Purchase Cards: Steps Taken to Improve DOD Program Management, but Actions Needed to Address Misuse
Published: 2003-12-02T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.

section_title: Letter
paragraphs: 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 testimonies and reports 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 report  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.
subsections: section_title: Background of the Purchase Card Program
paragraphs: 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.
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.
subsections: section_title: Our Previous Findings on DOD’s Purchase Card Program
paragraphs: 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.
subsections: section_title: Proliferation of Cardholders
paragraphs: 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.
section_title: Inadequate Training of Cardholders and Approving Officials
paragraphs: 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.
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.
section_title: Inadequate Purchase Card Program Monitoring
paragraphs: 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.
section_title: Lack of Disciplinary Actions
paragraphs: 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.
section_title: Legislative Requirements for Improvements in the DOD Purchase Card Program
paragraphs: 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.
section_title: DOD Has Taken Actions to Implement the Requirements of Public Laws 107-314 and 107-248
paragraphs: 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.
subsections: section_title: Limