishes criteria for using purchase cards to place orders and make 

payments. DOD has issued supplemental guidance to the Federal 

Acquisition Regulation that contain sections on simplified acquisition 

procedures. 

General Services Administration (GSA) reports show that DOD used 

purchase cards for nearly 11 million transactions, valued at almost 

$6.8 billion and representing nearly 45 percent of the federal government’s 

fiscal year 2002 purchase card activity. According to unaudited GSA data, 

the Army, Navy, and Air Force made about $2.7 billion, $1.9 billion, and

$1.6 billion, respectively, in purchase card acquisitions during fiscal year 

2002. Other DOD agencies, such as the Defense Logistics Agency and the 

Defense Finance and Account Service, made the remaining $564 million in 

purchase card acquisitions. 

Table 1: Number and Value of Fiscal Year 2002 Purchase Card Transactions 

Source: GSA.

DOD component 

Number of 

transactions 

(in thousands)

Cost of 

transactions 

(in millions)

Percentage of 

DOD purchase 

card costs

Army 4,553 $2,717 40%

Navy 2,764 $1,875 28%

Air Force 3,016 $1,601 24%

Other DOD agencies 647 $564 8%

Total 10,980 $6,757 100%
Page 5 GAO-04-156 Purchase Cards

The overall management of DOD’s purchase card program has been 

delegated to the DOD Purchase Card Joint Program Management Office, 

which is in the Office of the Assistant Secretary of the Army for Acquisition 

Logistics and Technology. At each service installation, personnel in three 

positions—program coordinator, cardholder, and approving official—are 

collectively responsible for providing reasonable assurance that purchase 

card transactions are appropriate and meet a valid government need. The 

installation program coordinator is responsible for the day-to-day 

management, administration, and oversight of the program, including 

developing local operating procedures, issuing and canceling cards, and 

providing training to cardholders and approving officials. Cardholders—

members and civilian personnel—use purchase cards to order goods and 

services for their units and their customers, to be picked up or delivered to 

themselves or to an end user. The cardholders are responsible for 

recording the transactions in their purchase log, obtaining documented 

independent confirmation that the items have been received and accepted 

by the government, and notifying the property book-officer of accountable 

items received so that these items can be recorded in the accountable 

property records. Approving officials, who typically are responsible for 

more than one cardholder, are to review cardholders’ transactions and the 

cardholders’ reconciled statements and certify the official consolidated bill 

for payment. Approving officials are to ensure that (1) all purchases made 

by the cardholders within his or her cognizance are appropriate and that 

the charges are accurate and (2) the monthly summary statement is 

certified for payment on time by the Defense Finance and Accounting 

Service (DFAS). DFAS relies on the approving official’s certification of the 

monthly bill as support to make the payment. 

Our Previous Findings on 

DOD’s Purchase Card 

Program

Between July 2001 and December 2002, we testified four times and issued 

four reports highlighting a weak control environment and breakdowns in 

specific internal controls over the purchase card program at the Army, 

Navy, and Air Force. Based on statistical sampling and selected reviews of 

at- risk transactions we identified through data mining, we reported that 

these weaknesses left the purchase card program at the three services 

vulnerable to fraudulent, improper, and abusive purchases. The 

testimonies and reports we issued pointed to common weaknesses. We 

identified (1) a proliferation of cardholders, (2) lack of documented 

evidence of training of cardholders and approving officials, (3) inadequate 

program monitoring, and (4) lack of disciplinary actions against 

cardholders who abused the purchase cards. We made recommendations 

to each of the services for improving the purchase card program.
Page 6 GAO-04-156 Purchase Cards

Proliferation of Cardholders We reported that the proliferation of cardholders resulted in an 

unmanageable approving official span of control and excessive credit limits 

compared to historical spending. This problem originated from the fact 

that the services did not have specific policies governing the number of 

cards to be issued or criteria for identifying employees eligible for the 

privilege of cardholder status. Consequently, as of September 2002, the Air 

Force reported that it had about 77,000 purchase card accounts—

translating to about 1 purchase card for every 7 employees. By contrast, 

the Navy, which in 2000 had 1 cardholder for every 3 employees in some of 

its units, had taken positive steps to reduce the number of its purchase 

cardholders to only about 1 cardholder for every 31 employees by 

September 2002. The proliferation of cardholders also resulted in a span of 

control problem for some approving officials. For example, at the end of 

fiscal year 2002, some officials at two Air Force installations had multiple 

job responsibilities in addition to being approving officials for more than 20 

cardholders, making it difficult for them to systemically scrutinize each 

purchase card statement they had to certify for payment. 

We also found that the credit limits on the purchase cards exceeded 

procurement needs. We saw little evidence that limits were set based on an 

analysis of individual cardholders’ needs or past spending patterns. For 

example, at the Marine Corps, the credit limit as of March 2002 exceeded 

average fiscal year 2001 monthly expenditures by a ratio of 34 to 1, while at 

an Air Force location, the credit limit exceeded fiscal year 2001 monthly 

purchases by a ratio of 20 to 1. At the Army, we saw infrequently used 

cards that, nevertheless, had spending limits set at the maximum. In some 

cases, we were told that the monthly limits were based on anticipated peak 

spending to avoid possible limit changes. Limits that are higher than 

justified by the cardholder’s authorized and expected use unnecessarily 

increase the government’s exposure to fraudulent, improper, and abusive 

purchases. Limiting credit available to cardholders is a key factor in 

managing the purchase card program and in minimizing the government’s 

financial exposure.

Inadequate Training of 

Cardholders and Approving 

Officials 

We reported that cardholders, approving officials, and/or agency program 

coordinators did not receive adequate training necessary to carry out their 

responsibilities. Specifically, we found that 51 percent of the fiscal year 

2001 transactions at one Air Force location, 56 percent of the transactions 

at the Marine Corps, and as high as 87 percent of the transactions at one 

Navy command, were made by cardholders or approved for payment by 

approving officials for whom there was no documented evidence of either 

initial training or refresher training at the time the transactions were made. 
Page 7 GAO-04-156 Purchase Cards

At the Army, cardholders received initial training, but were seldom 

provided refresher training as required by DOD guidance. Further, we 

noted that, even though the functions performed by the agency program 

coordinators, approving officials, and cardholders were substantially 

different, the training curriculum for the three positions was identical. The 

services did not have specific guidance or training concerning the role and 

responsibilities of agency program coordinators or approving officials.

Inadequate Purchase Card 

Program Monitoring

We reported that all of the military services needed to improve the quality 

of their monitoring and oversight of the purchase card program. At the 

time of our audits, the purchase card program offices of the military 

services did not systematically monitor the purchase card program. We 

also reported that when a military services’ purchase card program office 

or audit agency did uncover control weaknesses or improper and abusive 

or questionable activity, the results of those efforts were not always used to 

improve program management. 

Lack of Disciplinary Actions We also noted in our reports and testimonies that individuals who misused 

the purchase card were not always subject to strong disciplinary action or 

consequences. For example, we found that cardholders who purchased 

and officials who authorized items with excessive cost or without 

documented government need, including designer brief cases, folios, and 

palm pilot carrying cases from Coach, Dooney and Bourke, and Louis 

Vuitton; personal clothing including golf shirts and ski clothing; food 

including beer, wine, and cigars; and Bose stereo headset and clock radios, 

were not disciplined for their actions. We reported that without disciplinary 

actions, improper, abusive, and questionable purchases like those 

mentioned above will likely continue. 

Legislative Requirements 

for Improvements in the 

DOD Purchase Card 

Program

In response to the concerns we expressed about DOD’s management of the 

purchase card program, the Congress included Section 1007 in the National 

Defense Authorization Act for fiscal year 2003 (Public Law 107-314) and 

Section 8149 in the fiscal year 2003 DOD Appropriations Act (Public Law 

107-248) to require DOD to take specific actions to improve the 

management of the purchase card program, and in particular the 

weaknesses we identified. As shown in table 2, these laws limit the number 

of purchase cards and require DOD to train purchase card officials, 

monitor purchase card activity, discipline cardholders who misuse the 

purchase card, and assess the credit worthiness of cardholders.
Page 8 GAO-04-156 Purchase Cards

Table 2: Legislative Mandates in the Fiscal Year 2003 National Defense Authorization and DOD Appropriations Acts 

Source: GAO analysis of the Fiscal Year 2003 National Defense Authorization Act and DOD Appropriation Act.

Defense Authorization Act DOD Appropriation Act

Limit the number of purchase cards

• Conduct periodic reviews to determine whether each purchase 

cardholder has a need for the purchase card.

• Establish specific policies on the number of purchase cards 

issued by various organizations and categories of organizations, 

the credit limits authorized for various categories of cardholders, 

and categories of employees eligible to be issued purchase cards, 

and that those policies are designed to minimize the financial risk 

to the federal government of the issuance of the purchase cards 

and to ensure the integrity of purchase card holders.

Limit the total number of DOD credit cards (purchase cards and 

travel cards) in fiscal year 2003 to not exceed 1,500,000.

Train cardholders and approving officials

Provide appropriate training to each purchase cardholder and each 

official with responsibility for overseeing the use of purchase cards 

issued by DOD. 

Monitor purchase card program

The Inspector General of DOD, the Inspector General of the Army, 

the Naval Inspector General, and the Inspector General of the Air 

Force perform periodic audits to identify—

• potentially fraudulent, improper, and abusive uses of purchase 

cards;

• any patterns of improper card holder transactions, such as 

purchases of prohibited items; and

• categories of purchases that should be made by means other 

than purchase cards in order to better aggregate purchases and 

obtain lower prices.

Disciplining cardholders

• Establish regulations that provide for appropriate adverse 

personnel actions or other punishment to be imposed in cases in 

which military and civilian employees of the DOD violate purchase 

card regulation or are negligent or engage in misuse, abuse, or 

fraud with respect to a purchase card, including removal in 

appropriate cases.

• Provide that a violation of such regulations by a person subject to 

the Uniform Code of Military Justice be punishable as a violation 

of Article 92 of this code.

Establish guidelines and procedures for disciplinary actions to be 

taken against department personnel for improper, fraudulent, or 

abusive use of government purchase charge cards.

• Guidelines shall include appropriate disciplinary actions for use of 

charge cards for purposes, and at establishments, that are 

inconsistent with the official business of the department or with 

applicable standards of conduct.

• The disciplinary actions may include—

• review of the security clearance of the individual involved and

• modification or revocation of such security clearance in light of 

the review.

Credit Worthiness

• Evaluate the creditworthiness of an individual before issuing the 

individual a government purchase charge card. 

• Do not issue a government purchase charge card if the individual 

is found not creditworthy as a result of the evaluation.
Page 9 GAO-04-156 Purchase Cards

DOD Has Taken 

Actions to Implement 

the Requirements of 

Public Laws 107-314 

and 107-248

During fiscal year 2003, DOD and the military services took actions to 

implement all of the requirements mandated by the fiscal year 2003 

National Defense Authorization and DOD Appropriations acts. In several 

cases, although DOD and the services have issued policies and guidelines 

that implement the legislative mandates, sufficient time has not passed for 

the objective of the legislative mandate to be achieved. 

Limit the Number of 

Purchase Cards Issued

DOD has substantially reduced the number of purchase cards issued. 

According to GSA records, DOD had reduced the total number of purchase 

cards from about 239,000 in March 2001 to about 145,000 in March 2003. 

DOD also informed us that it manages the gross number of purchase and 

travel cards in accordance with the DOD Appropriations Act, 2003. To that 

end, DOD had reduced the total number of purchase and travel cards to 

about 1.23 million, about .27 million less than the 1.5 million statutory limit. 

DOD also issued policy guidance on April 25, 2002, to field activities to 

(1) perform periodic reviews of all purchase card accounts to reestablish a 

continuing bona fide need for each card account, (2) cancel accounts that 

were no longer needed, and (3) devise additional controls over infrequently 

used accounts to protect the government from potential cardholder or 

outside fraudulent use. The policy cited as an acceptable control for 

infrequently used cards the reduction of the spending limit to $1 until such 

time as the card is needed.

Train Cardholders and 

Approving Officials 

To implement the requirement to train each purchase cardholder and each 

official with responsibility for overseeing the use of purchase cards, DOD’s 

Defense Acquisition University has made available several on-line, selfpaced purchase card courses on its Web site. The on-line curriculum 

included a GSA module targeted to cardholders on how to use the card 

responsibly, a DOD course for cardholders and billing officials on the 

mandatory requirements and other guidelines of the purchase card 

program, and a GSA module aimed at providing advanced training to 

agency program coordinators who have completed basic training on the 

purchase card program. Further, on September 27, 2002, DOD issued a 

memorandum requiring all cardholders, approving officials, and certifying 

officials to complete the training module. 
Page 10 GAO-04-156 Purchase Cards

Monitor Purchase Card 

Program

To address the requirement that the Inspectors General of DOD and the 

military services periodically audit the program to identify potentially 

fraudulent, improper, and abusive uses of the purchase cards, as well as 

any patterns of improper cardholder transactions, DOD indicated that its 

Office of Inspector General and the Navy have prototyped and are now 

expanding a data-mining capability to screen for and identify high-risk card 

transactions (such as potentially fraudulent, improper, and abusive use of 

purchase cards including prohibited purchases) for subsequent 

investigation. According to DOD, this capability will eventually be 

implemented across the department. In addition, on June 27, 2003, the 

DOD Inspector General issued a report4

 summarizing the results of indepth review of purchase card transactions made by 1,357 purchase 

cardholders. The report identified 182 cardholders who potentially used 

their purchase cards inappropriately or fraudulently. 

With respect to the National Defense Authorization Act’s requirement to 

use strategic sourcing (i.e., that the Inspectors General identify categories 

of purchases that should be made by means other than purchase cards in 

order to better aggregate purchases and obtain lower prices), DOD issued a 

memorandum on June 5, 2003, reiterating a prior decision requiring all 

DOD components to review fiscal year 2002 purchase card transaction files 

and stratify the volume of purchases by vendors. According to the 

memorandum, these data will be used to determine if any componentwide 

contracts should be established to optimize purchasing power. DOD also 

indicated that each of the military departments have initiated a strategic 

sourcing plan, contract, or Blanket Purchase Agreement (BPA) to take 

advantage of purchase card demand (sales volume) data. As an example, 

DOD said that the Army had awarded a BPA for office supplies in 2002 to 

address long-standing concerns over cardholder compliance with 

mandatory sourcing requirements. Likewise, the Air Force entered into a 

BPA with a large provider of office supplies and anticipates others. The 

Navy is expected to make similar BPA arrangements when its sales volume 

analysis is completed. According to DOD, the strategic sourcing initiative 

is still in the infancy stage, but the department is committed to expanding 

opportunities to leverage its purchase card purchasing power. The issue of 

strategic sourcing of purchase card transactions is also the subject of an 

audit that we initiated at the request of the Chairman and Ranking Minority 

4

Department of Defense, Office of the Inspector General, Summary Report on Joint Review 

of Selected DOD Purchase Card Transactions, D2003-109 (Washington, D.C.: June 27, 2003).
Page 11 GAO-04-156 Purchase Cards

Member of the House Committee on Government Reform, Subcommittee 

on Government Efficiency, Financial Management and Intergovernmental 

Relations. 

Disciplining Cardholders With respect to establishing regulations that provide for appropriate 

adverse personnel actions or other punishment for misuse, abuse, or fraud 

with respect to purchase cards, DOD has issued disciplinary guidelines, 

separately, for civilian and military employees. In both updated guidelines, 

DOD continues to emphasize its policy that improper, fraudulent, abusive, 

or negligent use of a government charge card is prohibited. This includes 

any use of government charge cards at establishments or for purposes that 

are inconsistent with the official DOD business or with applicable 

regulations. The intent of the guide is to ensure that management emphasis 

is given to the important issue of personal accountability. The civilian 

guide has a sample range of potential charge card offenses and remedies or 

penalties for such offenses as shown in table 3. 

Table 3: Sample Schedule of Potential Charge Card Offenses and Remedies/Penalties

 Source: DOD memorandum. 

According to the disciplinary guidelines, there is no single response for all 

cases. Instead, a progression of increasingly severe disciplinary measures 

is often appropriate in the case of minor instances of misuse, but more 

serious cases may warrant the most severe sanctions in the first instance. 

The disciplinary guide for military employees indicates that actions 

available when military personnel misuse a purchase or travel card include 

counseling, admonishment, reprimand, nonjudicial punishment (Article 15, 

Uniform Code of Military Justice – UCMJ), court-martial, and 

administrative separation. In addition to corrective disciplinary actions, 

military personnel who misuse their government charge cards may have 

their access to classified information modified or revoked if warranted in 

the interests of national security. These guidelines emphasized that while 

the merits of each case may be different, timeliness, proportionality, and 

the exercise of good judgment and common sense are always important. 

Offenses First offense Second offense Third offense

Unauthorized use of or failure to appropriately control use of 

Government Purchase Card as a cardholder, approving official 

responsible for use or oversight of the card.

Letter of 

Counseling to 

removal

14-day suspension to 

removal

30-day suspension 

to removal
Page 12 GAO-04-156 Purchase Cards

Credit Worthiness Finally, with regard to the requirement that DOD evaluate the credit 

worthiness of cardholders, DOD told us that a senior focus group 

consisting of acquisition, financial management, and general counsel 

executives had concluded that there are conflicts between this legislation 

and the Fair Credit Reporting Act. The department is pursuing an 

alternative solution that would rely on a self-certification process by 

prospective cardholders. The legality and practicality of this alternative 

are being staffed and coordinated. This process, however, is in stark 

contrast to the standard industry practice of conducting credit checks on 

credit card applicants. 

Status of Our 

Recommendations to 

Improve Purchase 

Card Operations

According to information provided by representatives of the Army, Navy, 

and Air Force, the three services have either completed or initiated actions 

to implement nearly all of the 109 recommendations we made to improve 

the management of the purchase card program. As shown in table 4, we 

made 22 recommendations to the Army to improve its purchase card 

program and the Army provided us with information that it had 

implemented 18 of those recommendations and initiated actions to 

implement the remaining 4 recommendations. In addition, the Navy told us 

that it had implemented 38 of our 48 recommendations, and initiated 

actions to implement the 10 other recommendations. Similarly, the Air 

Force reported that it had implemented 24 of our 39 recommendations and 

initiated actions to implement the 15 other recommendations. 

Table 4: Status of Recommendations Made to the Military Services to Improve the 

Management of the Purchase Card Program

Source: GAO analysis of military services responses.

The recommendations that the Army, Navy, and Air Force told us they have 

implemented related to issuing new purchase card policies and procedures, 

retraining cardholders and approving officials, and reducing the number of 

purchase card accounts to improve management of the purchase card 

program. The recommendations they have not fully implemented generally 

Recommendations Army Navy Air Force Total

Made 22 48 39 109

Fully implemented 18 38 24 80

Partially implemented 4 10 15 29
Page 13 GAO-04-156 Purchase Cards

were those dealing with leveraging purchase card buying power, 

establishing servicewide databases for data mining, investigating suspected 

and known fraud cases, and linking the cardholders’, approving officials, 

and agency program coordinators’ performance appraisals to performance 

standards. 

The Air Force and Navy reported to us that they planned to complete 

implementation of most of the remaining GAO recommendations by June 

2004. The Air Force planned to complete implementation of all of the 

partially completed recommendations by January 4, 2004. The Navy 

indicated that some of the recommendations would be implemented by 

June 2004. The Army and the Navy did not provide a date for when some of 

the partially completed recommendations would be implemented, but 

indicated that there was an ongoing effort to identify opportunities to 

leverage purchasing power, develop data mining, analysis, and 

investigation functions, and develop databases of known fraud cases to 

improve internal controls.

Appendixes II, III, and IV summarize GAO recommendations and the 

military services’ representations of actions taken. We have not verified 

whether the military services are effectively implementing the policies and 

procedures that we recommended they establish and/or modify. 

Limited Disciplinary Actions 

Taken 

In our purchase card reports and testimonies, we identified 51 cases where 

cardholders had used the government purchase card to make fraudulent or 

potentially fraudulent purchases and 120 cases where cardholders had 

made improper and abusive or questionable purchases. In general, when a 

court of law determined that a cardholder fraudulently used the purchase 

card, all the military services took strong disciplinary actions (i.e., assessed 

fines, and in the case of uniformed personnel, sentenced the individual to 

jail/confinement). We also found that the military services either took 

strong disciplinary actions or were actively investigating the cases we 

reported as potentially fraudulent. For example, our two Navy reports 

identified 26 fraudulent and potentially fraudulent transactions totaling 

more than $1,342,000. The Navy reported that in response, it fired six 

cardholders, reduced the grade of others, confined several uniformed 

serviceman to from 14 months to 60 months, and required repayment to the 

government of over $460,000. Other actions taken on fraudulent or 

potentially fraudulent transactions included suspending or revoking 

purchase card privileges, requiring repayment to the government for the 

cost of the items obtained, giving the items obtained back to the 
Page 14 GAO-04-156 Purchase Cards

government, and written reprimands. In eight instances where no action 

was taken against cardholders we categorized as having used the purchase 

card in a fraudulent or potentially fraudulent manner, the military services 

and the credit card company determined that the fraud was committed by a 

third party, and the government had no responsibility for the charge. The 

military services were still investigating 15 cases for fraud. 

However, as shown in table 5, the military services often did not discipline 

the 120 individuals that we identified as having made improper, abusive, or 

questionable transactions. Further, the discipline, if it was imposed at all, 

was usually retraining. The responses the military services provided to our 

inquiries concerning disciplinary actions indicated that in three instances 

the cardholder had to repay the government for the cost of the improper, 

abusive, or questionable item(s) we identified. Of the remaining 

cardholders, 7 had their purchase card privileges revoked, 5 received 

verbal or written reprimands, and 6 had to return items that we deemed 

improper, abusive, or questionable to the government.

Table 5: Disciplinary Actions Taken Against Cardholders

Dollars in thousands

Type of disciplinary action taken Army Navy Air Force Total

Potentially fraudulent transactions

Number of potentially fraudulent transactions identified by GAO 13 26 12 51

Value of potentially fraudulent transactions identified by GAO $209,561 $1,342,257 $71,749 $1,623,567

No action taken because it was third party fraud 2 3 3 8

Fired 5 6 0 11

Suspended from work 0 0 0 0

Court-martial, confinement, probation, reduction in grade, and 

restitution 371 11

Repay the cost of the fraudulent items 2 0 1 3

Give item to government 0 0 0 0

Written reprimand 3 1 0 4

Verbal reprimand 0 0 0 0 

Credit card revocation 9 1 1 11

Credit card suspension 6 0 1 7

Required to take training 0 2 1 3

Still under review/investigation 7 6 2 15

No action taken 0 5 4 9
Page 15 GAO-04-156 Purchase Cards

Source: Responses provided by the Army, Navy, and Air Force.

Note: Total actions taken exceed transactions identified because multiple actions were taken for some 

transactions. 

Further, in their response to our inquiries concerning the disciplinary 

actions taken against cardholders who we identified as making improper, 

abusive, or questionable purchases, the military services stated that they 

did not take any action in over half of the transactions we identified. We 

believe that these items were imprudent use of tax dollars, but the military 

services claimed that policies existing at the time the purchases were made 

permitted the acquisitions. Therefore, the military services did not think 

that they had the authority to discipline the cardholders or approving 

officials. Rather, the military services told us they modified their policies 

and procedures to prohibit similar acquisitions in the future. The Navy, for 

example, told us that it had issued numerous e-mails and updated its 

policies to indicate that some products purchased in the past were now 

prohibited, and that it planned to better monitor purchases so that none of 

these purchases would occur in the future. While clarifying purchase card 

policies and procedures is appropriate, failure to take any disciplinary 

actions against individuals who purchased or authorized the purchase of 

items that clearly exceed the needs of the government (designer 

briefcases) or were excessive in cost ($350 clock radios) does not serve as 

a deterrent to future abuse or the waste of tax dollars. 

Improper, abusive, or questionable transactions

Number of transactions identified by GAO 34 59 27 120

Value of transactions identified by GAO $999,094 $1,102,647 $960,704 $3,062,445

Fired 000 0

Suspended from work 0 0 0 0

Repay for cost of improper, abusive, or questionable charge 1 0 2 3

Give item to government 0 0 6 6

Written reprimand 2 0 0 2

Verbal reprimand 1 1 1 3

Credit card revocation 1 4 2 7

Credit card suspension 1 0 0 1

Required to take training/guidance 8 20 11 39

Still under review/investigation 0 3 0 3

Written policy authorized purchase – no disciplinary action taken 0 0 3 3

No action taken 27 36 5 68

(Continued From Previous Page)

Dollars in thousands

Type of disciplinary action taken Army Navy Air Force Total
Page 16 GAO-04-156 Purchase Cards

Conclusions DOD and the military services have taken strong actions to improve the 

controls over the purchase card program. DOD has initiated actions to 

implement all of the requirements that were mandated in the fiscal year 

2003 National Defense Authorization and DOD Appropriations acts. In 

addition, DOD and the military services have taken actions on nearly all of 

109 recommendations that GAO made in its four reports on the purchase 

card program, and DOD has plans to have most of the recommendations 

implemented by June 2004. While the military services have generally 

taken strong disciplinary actions against cardholders who we identified as 

having made fraudulent or potentially fraudulent purchases, the military 

services generally have done little or nothing to discipline cardholders who 

have made improper, abusive, or questionable purchases. 

Recommendations for 

Executive Action

To help provide reasonable assurance that DOD holds cardholders and 

approving officials accountable for improper and abusive purchase card 

acquisitions, we recommend that the Secretary of Defense direct the 

service secretaries and the heads of DOD agencies to establish procedures 

to: 

• monitor the results of purchase card reviews conducted by the military 

services and the DOD agencies, 

• track whether the major commands and units are consistently applying 

DOD’s disciplinary guidelines to those who made and/or authorized 

improper or abusive acquisitions, and 

• notify the appropriate officials at the major commands or units if DOD’s 

disciplinary guidelines are not being consistently applied.

Agency Comments and 

Our Evaluation

In comments on a draft of this report, reprinted in appendix V, DOD stated 

that while more needs to be done, it appreciated our recognition of the 

department’s efforts to address previously cited managerial and internal 

control deficiencies. In its response, DOD requested that we add some 

perspective to table 5 that shows the extent to which DOD had not taken 

disciplinary actions on purchases that we had characterized as improper, 

abusive, or questionable because the military services belief that they had 

documented policies that specifically authorized the purchases we 

questioned. To provide this additional perspective, we modified table 5 to 

separately identify the three transactions that we considered abusive or 
Page 17 GAO-04-156 Purchase Cards

questionable that the military services believe were specifically authorized 

by existing Air Force regulations. While we believe that this differentiation 

is useful, we continue to question whether the purchase card was the 

appropriate vehicle to make the purchases we identified as abusive or 

questionable in our prior report. We also modified the report’s title to be 

focused on future program improvements. DOD did not comment on our 

recommendations to monitor implementation of the disciplinary guidance. 

We will send copies to interested congressional committees; the Secretary 

of Defense; the Under Secretary of Defense, Comptroller; the Under 

Secretary of Defense for Acquisition Technology and Logistics; the 

Secretary of the Army; the Secretary of the Navy; the Secretary of the Air 

Force; the Director of the Defense Finance and Accounting Service; and the 

Director of Management and Budget. We will make copies available to 

others upon request. In addition, the report will be available at no charge 

on the GAO Web site at http://www.gao.gov.

Please contact Gregory D. Kutz at (202) 512-9505 or kutzg@gao.gov, or 

John V. Kelly at (202) 512-6926 or kellyj@gao.gov if you or your staffs have 

any questions concerning this report. Major contributors to this report are 

acknowledged in appendix VI.

Gregory D. Kutz

Director

Financial Management and Assurance

Robert J. Cramer

Managing Director

Office of Special Investigations
Page 18 GAO-04-156 Purchase Cards

List of Committees

The Honorable John Warner

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Ted Stevens

Chairman

The Honorable Daniel Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Duncan Hunter

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representative

The Honorable Jerry Lewis

Chairman

The Honorable John Murtha

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

House of Representative
Page 19 GAO-04-156 Purchase Cards

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

This study responded to the legislative mandate in the conference report to 

the Bob Stump National Defense Authorization Act of 2003, that directs the 

Comptroller General to review the actions taken by the Department of 

Defense (DOD) to comply with the requirements of Section 1007 of the act 

and submit a report on those actions to the congressional defense 

committees no later than December 2, 2003. At the request of the 

committee, this report also summarizes the actions taken by the Army, 

Navy, and Air Force to respond to the legislative mandates in Section 8149 

of fiscal year 2003 DOD Appropriations Act, and actions taken by the 

military services to implement the recommendations we made in four 

reports issued during fiscal years 2002 and 2003 aimed at improving the 

military services’ management of the purchase card program. Finally, the 

report also discusses the actions taken by the military services against 

individuals we identified in our testimonies and reports as having made 

potentially fraudulent, improper, abusive, or questionable purchase card 

transactions. 

To meet the objectives of this assignment, we requested that DOD and the 

military services provide us the (1) status of DOD and the military services’ 

efforts in implementing certain provisions of the National Defense 

Authorization Act for fiscal year 2003 and the fiscal year 2003 DOD 

Appropriations Act, (2) status of actions taken to implement the 

recommendations included in our four reports, and (3) administrative or 

disciplinary actions taken against individuals we identified as having made 

potentially fraudulent, improper, and abusive or questionable transactions. 

While we asked DOD and the military services to provide evidence 

documenting actions taken to improve the purchase card program and 

prevent individuals and companies from further obtaining fraudulent, 

improper, and abusive or questionable items with a DOD purchase card, we 

did not make any field visits to independently validate whether DOD had 

effectively implemented the reported changes.

We briefed DOD managers, including DOD officials in the Office of the 

Undersecretary of Defense (Comptroller), and the Inspector General; Army 

officials in the Office of Deputy Chief of Staff for Logistics; Navy officials in 

the Office of the Assistant Secretary of the Navy for Research Development 

and Acquisition; and Air Force officials in the Office of the Deputy Chief of 

Staff for Installation and Logistics. We conducted our review from June 

through September 2003 in accordance with U.S. generally accepted 

government auditing standards. We requested comments on a draft of this 

report from the Secretary of Defense or his designee. We received written 

comments from the Director of DOD’s Purchase Card Joint Program 
Appendix I

Objectives, Scope, and Methodology

Page 20 GAO-04-156 Purchase Cards

Management Office, which are reprinted in appendix V. We have 

incorporated suggested changes as appropriate.
Page 21 GAO-04-156 Purchase Cards

Appendix II

Status of Army Actions to Implement GAO 

Recommendations ApendxiI

GAO recommendation

Status of GAO recommendation, as reported by the 

Army

GAO observation on the 

status of recommendation

Purchase Cards: Control Weaknesses Leave Army Vulnerable to Fraud, Waste, and Abuse (GAO-02-732, June 27, 2002)

Overall program management and environment

Address key control environment issues in 

Army-wide standard operating procedures. At a 

minimum, the following key issues should be 

included in the procedure: 

1. Controls over the issuance and 

assessment of ongoing need for cards.

Identified in Army Standard Operating Procedure (SOP) 

Section 15. Also reinforced by Army in memorandum 

issued May 22, 2002, requesting that heads of 

contracting activities ensure cards are issued only to 

individuals with bonafide needs and that the limits reflect 

actual needs and available funding.

Reported implemented

2. Cancellation of cards when a cardholder 

leaves the Army, is reassigned, or no 

longer has a valid need for the card.

Identified in Army SOP Section 15. Reported implemented 

3. Span of control of the approving officials. Identified in Army SOP Section 5. Reported implemented

4. Appropriate cardholder spending limits. Identified in Army SOP Sections 15 and 16. Also 

reinforced by Army in memorandum issued May 22, 

2002, requesting heads of contracting activities to 

ensure cards are issued only to individuals with 

bonafide needs and that the limits reflect actual needs 

and available funding.

Reported implemented

5. Help ensure that program coordinators and 

approving officials have the needed 

authority, including grade level, to serve as 

the first line of defense against purchase 

card fraud, waste, and abuse by issuing a 

policy directive that specifically addresses 

their positions, roles, and job descriptions. 

Policies should also be established that 

hold these officials accountable for their 

purchase card program duties through 

performance expectations and evaluations

Issued Memorandum endorsed by General John Keane, 

Vice Chief of Staff articulating the focus on the number 

of purchase card organizations for each card account 

(300), and the skill sets typically require a GS-11 and 

also required in-depth skills in financial and contracting 

policy and procedures with strong verbal 

communications skills. The DOD Concept of 

Operations (CONOPS) report has been updated to 

further identify skill sets for the billing official and 

cardholders.

Reported implemented

6. Assess the adequacy of human capital 

resources devoted to the purchase card 

program, especially for oversight activities, 

at each management level, and provide 

needed resources.

Memorandum signed by Vice Chief of Staff, July 8, 

2002, directed Army commanders to provide adequate 

resources for purchase card program coordinators to 

ensure a system of strong internal controls. This was 

also reemphasized in the Army SOP.

Reported implemented

7. Develop and implement a program 

oversight system for program coordinators 

that includes standard activities and 

analytical tools to be used in evaluating 

program results.

Identified in Army SOP Section 9. Reported implemented
Appendix II

Status of Army Actions to Implement GAO 

Recommendations

Page 22 GAO-04-156 Purchase Cards

8. Develop performance measures and goals 

to assess the adequacy of internal control 

activities and the oversight program.

Identified in Army SOP Section 9 and appendixes J and 

I. Also reinforced in Secretary of the Army 

memorandum dated January 28, 2003.

Reported implemented

9. Require reviews of existing cardholders 

and their monthly spending limits to help 

ensure that only those individuals with valid 

continuing purchasing requirements 

possess cards and that the monthly 

spending limits are appropriate for the 

expected purchasing activity. These 

reviews should result in canceling 

unneeded cards Army-wide and especially 

at Fort Hood where we found a significant 

problem.

September 2002 the Army had 101,398 cardholders. 

Army canceled 35,778 since September. Additionally, 

agency program coordinators are required to review this 

as part of their surveillance reviews as identified in the 

Army SOP. 

Reported implemented

Direct the implementation of specific internal 

control activities for the purchase card program 

in an Army-wide standard operating procedure. 

While a wide range of diverse activities can 

contribute to a system that provides reasonable 

assurances that purchases are correct and 

proper, at a minimum, the following activities 

should be included in the promulgated 

procedure:

10. Advance approval of purchases, including 

blanket approval for routine, low dollar 

purchases.

Identified in SOP Sections 12 and 18. Reported implemented

11. Independent receiving and acceptance 

of goods and services.

Identified in SOP 13. Reported implemented 

12. Independent review by an approving official 

of the cardholder’s monthly statements and 

supporting documentation.

Identified in SOP Section 11. Reported implemented 

13. Approving official reconciling the charges 

on the monthly statement with invoices and 

other supporting documentation and 

forwarding the reconciled statement to the 

designated disbursing office for payment as 

required by governmentwide and DOD 

regulations.

Identified in SOP Section 11. Reported implemented

14. Cardholders obtaining and retaining 

invoices that support their purchases and 

provide the basis for reconciling cardholder 

statements.

Identified in SOP Section 12. Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by the 

Army

GAO observation on the 

status of recommendation
Appendix II

Status of Army Actions to Implement GAO 

Recommendations

Page 23 GAO-04-156 Purchase Cards

15. Develop and implement procedures and 

checklists for approving officials to use in 

the monthly review of cardholders’ 

transactions. These procedures and 

checklists should specify the type and 

extent of review that is expected and the 

required review documentation.

Identified in SOP Appendix E. Reported implemented 

16. Reiterate records retention policy for 

purchase card transaction files and require 

that compliance with record retention policy 

be assessed during the program 

coordinator’s annual review of each 

approving official.

Identified in SOP Section 19. Reported implemented

17. Require the development and 

implementation of coordination and 

reporting procedures to help ensure that 

accountable property bought with the 

purchase card is brought under appropriate 

control.

Identified SOP Section 8. Reported implemented

18. Require additional prior documented 

justification and approval of those planned 

purchases that are “questionable” that fall 

outside the normal procurements of the 

cardholder in terms of either dollar amount 

or type of purchase.

Identified in SOP Section 18 and Appendix D. Reported implemented

19. Analyze the procurements of continuing 

requirements through micropurchases and 

require the use of appropriate contracting 

processes to help ensure that such 

purchases are acquired at the best prices.

Ongoing effort. If the Army identifies leveraging 

opportunities, they will be implemented through some 

form of contracting process.

The Army issued 12 mandatory Blanket Purchase 

Agreements for office products and supplies in 

September 2002. The army has also teamed with the 

Army Comptroller’s office in awarding a support contract 

to assess the Army’s purchasing data to determine if 

leveraging opportunities exist. 

Reported partially 

implemented

20. Develop an Army-wide database on known 

fraud cases that can be used to identify 

potential deficiencies in existing internal 

control and to develop and implement 

additional control activities, if warranted or 

justified.

The Army participates in the DOD charge card special 

focus group to look at this issue DOD-wide. However, 

the Army has teamed with the Army Criminal 

Investigative Command and the Public Affairs office to 

identify, report, and publish newsworthy fraud cases and 

to inform Army soldiers and Department of the Army 

civilian personnel, their supervisors, and the public of 

corrective actions taken to resolve misuse of the Army 

Purchase Card.

Reported partially 

implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by the 

Army

GAO observation on the 

status of recommendation
Appendix II

Status of Army Actions to Implement GAO 

Recommendations

Page 24 GAO-04-156 Purchase Cards

Source: GAO analysis of DOD responses.

21. Develop and implement an Army-wide data 

mining, analysis, and investigation function 

to supplement other oversight activities. 

This function should include providing 

oversight results and alerts to major 

commands and installations when 

warranted. 

Ongoing. Army will continue to work with the DOD 

Charge Card Focus Group.

The Army participates in the DOD Charge Card Focus 

Group to look at this issue DOD-wide. DOD is currently 

working with the DOD IG to test a Navy prototype datamining system. A July 2003 Draft Army Audit Report 

Audit of Army Government Purchase Card (using DOD 

IG data-mining techniques) stated that about 6 percent 

(281) of the 4,537 reviewed Army purchase card 

transactions were improper. Over half of those 

instances were instances of compromised purchase 

cards used by third parties for charges and in billing 

adjustments that returned about 98 percent of the 

improperly charged Army funds. This left about 3 

percent of purchases that were improper, which is less 

than commercial industry standards of 4.2 percent 

identified in the 2003 Purchase Card Benchmark survey 

results, a VISA survey conducted by Palmer and 

Mahendra Gupta dated July 21, 2002.

Reported partially 

implemented

22. Incorporate GAO recommendations, to the 

extent applicable, into the Charge Card 

Task Force’s future recommendations to 

improve purchase card policies and 

procedures throughout DOD.

The Army participates in the DOD Charge Card Focus 

Group to look at these issues DOD-wide.

Reported partially 

implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by the 

Army

GAO observation on the 

status of recommendation
Page 25 GAO-04-156 Purchase Cards

Appendix III

Status of Navy Actions to Implement GAO 

Recommendations ApendxiI

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation

Purchase Cards: Control Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse (GAO-02-32, Nov. 30, 2001)

Proliferation of cardholders

1. Establish specific policies and strategies 

governing the number of purchase cards to be 

issued with a focus on minimizing the number of 

cardholders. 

The revised eBusiness Operations Office Instruction 

(EBUSOPSOFFINST) 4200.1 incorporates the 

Department of Defense “Span of Control Goals” 

which resulted in approving officials having a 

reasonable number of cardholders. The Navy 

executes the DOD Purchase Card Program in a 

decentralized manner consistent with DOD policy. 

This allows individual commands to issue purchase 

cards to employees as mission requirements 

warrant. No less than semiannually, Agency 

Program Coordinators (APC) review the continuing 

need for each account under their purview.

Reported implemented

2. Develop criteria for identifying employees eligible 

for the privilege of cardholder status. As part of 

the effort to develop these criteria, assess the 

feasibility and cost-benefit of performing credit 

checks on employees prior to assigning them 

cardholder responsibilities to ensure that 

employees authorized to use government 

purchase cards have demonstrated credit 

worthiness and financial integrity.

The criterion on eligibility for cardholder’s duties has 

been developed and is incorporated in Department 

of Navy (DON) PC desk guides. The issue of credit 

checks was deferred to DOD. DOD is seeking 

additional legislative action required to implement 

credit checks.

Reported partially 

implemented 

3. Develop policies and strategies on credit limits 

provided to cardholders with a focus on 

minimizing specific cardholder spending 

authority and minimizing the federal 

government’s financial exposure.

EBUSOPSOFFINST 4200.1, chapter 2, paragraph 3, 

defines DON policy. In addition, the EBUSOPSOFF 

monitors credit limits quarterly and takes action 

when it appears that existing credit limits exceed 

mission requirements. Credit limits are now a critical 

element in the revised semiannual review 

procedures. 

Reported implemented

4. Confirm that required training has been 

completed and documented.

EBUSOPSOFFINST 4200.1, chapter 3, paragraph 9, 

addresses mandatory requirements for training. In 

addition, chapter 4, paragraph 1b.2, mandates that 

program compliance with applicable training be 

reported as part of the semiannual APC review. 

Major claimants have been reporting status of 

training completion via the semiannual review report 

and have reported corrective actions are necessary.

Reported implemented 
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 26 GAO-04-156 Purchase Cards

5. Incorporate into purchase card training programs 

any relevant changes in policies and procedures 

made as a result of the recommendations in this 

report.

Policy changes resulting from previous GAO audit 

recommendations were incorporated into revised 

desk guides and training modules as well as the 

September 2002 revision of the DON 

EBUSOPSOFFINST 4200.1. Furthermore, a second 

combined Purchase Card/Travel Card APC 

conference was held in San Diego Nov. 5-8, 2002. A 

third combined conference was held in Philadelphia, 

Mar 17-20, 2003. On Sept 27, 2002, the Navy 

commenced distribution of training CDs that 

contained four training modules for purchase 

cardholders and approving officials (AO). A total of 

30,000 CDs were distributed at that time. In 

December. 2002, the remaining three training 

modules were completed and posted to the DON 

eBusiness Web site for downloading of complete 

training modules. A second version of the Navy 

training CD was released and distributed at the 

March 2003 APC conference. This version contains 

seven training modules and a desk guide for each 

module for use by APCs. Each module contains 

both a Citidirect (shore) and WINSAALTS (afloat) 

version. 

Reported implemented

Rebates

6. Investigate ways to maximize potential rebates, 

such as (1) working with Citibank to facilitate 

timely receipt of monthly purchase card 

statements and (2) reducing the time associated 

with mailing and receipt of hard copy billing 

statements. 

A plan for the “on-line statement process” (electronic 

certification) was presented to APCs at the March 

2003 APC conference in Philadelphia. All general 

fund activities are expected to be performing 

electronic certification by Sept. 30, 2003. All others, 

including outside the continental United States 

(OCONUS), nonappropriated fund (NAF), and Navy 

working capital fund (NWCF) activities, are expected 

to be performing electronic certification by June 30, 

2004. In April 2003, a Navy Working Capital Fund 

users conference convened to discuss issues, 

explore problem areas, and develop an 

implementation plan. The electronic certification tool 

provides Navy purchase card customers with the 

ability to significantly decrease payment timelines, 

thereby optimizing rebate amounts.

Reported partially 

implemented

7. Establish effective policies and procedures for 

routinely calculating and verifying Citibank 

rebates. 

The Defense Contract Audit Agency (DCAA) was 

assigned the task of auditing the integrity of the 

rebate computation process. A number of systems 

issues have been discussed with the banks and 

DCAA has finalized its audit recommendations. The 

Navy and the PC Program Management Office are 

assessing the results. 

Reported partially 

implemented 

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 27 GAO-04-156 Purchase Cards

8. Develop guidance for routine distribution of 

rebate earnings to Navy units and activities.

The Navy made a determination to retain the rebates 

at the department level in lieu of disbursing them to 

lower echelons.

Reported implemented

Monitoring and review

9. Establish in Navy Supply Systems Command 

(NAVASUP) Instruction 4200.94 further 

guidelines for an effective internal review 

program, such as having reviewers analyze 

monthly summary statements to identify (1) 

potentially fraudulent, improper, and abusive 

purchases and (2) any patterns of improper 

cardholder transactions, such as purchases of 

food or other prohibited items.

EBUSOPSOFFINST 4200.1, chapter 4, addresses 

this issue.

Reported implemented

10. Revise NAVSUP Instruction 4200.94 to require 

that (1) written reports on the results of internal 

reviews along with any recommendations for 

corrective actions be prepared and submitted to 

local management and cognizant commands 

and (2) commands identify and report systemic 

weaknesses and corrective action plans to the 

Naval Supply Systems Command for monitoring 

and oversight.

EBUSOPSOFFINST 4200.1, chapter 4, addresses 

this issue. Semiannual program reviews have been 

established and reports are being submitted to the 

DON EBUSOPSOFF.

Reported implemented

11. Require purchase card agency program 

coordinators to report in writing to the unit 

commander and the Commander of Naval 

Supply Systems Command any internal control 

weakness identified during the semiannual 

program reviews.

EBUSOPSOFFINST 4200.1, chapter 4, addresses 

this issue. Semiannual program reviews have been 

established and reports are being submitted to the 

DON EBUSOPSOFF.

Reported implemented 

12. Disclose systemic purchase card control 

weaknesses along with corrective action plans in 

the Secretary of the Navy’s Annual Statement of 

Assurance, prepared under 31 U.S.C. 3512 (d).

The Navy included systemic purchase card 

weaknesses identified in the semiannual report in 

the Secretary of the Navy’s Annual Statement of 

Assurance.

Reported implemented

Receipt of goods and services

13. Revise NAVSUP Instruction 4200.94 to eliminate 

ambiguous language suggesting that advance 

independent authorization of a purchase can be 

substituted for independent confirmation that 

goods and services ordered and paid for with a 

purchase card have been received and accepted 

by the government. 

EBUSOPSOFFINST 4200.1 is a comprehensive 

instruction that addresses the roles of each 

participant in the purchase card process, with 

specific guidance addressing the responsibilities of 

each program participant. EBUSOPSOFFINST 

4200.1, chapter 2, section 4d—Approving Official 

Duties, states that the AO will “ensure proper receipt, 

acceptance, and inspection is accomplished on all 

items being certified for payment.” Additionally, 

EBUSOPSOFF 4200.1, chapter 3, section 7–

Establishing Internal Management Controls, 

discusses the separation of functions between 

receipt and acceptance of goods and services.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 28 GAO-04-156 Purchase Cards

14. Implement procedures to require and document 

independent confirmation of receipt of goods and 

services acquired with a purchase card. 

EBUSOPSOFFINST 4200.1, chapter 3, paragraph 

7c, under Establishing Internal Management 

Controls separation of function, addresses this issue. 

Reported implemented

15. Revise NAVSUP Instruction 4200.94 to require 

that (1) cardholders notify approving officials 

prior to payment that purchase card statements 

have been reconciled to supporting 

documentation, (2) approving officials certify 

monthly statements only after reviewing them for 

potentially fraudulent, improper, and abusive 

transactions, and (3) approving officials verify, on 

a sample basis, supporting documentation for 

various cardholders’ transactions prior to 

certifying monthly statements for payment.

EBUSOPSOFFINST 4200.1 has been revised to 

reflect the issues noted. The specific provisions are 

cited below:

(1) Chapter 2, Section 6e, Cardholders Duties—

Review the monthly purchase card statement to 

ensure that all charges are proper and accurate;

(2) Chapter 2, Section 6f, Cardholders Duties—

Forward the monthly purchase card statement to 

the AO with the appropriate supporting 

documentation, (i.e., sales slips, documentation of 

receipt and acceptance, purchase log) promptly to 

maximize rebates and minimize prompt payment 

penalties;

(3) Chapter 2, Section 4.c, Approving Official 

Duties—Notify the Commanding Officer and APC 

in the event of any suspected unauthorized 

purchase (purchases that would indicate 

noncompliance, fraud, misuse, and/or abuse);

(4) Chapter 2, Section 4.b, Authorizing Official 

Duties—Verify supporting transaction 

documentation on all card accounts prior to 

certifying the monthly invoice.

Reported implemented

16. The Navy Comptroller withdrew the June 3, 

1999, policy memorandum or revised the policy 

guidance to be consistent with the preceding 

recommendation for revising payment 

certification guidance in NAVSUP Instruction 

4200.94.

The Navy Comptroller policy letter dated June 3, 

1999, was rescinded effective March 12, 2002.

Reported implemented

Proper and timely accounting

17. Monitor and confirm that purchase card 

transactions are recorded to projects that 

benefited from the goods and services or to 

relevant overhead accounts promptly, in 

accordance with internal control standards and 

federal accounting standards. 

Both Public Works Center, San Diego, and Naval 

Space and Warfare Systems Command (SPAWAR) 

Systems Center, San Diego, concurred and are 

complying. Internal operating procedures at both 

sites include guidance on the issue.

Reported implemented

18. Revise NAVSUP Instruction 4200.94 to require 

that purchase card expenses be properly 

classified in the Navy’s detailed accounting 

records.

EBUSOPSOFFINST 4200.1, chapter 2, paragraph 4, 

addresses this issue. 

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 29 GAO-04-156 Purchase Cards

19. Verify that the detailed purchase card transaction 

records reflect the proper object classification of 

expense. 

Both Public Works Center, San Diego, and SPAWAR 

Systems Center, San Diego, concurred and are 

complying. The Navy issued policy as an interim 

change to NAVSUP Instruction 4200.94—Standards 

of Compliance for Timely Recording and Classifying 

of Navy Purchase Card Commitments and 

Obligations, which reiterates existing Navy and DOD 

Financial Management Regulation policy on the 

issue.

Reported implemented 

Accountable property

20. Require and verify that accountable property 

obtained using a purchase card is promptly 

recorded in property records as it is acquired, in 

accordance with DOD and Navy policies and 

procedures.

The EBUSOPSOFFINST 4200.1 definition of 

accountable property reads as follows: Accountable 

Property: A term used to identify property recorded 

in a formal property management or accounting 

system. Accountable Property includes all property 

purchased, leased (capital leases), or otherwise 

obtained, having a unit acquisition cost of $5,000 or 

more (land, regardless of cost), and items that are 

sensitive, or classified. Additional and/or separate 

records or other recordkeeping instruments shall be 

established for management purposes, or when 

otherwise required by law, policy, regulation, or 

Agency direction, including, but not limited to 

pilferable items (items that have a ready resale value 

or application to personal possession and which are, 

therefore, especially subject to theft). Additionally, 

EBUSOPSOFFINST 4200.1, chapter 2, sections 6d 

and f, require a detailed purchase log to identify all 

purchase card transactions, including defined 

“Pilferable Personal Property.” Purchase log data are 

also forwarded to the AO as part of its purchase 

review process. A similar change is included in the 

draft revision to Secretary of Navy (SECNAV) 

Instruction 7320.10, which is currently in the 

coordination phase.

Reported implemented

Fraudulent, improper, and abusive transactions

21. Immediately cancel all known active 

compromised purchase card accounts.

All compromised accounts are closed. Reported implemented

22. Determine whether purchases of excessive cost, 

questionable government need, or both, such as 

items for personal use, including personal digital 

assistants (such as Palm Pilots) and flat screen 

computer monitors, that were identified by GAO, 

are proper government purchases. If not, the 

Commander should prohibit their purchase.

EBUSOPSOFFINST 4200.1, chapter 4, paragraphs 

1 and 2 require a monthly 100 percent APC review 

and a semiannual APC review that addresses this 

issue. 

Reported Implemented 

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 30 GAO-04-156 Purchase Cards

23. Establish written policies and criteria requiring 

documented justifications and procurement 

management approval for types of items that can 

be acquired with a government purchase card. 

EBUSOPSOFFINST 4200.1, Enclosure 2, contains a 

list of generally prohibited items. Due to differing 

mission requirements and unique requirements 

throughout the Department of the Navy and DOD, it 

is difficult to develop a general list of what items can 

be purchased with or without special justification. 

Ticket purchases to Disneyland may be an 

appropriate purchase not requiring special 

justifications within a Non-Appropriated Funded 

activity, but may require such documentation at an 

Appropriated Funded activity. These decisions are 

best left to the local command. 

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 31 GAO-04-156 Purchase Cards

24. Examine purchase card acquisition guidance to 

determine whether the purchase card is the right 

vehicle for acquiring certain goods and services, 

such as vehicle and equipment maintenance, 

installation of upgraded computer software, and 

other recurring or installationwide services, or 

whether these items should be subject to 

negotiated contracts. 

The cardholder training CD in use Navy-wide 

contains specific information on the requirement to 

verify other contracting sources prior to making all 

purchases. EBUSOPSOFFINST 4200.1 chapter 2, 

section 6.b, Purchase Cardholder Duties, includes a 

requirement to “screen all requirements for their 

availability from mandatory Government sources of 

supply.” Additionally, the Naval Facilities 

Engineering Command (NAVFAC) has undertaken 

an initiative to facilitate client ordering of Indefinite 

Delivery Indefinite Quantity (IDIQ) services from 

Base Operations Support (BOS) contracts using the 

Department of Defense Electronic Mall (DOD 

EMALL). The NAVFAC Electronic Facilities support 

Contracts (e-FSC) initiative was created to facilitate 

direct client ordering by governmentwide commercial 

purchase cards (GCPC), thereby streamlining the 

BOS IDIQ ordering process and providing better 

compliance with DFARS 213.270 (Use of the 

Governmentwide Commercial Purchase Card). 

Each NAVFAC contract’s IDIQ schedule that is 

posted to the DOD EMALL is from a competed 

contract that has satisfied Competition In Contracting 

Act (CICA) requirements. This distinguishes 

NAVFAC contracts on the DOD EMALL from blanket 

purchase agreements (BPA) and other contracting 

instruments since orders off of the IDIQ catalogs are 

not considered stand-alone (open-market) 

purchases. The e-FSC initiative is currently in its 

early stages. NAVFAC is in the process of adding 

the Payment by Third Party clause (48 C.F.R. 

52.232-36) and an e-FSC requirement to all new 

BOS solicitations and selected existing BOS 

contracts from installations and regions across the 

DON. As new BOS IDIQ schedules continue to be 

uploaded to the DOD EMALL, NAVFAC anticipates 

that within the next year many BOS contracts at most 

major installations will be available for electronic 

ordering by GCPC. This strategic initiative is 

expected to result in significant labor-hour savings 

and expedite the order and delivery process.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 32 GAO-04-156 Purchase Cards

25. Work with the Under Secretary for Acquisition, 

Technology, and Logistics and DOD’s Purchase 

Card Joint Program Office to determine whether 

the purchase card should be used to acquire 

computers and other equipment or property 

items individually that could be more 

economically and efficiently procured through 

bulk purchases. 

The DOD EMALL is now available to the Navy and its 

use and availability are being articulated to Navy 

purchasers as a single point for commercial 

purchases, including computers, using the 

government purchase card. Most recently, a DOD 

EMALL representative spoke at the March 2003 APC 

conference. The DON EBUSOPSOFF is in the 

process of querying all Level III APCs to identify all 

strategic sourcing agreements in their respective 

claimancies. This information will then be shared 

Navywide.

Reported implemented

26. Revise NAVSUP Instruction 4200.94 to make it 

consistent with the Federal Acquisition 

Regulation, 48 C.F.R. 13.301(a), which states 

that the “card may be used only for purchases 

that are otherwise authorized by law or 

regulation.” The clarifying guidance should 

specifically state that in the absence of specific 

statutory authority, purchases of items for the 

personal benefit of government employees, such 

as flowers or food, are not permitted and are 

therefore improper transactions.

EBUSOPSOFFINST 4200.1, chapter 1, paragraph 4, 

contains clarifying guidance.

Reported implemented

Split purchases

27. Prohibit splitting purchases into multiple 

transactions as required by the Federal 

Acquisition Regulation and emphasize this 

prohibition in purchase card training provided to 

cardholders and approving officials. 

EBUSOPSOFFINST 4200.1, chapter 1, paragraph 

5a, addresses this specific issue. In addition, 

training modules emphasize the prohibition on split 

purchases, as do all monthly and semiannual 

program reviews. Also, APCs have an on-line tool to 

monitor split purchases.

Reported implemented

28. Require approving officials to monitor monthly 

purchase card statements and identify and report 

to them regarding any split purchases and the 

names of cardholders who made the 

transactions. 

EBUSOPSOFFINST 4200.1, chapter 2, paragraph 4, 

requires the approving official to verify supporting 

documentation on all card accounts prior to certifying 

the monthly accounts. Detecting potential split 

purchases and notifying AOs to review these 

transactions will be a capability of the data-mining 

tool. The tool will push the suspected split purchase 

down to the AO for review. The data-mining tool will 

identify the cardholder(s) who are splitting purchase 

requirements, along with the disciplinary actions 

associated with the transaction.

Reported partially 

implemented 

29. Incorporate GAO recommendations, to the 

extent applicable, into the Commander of the 

Naval Supply Systems Command’s future 

revisions to NAVSUP Instruction 4200.94, to 

include specific consequences for 

noncompliance with these guidelines and not 

enforcing the guidelines.

Guidance for actions that may be taken for 

noncompliance with the regulations have been 

incorporated as disciplinary guidelines in the draft 

revision of EBUSOPSOFFINST 4200.1A.

Reported partially 

Implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 33 GAO-04-156 Purchase Cards

Purchase Cards: Navy Is Vulnerable to Fraud and Abuse but Is Taking Action to Resolve Control Weaknesses (GAO-02-1041, Sept. 27, 

2002)

Overall program management and environment

30. Direct all agency program coordinators to review 

the number of cardholders who report to an 

approving official and make the changes 

necessary to prevent approving officials from 

having the responsibility of reviewing more 

cardholders than allowed by Navy and DOD 

policies. 

On September 19, 2002, DON issued 

EBUSOPSOFFINST 4200.1 that mandates a 

maximum span of control of card accounts to 

approving officials (AO) of 7:1: this metric (span of 

control ratio of 7:1) is monitored by the Navy on a 

monthly basis and corrective action is taken as 

required.

Reported implemented

31. Establish a database that maintains information 

on all purchase card training taken by 

cardholders, approving officials, and agency 

program coordinators. Require that agency 

program coordinators update that database 

whenever these purchase card program officials 

take training.

DON EBUSOPSOFF is building and will maintain an 

automated centralized training database using an email response mechanism. Training completion 

responses are currently being accumulated and held 

off-line until the centralized training database is 

completed. After completion, e-mail responses will 

be electronically processed and student records will 

be recorded in the database. 

Reported partially 

implemented

32. Establish specific training courses for 

cardholders, approving officials, and agency 

program coordinators tailored to the specific 

responsibilities associated with each of these 

roles. 

Role-based training for APCs, Aos, and cardholders 

have been developed and distributed to all 

participants on CD ROM and are also posted to the 

DON EBUSOPSOFF Web site for downloading. This 

version contains seven training modules and a desk 

guide for each module for use by APCs. Each 

module contains both a Citidirect (shore) and 

WINSAALTS (afloat) version. 

Reported implemented

33. Direct agency program coordinators to review an 

approving official’s overall workload and 

determine whether the approving official has the 

time necessary to perform the required review 

functions.

EBUSOPSOFFINST 4200.1 mandates a maximum 

7:1 ratio (seven accounts for each AO). Additionally, 

approximately 1 year ago, a one-time purge was 

done to realign the hierarchies in accordance with 

this policy. Compliance is monitored by 

EBUSOPSOFF twice a month with data from 

Citidirect. When an AO is found to be operating 

outside the ratio, they are notified and are required to 

take corrective action. Also on October 29, 2001, 

DON issued a policy letter PC02-05 and PCPN #69 

requiring all agency program coordinators to review 

an approving official’s overall workload and 

determine whether the approving official has the time 

necessary to perform the required review functions. 

If the determination is that an approving official does 

not have the necessary time, the APC will address 

this situation with the approving official’s commander 

or supervisor. 

Reported implemented 

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 34 GAO-04-156 Purchase Cards

34. Establish job descriptions that identify 

responsibility and performance standards for 

cardholders, approving officials, and agency 

program coordinators. 

Established recommended guidelines in the DON 

PC desk guides. 

Reported implemented 

35. Link the cardholders’, approving officials, and 

agency program coordinators’ performance 

appraisals to achieving their performance 

standards.

The Office of the Secretary of Defense, Personnel 

and Readiness, has advised that inclusion of 

purchase card duties in the performance goals is 

solely a supervisory responsibility, just as the 

inclusion of other performance outcomes, and 

should not be separately mandated. The DON 

EBUSOPSOFF cannot mandate this requirement. 

Performance goals are established by supervisors 

and employees and are a reflection of the 

employee’s major duties/responsibilities and the 

desired performance outcomes based on those 

duties. The goals established and the performance 

appraisals given are unique to the individual. 

However, roles and responsibilities have been 

outlined in DON PC desk guides. Internal 

management controls have been identified (e.g., 

span of control ratios, credit limit determination, 

delinquency management, separation of functions).

Reported partially 

implemented

36. Work with the Naval Audit Service and 

Command Evaluation staff to begin periodic 

audits of the purchase card program to provide 

Navy management at the command and unit 

levels an independent assessment of the control 

environment and whether the agency program 

coordinators, approving officials, and 

cardholders are adhering to control procedures. 

The DON EBUSOPSOFF and the Assistant 

Secretary of the Navy (Research Development & 

Acquisition) Acquisition Business Management 

(ABM) offices are engaged with the Naval Audit 

Service (NAVAUDSVC) to finalize a schedule of 

purchase card command assessments. Ongoing 

audits:

NAVAUDIT

Activity reviews

Validate filters

Rebates

GAO

Leveraging buying power

DODIG

Convenience checks

OCONUS transactions

Reported implemented 

37. Identify vendors with which the Navy or Marine 

Corps uses purchase cards to make frequent 

purchases, evaluate Navy purchasing practices 

with those vendors, and forward the results of 

that evaluation to the Assistant Secretary of the 

Navy for Research, Development, and 

Acquisition to contract with them, when 

applicable, to optimize Navy purchasing power.

The data mining of purchase card transactions was 

completed in September 2002 and May 2003. Total 

transactions by vendor were extracted from the bank 

database and forwarded to the Office of the ASN 

(ACQ) for further review to determine whether Navywide contracts should be established.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 35 GAO-04-156 Purchase Cards

38. Modify the definition of “Pilferable Personal 

Property” in SECNAV Instruction 7320.10 dated 

August 1, 2001, by eliminating the requirement 

that a portable item easily converted to personal 

use also be difficult to repair or replace, and 

specifically identify items such as computers, 

cameras, personal digital assistants, and 

audiovisual equipment as meeting the definition 

of being pilferable and thus accountable. 

The EBUSOPSOFFINST 4200.1 definition of 

accountable property reads as follows: Accountable 

Property: A term used to identify property recorded 

in a formal property management or accounting 

system. Accountable Property includes all property 

purchased, leased (capital leases), or otherwise 

obtained, having a unit acquisition cost of $5,000 or 

more (land, regardless of cost), and items that are 

sensitive, or classified. Additional and/or separate 

records or other recordkeeping instruments shall be 

established for management purposes, or when 

otherwise required by law, policy, regulation, or 

Agency direction, including, but not limited to 

pilferable items (items that have a ready resale value 

or application to personal possession and which are, 

therefore, especially subject to theft). Additionally, 

EBUSOPSOFFINST 4200.1, chapter 2, sections 6d 

and f, requires a detailed purchase log to identify all 

purchase card transactions, including defined 

“Pilferable Personal Property.” Purchase log data are 

also forwarded to the AO as part of the AO purchase 

card review process. A similar change is included in 

the draft revision of SECNAV Instruction 7320.10, 

which is currently in the coordination phase.

Reported implemented

Specific internal control activities

Modify NAVSUP Instruction 4200.94 to provide 

cardholders, approving officials, and agency program 

coordinators detailed instructions on the following: 

39. Timely and independent receiving and 

acceptance of items obtained with a purchase 

card and documenting the results of that 

process.

Complete – This subject was addressed in the 

DONEBUSOPSOFF Instruction 4200.1 dated 

September 19, 2002.

Reported implemented 

40. Screening purchases for the availability from 

required vendors and documenting the results of 

the screening.

Complete – This subject was addressed in the 

DONEBUSOPSOFF Instruction 4200.1 dated 

September 19, 2002.

Reported implemented 

41. Promptly reconciling the monthly purchase card 

statements to supporting documentation and 

documenting the results of that reconciliation. 

Complete – This subject was addressed in the 

DONEBUSOPSOFF Instruction 4200.1 dated 

September 19, 2002.

Reported implemented

42. Promptly reviewing a cardholder purchase card 

statement by the approving official prior to 

certifying the statement for payment and 

documenting the results of that review.

Complete – This subject was addressed in the 

DONEBUSOPSOFF Instruction 4200.1 dated 

September 19, 2002.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Appendix III

Status of Navy Actions to Implement GAO 

Recommendations

Page 36 GAO-04-156 Purchase Cards

Source: GAO analysis of military service respones.

43. Prompt cardholder notification to property 

accountability officer of the pilferable property 

obtained with the purchase card, and approving 

official responsibility for monitoring that the 

pilferable property has been recorded in the 

accountability records.

Complete – This subject was addressed in the 

DONEBUSOPSOFF Instruction 4200.1 dated 

September 19, 2002.

Reported implemented

Potentially fraudulent, improper, and abusive or questionable purchases 

44. Modify NAVSUP Instruction 4200.94 to require 

cardholders to maintain documented justification 

and advanced approval of purchases that fall 

outside the normal procurements of the 

cardholder in terms of either dollar amount or 

type of purchase.

Complete – This subject was addressed in the 

DONEBUSOPSOFF Instruction 4200.1 dated 

September 19, 2002.

Reported implemented

45. Establish a Navy-wide database of known 

purchase card fraud cases by type of fraud that 

can be used to identify deficiencies in existing 

internal control and to develop and implement 

additional control activities, if warranted or 

justified.

This is a parallel effort to the Automated Review and 

Response Oversight Wizard (ARROW) data-mining 

tool discussed below. ARROW is in the early stages 

of development. Additionally, the Office of the DOD 

IG, Investigative Policy and Oversight, has 

established a Government Purchase Card Fraud 

Investigations database that is already operational. 

Reported partially 

implemented

46. Establish a Navy-wide data-mining, analysis, and 

investigation function to supplement other 

oversight activities. This function should include 

providing oversight results and alerts to major 

commands and installations when warranted. 

The EBUSOPSOFF, in partnership with DOD IG, is 

conducting the ARROW data-mining project. Phase 

I of the data-mining pilot was completed in June 

2003 at the Marine Corps site at Camp LeJeune, 

Fayetteville, N.C. The automated process is 

functioning as planned and initial reaction to the 

process from the participants has been positive; 

however, the fraud indicators were not adequately 

validated in Phase I. Phase 2 development will focus 

on validating the proposed fraud indicators. The 

Phase 2 pilot will begin in January 2004. 

Reported partially 

implemented

47. Modify NAVSUP Instruction 4200.94 to include a 

schedule of disciplinary actions as a guide for 

taking action against cardholders who make 

improper or abusive acquisitions with the 

purchase card. 

A schedule of disciplinary actions has been 

incorporated in the revised EBUSOPSOFF 

instruction 4200.1A. 

Reported implemented 

48. Incorporate GAO recommendations, to the 

extent applicable, into the Charge Card Task 

Force’s future recommendations to improve 

purchase card policies and procedures 

throughout DOD.

The Navy sent this recommendation to OUSD for 

action.

Reported partially 

implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported by 

the Navy as of August 29, 2003

GAO observation on the 

status of 

recommendation
Page 37 GAO-04-156 Purchase Cards

Appendix IV

Status of Air Force Actions to Implement GAO 

Recommendations ApendxiIV

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation

Purchase Cards: Control Weaknesses Leave the Air Force Vulnerable to Fraud, Waste, and Abuse (GAO-03-292, Dec. 20, 2002)

Overall program management and environment

Direct the Assistant Secretary of the Air Force 

for Acquisition and the Deputy Assistant 

Secretary for Contracting to take the following 

actions:

1. Establish specific policies and strategies 

governing the number of purchase cards 

to be issued with a focus on minimizing 

the number of cardholders.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that the number of cards 

issued should be minimized. Item closed.

Reported implemented

2. Direct all command and installation-level 

agency program coordinators to review 

purchase card use with a view towards 

eliminating unneeded purchase card 

accounts.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that Installation Purchase Card 

Managers eliminate unneeded purchase card 

accounts. Item closed

Reported implemented

3. Eliminate purchase cards used to 

facilitate line-item accounting.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that Installation Purchase Card 

managers, in conjunction with Financial Services 

officers, review all purchase cardholders with 

multiple accounts and eliminate those accounts 

existing to facilitate line-item accounting. Item 

closed.

Reported implemented

4. Direct all agency program coordinators to 

review the number of cardholders who 

report to an approving official and make 

the changes necessary so that approving 

officials do not have responsibility for 

reviewing more cardholder accounts than 

allowed by Air Force and DOD policies.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that Installation Purchase Card 

managers and coordinators review the number of 

cardholders who report to an approving official 

and make the changes necessary so that 

approving officials do not have responsibility for 

reviewing more cardholder accounts than allowed 

by Air Force and DOD policies. Item closed.

Reported implemented

5. Review existing credit limits and monthly 

spending and develop policies and 

strategies on credit limits provided to 

cardholders with a focus on minimizing 

specific cardholder spending authority 

and minimizing the federal government’s 

financial exposure.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that installation purchase card 

program managers shall to review existing credit 

and monthly spending limits against current 

spending patterns and determine if cardholder 

spending authority can be reduced in the interest 

of minimizing the federal government's financial 

exposure.

Reported implemented

6. Deactivate purchase card accounts of 

alternate cardholders and approving 

officials when primary cardholders and 

approving officials are available.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that alternate cardholders and 

billing official accounts be suspended when 

primary cardholders and billing officials are 

available. Item closed.

Reported implemented
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 38 GAO-04-156 Purchase Cards

7. Establish specific training courses for 

cardholders, approving officials, and 

agency program coordinators tailored to 

the specific responsibilities associated 

with each of those roles.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that, in addition to already 

instituted mandatory training through the Defense 

Acquisition University for cardholders, billing 

officials, and financial services officers, all 

A/OPCs are required to take the A/OPC training 

developed by GSA. Item closed.

Reported implemented

8. Require installation program coordinators 

to track and monitor corrective actions on 

purchase card audit and annual 

surveillance findings and provide periodic 

status reports to their installation 

contracting directors.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that Installation Purchase Card 

managers track and monitor corrective actions on 

purchase cards and annual surveillance findings 

and provide quarterly status reports to their 

installation Contracting Director. Item closed.

Reported implemented

9. Develop and implement a program 

oversight system for program 

coordinators that includes standard 

activities and analytical tools to be used in 

evaluating program results.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed mandatory use of the review 

checklist in the GPC Surveillance Guide. Item 

closed.

Reported implemented

10. Require reports on annual surveillance 

results to include an assessment of 

control environment issues, including the 

ratio of cardholders to employees, ratio of 

approving officials to cardholder 

accounts, ratio of monthly credit limits to 

actual spending, and number of 

cardholders and approving officials 

requiring training.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that reports on annual 

surveillance results include an assessment of 

control environment issues, including the ratio of 

cardholders to employees, ratio of approving 

officials to cardholder accounts, ratio of monthly 

credit limits to actual spending, and number of 

cardholders and approving officials requiring 

training. Item closed.

Reported implemented

11. Assess the adequacy of human capital 

resources devoted to the purchase card 

program, especially for oversight activities 

at each management level, and provide 

needed resources where appropriate.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that the Directors of 

Contracting address the adequacy of personnel 

devoted to the purchase card program, especially 

for oversight activities, at each management level, 

and work to increase manpower authorizations 

where appropriate.

Reported implemented

Direct the Assistant Secretary of the Air Force 

for Acquisition and the Deputy Assistant 

Secretary for Contracting to make the 

following revisions to Air Force Instruction 64-

117, Air Force Government-wide Purchase 

Card Program:

12. Correct faulty records retention guidance 

by referring to specific guidelines in the 

Federal Acquisition Regulation, National 

Archives and Records Administration 

federal records retention guidelines, 

DOD’s Financial Management 

Regulation, and other federal guidelines 

as appropriate.

Per the Air Force response to the GAO final 

report, correction was incorporated into the 

December 6, 2002, revision to AFI 64-117. Item 

closed.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 39 GAO-04-156 Purchase Cards

13. Require purchase card program 

management and administrative records 

generated by installation program 

coordinators and approving officials, such 

as records of cardholder and approving 

official appointments and training, 

cardholder delegations of authority, and 

purchase card surveillances, to be 

retained for 3 years.

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117, Air Force 

Government-wide Purchase Card Program, will 

be revised to require purchase card program 

management and administrative records 

generated by installation program coordinators 

and approving officials, such as records of 

cardholder and approving official appointments 

and training, cardholder delegations of authority, 

and purchase card surveillances, to be retained 

for 3 years.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

14. Stipulate, in the body of the Instruction, 

that approving officials are required to 

have annual purchase card refresher 

training.

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117, Air Force 

Government-wide Purchase Card Program, will 

be revised to specify that approving officials are 

required to have annual purchase card refresher 

training.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

15. Require that the surveillance checklist, 

which is included in an appendix to the Air 

Force Instruction, be used to guide and 

document surveillance results.

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117, Air Force 

Government-wide Purchase Card Program, will 

be revised to require that the surveillance 

checklist be used to guide and document 

surveillance results.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

16. Require reports on the results of annual 

surveillances to be signed by installation 

contracting directors to demonstrate 

management oversight and “tone at the 

top.”

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117, Air Force 

Government-wide Purchase Card Program, will 

be revised to require reports on the results of 

annual surveillances to be signed by the 

contracting squadron commander/chief of the 

contracting office.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

17. Require reports on surveillance results to 

be addressed to unit commanders.

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117, Air Force 

Government-wide Purchase Card Program, will 

be revised to require reports on surveillance 

results to be addressed to unit commanders.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 40 GAO-04-156 Purchase Cards

18. Require reports on surveillance results to 

include recommendations for unit 

commander action, where approving 

officials and cardholders have failed to 

follow Air Force policy—particularly policy 

related to federal regulations, such as 

micropurchase requirements and 

mandated sources of supply.

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117, Air Force 

Government-wide Purchase Card Program, will 

be revised to require reports on surveillance 

results to include recommendations for unit 

commander action, where approving officials and 

cardholders have failed to follow Air Force policy 

related to federal regulations.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

To resolve noncompliance with requirements 

in law for proper certification of purchase card 

payments, we recommend that the Secretary 

of the Air Force take the following actions: 

19. Direct the Assistant Secretary of the Air 

Force for Acquisition and the Deputy 

Assistant Secretary for Contracting to 

work with the Under Secretary of Defense 

(Comptroller) to resolve inconsistencies 

between DOD and Air Force policies and 

procedures for reconciling purchase card 

statements prior to payment.

The Under Secretary of Defense (Comptroller) 

requested an opinion from the Deputy General 

Counsel (Fiscal) (DGC(F)) to determine whether 

“pay and confirm” is in compliance with Title 10, 

United States Code (U.S.C.), section 2784. In its 

response, the DGC(F) stated that the business 

practice of paying a purchase card statement of 

account before receipt of a reconciled statement 

and detailed supporting documentation is 

supported by governmentwide policy, and not 

otherwise prohibited by statute. Counsel did 

caution that the practice is contingent upon 

maintaining appropriate internal controls sufficient 

to ensure that the benefits associated with this 

practice outweigh the risk of loss. Item closed.

Reported implemented

20. Develop a strategy for achieving Air Force 

compliance with requirements in the law 

that DOD purchase card policies and 

procedures require reconciliation of 

purchase card statements prior to 

payment.

The Under Secretary of Defense (Comptroller) 

requested an opinion from the Deputy General 

Counsel (Fiscal) (DGC(F)) to determine whether 

“pay and confirm” is in compliance with Title 10, 

United States Code (U.S.C.), section 2784. In its 

response, the DGC(F) stated that the business 

practice of paying a purchase card statement of 

account before receipt of a reconciled statement 

and detailed supporting documentation is 

supported by governmentwide policy, and not 

otherwise prohibited by statute. Counsel did 

caution that the practice is contingent upon 

maintaining appropriate internal controls sufficient 

to ensure that the benefits associated with this 

practice outweigh the risk of loss. Item closed.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 41 GAO-04-156 Purchase Cards

21. Establish appropriate criteria, including 

types of items and dollar thresholds for 

documenting independent receipt and 

acceptance of items obtained with a 

purchase card.

Anticipate publication of revised AFI in March 

2004.

The Deputy Assistant Secretary of Contracting 

will revise Air Force Instruction 64-117 to provide 

cardholders, approving officials, and installation 

program coordinators appropriate criteria, 

including types of items and dollar thresholds for 

documenting independent receipt and acceptance 

of items obtained with a purchase card.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

22. Establish specific procedures for 

documenting independent receiving, such 

as requiring the approving official or 

supervisor to sign and date the vendor 

invoice, sales receipt, or credit card 

receipt, or requiring the approving official 

to sign the cardholder’s monthly purchase 

log to verify that items noted as having 

been received were actually received.

Anticipate publication of revised AFI in March 

2004.

The Deputy Assistant Secretary of Contracting 

will revise Air Force Instruction 64-117 to provide 

cardholders, approving officials, and installation 

program coordinators with detailed instructions on 

procedures for documenting independent 

receiving, such as requiring the approving official 

or supervisor to sign and date the vendor invoice, 

sales receipt, or credit card receipt, or requiring 

the approving official to sign the cardholder’s 

monthly purchase log to verify that items noted as 

having been received were actually received.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

23. Require cardholders to maintain 

documentation of timely and independent 

receiving and acceptance of items 

obtained with a purchase card.

Anticipate publication of revised AFI in March 

2004.

Deputy Assistant Secretary of the Air Force 

(Contracting) will revise Air Force Instruction 64-

117 to require cardholders to maintain 

documentation of independent receiving and 

acceptance of items obtained with a purchase 

card.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

24. Require reconciliation of monthly 

purchase card statements associated 

with accounts that were “shut down” 

(suspended) in July 2002 due to lack of 

cardholder reconciliation and approving 

official review.

A SAF/AQC letter, dated March 27, 2003, was 

sent to the purchase card points of contact at the 

Air Force major commands requesting that they 

direct their A/OPCs to review all accounts subject 

to automatic suspension in July 2002 due to lack 

of cardholder reconciliation and approving official 

review to ensure that they have been manually 

reconciled. Item closed.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 42 GAO-04-156 Purchase Cards

25. Verify that all potentially fraudulent and 

erroneous transactions that have been 

detected are disputed and properly 

resolved.

Anticipate publication of revised AFI in March 

2004.

The Deputy Assistant Secretary of Contracting 

will revise Air Force Instruction 64-117 to instruct 

cardholders, approving officials, and installation 

program coordinators to verify that all potentially 

fraudulent and erroneous transactions that have 

been detected are disputed and properly 

resolved.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

26. Require timely cardholder notification to 

the property accountability officer of 

pilferable property, such as fax machines, 

digital cameras, and palm pilots obtained 

with the purchase card.

Anticipate publication of revised AFI in March 

2004.

The Deputy Assistant Secretary of Contracting 

will revise Air Force Instruction 64-117 to provide 

cardholders, approving officials, and installation 

program coordinators with detailed instructions to 

require timely cardholder notification to the 

property accountability officer of accountable 

pilferable property obtained with the purchase 

card.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

27. Encourage installation contracting officers 

to consider the benefits of central 

purchasing and receiving and acceptance 

of computer equipment by installation 

information technology units to facilitate 

recording computer equipment in 

accountable property records at the time 

it is received.

Air Force Policy Memo #03-C-05, issued March 

2003, encouraged installation Contracting 

Officers to consider the benefits of central 

purchasing and receiving and acceptance of 

computer equipment by installation information 

technology units to facilitate recording computer 

equipment in accountable property records at the 

time it is received. Item closed.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 43 GAO-04-156 Purchase Cards

28. Define and list examples of sensitive and 

pilferable property purchased with a 

government purchase card, including cell 

phones, digital cameras, fax machines, 

palm pilots, and copiers and printers, and 

require prompt recording of these items in 

installation property systems.

Anticipate publication of revised AFI in March 

2004.

Air Force Instruction 64-117 will be revised to 

define and list examples of sensitive and pilferable 

property purchased with a government purchase 

card, including cell phones, digital cameras, fax 

machines, palm pilots, and copiers and printers. 

Sub-paragraph 5.3.1 of DODI 5000.64 allows 

additional and/or separate records or other 

recordkeeping instruments when required by law, 

policy, regulation, Agency direction, or for 

management purposes (e.g., pilferable item, 

property hazardous to health and human safely). 

Property not meeting the minimum accountability 

threshold is still subject to appropriate internal 

controls which, depending on the property, can 

include an accountable property record. 

SAF/AQCP is working with USAF/ILGP, Materiel 

Management Policy Division, to establish clear 

accountability and/or visibility criteria that will 

meet the intent of GAO’s accountability concerns.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

29. Establish policies and procedures for 

recording all pilferable and sensitive 

property, including digital cameras, palm 

pilots, and cell phones, in installationaccountable property records. At a 

minimum, require installations to follow 

DOD policies and procedures on 

accountable property.

Anticipate publication of revised AFI in March 

2004.

Current guidance (DODI 5000.64, AFI 33-112, 

AFI 23-111, and AFI 23-110) all indicate that 

organizational commanders must account for 

property issued to them or procured by them. 

These guidelines do not mandate a mechanism to 

ensure accountability is established for items 

procured from outside of the standard base 

supply system. SAF/AQCP is working with 

USAF/ILGP, Materiel Management Policy 

Division, to establish clear accountability and/or 

visibility criteria that will meet the intent of GAO’s 

accountability concerns. These changes will be 

incorporated into AFI 64-117.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

30. Direct the Air Force Audit Agency and Air 

Force Office of Special Investigations to 

establish an Air Forcewide database of 

known fraud cases by type of fraud, 

including purchase card fraud, that can be 

used to identify systemic weaknesses 

and deficiencies in existing internal 

control and to develop and implement 

additional control activities, if warranted or 

justified.

The Air Force Office of Special Investigations 

(AFOSI), in conjunction with the other Defense 

Criminal Investigative Organizations (DCIO), now 

reports information on initiated and ongoing 

Government Purchase Card (GPC) investigations 

quarterly to the Department of Defense Inspector 

General for macro-level analysis of systemic 

weaknesses in the GPC program DOD-wide.

Reported implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 44 GAO-04-156 Purchase Cards

We recommend that the Assistant Secretary 

of the Air Force for Acquisition and the Deputy 

Assistant Secretary for Contracting take the 

following actions:

31. Establish an Air Force-wide database of 

known purchase card fraud cases by type 

of fraud, including vendor fraud and 

compromised accounts, that can be used 

to identify deficiencies in existing internal 

control and implement additional control 

activities, if warranted.

The DOD IG has been directed to develop a 

centralized purchase card database on known 

fraud cases and audit results that can be used to 

identify potential deficiencies in existing internal 

controls. The Air Force will evaluate the Air Force 

cases and audits to determine the effectiveness of 

existing internal controls and implement additional 

control activities, if warranted.

Reported implemented

32. Identify vendors with which the Air Force 

used purchase cards to make frequent, 

recurring purchases, evaluate Air Force 

purchasing practices with those vendors, 

and where appropriate, develop contracts 

with those vendors to optimize Air Force 

purchasing power.

Air Force Policy Memo #03-C-11, issued May 22, 

2003, directed that A/OPCs identify vendors with 

which they used purchase cards to make 

frequent, recurring purchases, evaluate 

purchasing practices with those vendors, and 

where appropriate, develop contracts with those 

vendors to optimize Air Force purchasing power. 

Item closed.

Reported implemented

33. Review organizational use of the 

purchase card and revoke purchase 

cards issued to organizations that do not 

have authority to participate in the 

governmentwide purchase card program.

Anticipate publication of revised AFI in Mar 04.

The Deputy Assistant Secretary for Contracting 

will review organizational use of the purchase 

card and revoke purchase cards issued to 

organizations that do not have authority to 

participate in the governmentwide purchase card 

program. However, AF/HC does not agree that 

the Chaplain Service had no authority to use 

GPCs. DODD 1015.1. recognizes Chaplain 

Religious Funds and states that “funds are 

administered and managed in accordance with 

separate DOD Component regulations” (Par. 2.2. 

and 2.2.11.). Based on DODD 1015.1, AFI 52-

101 (May 19, 1997) was issued that stated “The 

International Merchant Purchase Authorization 

Card (IMPAC) is the official Chaplain Service 

funds credit card” (Para. 4.3.). AF/HC will 

recommend reinstatement of the Chaplain Funds 

into the revised publication of DODD 1015.1, 

Establishment, Management, and Control of 

Nonappropriated Fund Instrumentalities. AFI 52-

101 is in the process of being updated to reflect 

the current DOD and AF policies regarding the 

GPC.

Reported partially implemented 

pending March 2004 issuance of 

revised Air Force Instruction 64-117.

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 45 GAO-04-156 Purchase Cards

34. Cancel convenience check privileges of 

cardholders who have continued to 

improperly use convenience checks.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that installation purchase card 

managers cancel convenience check privileges of 

cardholders who have misused convenience 

checks more than once. Item closed.

Reported implemented

35. Require accounting adjustments to be 

made to correct transactions that were 

charged to the wrong appropriation 

account with respect to fiscal year and 

purpose of the expenditures.

A SAF/AQC letter, dated March 27, 2003, was 

sent to SAF/FMP requesting that an accounting 

adjustment be made to correct any GPC 

transactions that were charged to the wrong 

appropriations account with respect to fiscal year 

and items purchased. Item closed.

Reported implemented 

36. Establish appropriate, consistent Air 

Force-wide policy as a guide for taking 

disciplinary actions with respect to 

cardholders and approving officials who 

make or approve fraudulent, improper, or 

abusive purchase card transactions.

The Deputy Assistant Secretary of the Air Force 

(Contracting) does not make Air Force-wide policy 

as a guide for taking disciplinary actions with 

respect to cardholders and approving officials 

who make or approve fraudulent, improper, or 

abusive purchase card transactions. Guidelines 

for procedures regarding the violation of Air Force 

GPC procedures are already contained in AFI 64-

117. In addition, the Deputy Assistant Secretary 

of the Air Force (Contracting) has issued a 

memorandum requiring a summary of each case 

of purchase card fraud and each instance of 

repeated misuse of the purchase card and a 

quarterly briefing by the contracting squadron 

commander to the installation commander 

including the disciplinary action taken. Item 

closed.

Reported implemented

37. Require cardholders and/or approving 

officials to reimburse the government for 

any unauthorized or erroneous purchase 

card transactions that were not disputed.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that installation purchase card 

managers remind all cardholders and billing 

officials that they are “accountable officials” in 

accordance with Attachment 2, paragraph 1.b. of 

AFI 64-117, and as such, may be pecuniarily 

liable for erroneous payments (see DOD Financial 

Management Regulation, Volume 5, Chapter 33, 

August 1998, page 33-1) and may be required to 

reimburse the government for any unauthorized or 

erroneous purchase card transaction that was not 

disputed within the 60-day grace period. In 

addition, all “benefiting individuals” who have 

requested personal items to be purchased for 

their use may also be required to reimburse the 

government for such purchases. Item closed.

Reported implemented 

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Appendix IV

Status of Air Force Actions to Implement 

GAO Recommendations

Page 46 GAO-04-156 Purchase Cards

Source: GAO analysis of DOD responses.

38. Require benefiting individuals to 

reimburse the government for the cost of 

any personal items that they requested or 

directed a cardholder to purchase for 

them.

Air Force Policy Memo #03-C-05, issued March 

18, 2003, directed that installation purchase card 

managers remind all cardholders and billing 

officials that they are “accountable officials” in 

accordance with Attachment 2, paragraph 1.b. of 

AFI 64-117, and as such, may be pecuniary liable 

for erroneous payments (see DOD Financial 

Management Regulation, Volume 5, Chapter 33, 

August 1998, page 33-1) and may be required to 

reimburse the government for any unauthorized or 

erroneous purchase card transaction that was not 

disputed within the 60-day grace period. In 

addition, all “benefiting individuals” who have 

requested personal items to be purchased for 

their use may also be required to reimburse the 

government for such purchases. Item closed.

Reported implemented

39. Incorporate GAO recommendations, to 

the extent applicable, into the Charge 

Card Task Force’s future 

recommendations to improve purchase 

card policies and procedures throughout 

DOD.

This recommendation was directed to the Under 

Secretary of Defense (Comptroller), not to the Air 

Force.

Reported partially implemented

(Continued From Previous Page)

GAO recommendation

Status of GAO recommendation, as reported 

by the Air Force

GAO observation on the status of 

recommendation
Page 47 GAO-04-156 Purchase Cards

Appendix V

Comments from the Department of Defense ApendxiV
Appendix V

Comments from the Department of Defense

Page 48 GAO-04-156 Purchase Cards
Page 49 GAO-04-156 Purchase Cards

Appendix VI

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts John V. Kelly, (202) 512-6926

James D. Moses, (213) 830-1085

Acknowledgments Staff making key contributions to this report were Francine DelVecchio, 

Gail Luna, Jerrod O’Nelio, Harold Reich, John Ryan, Quan Thai, and Gary 

Wiggins.

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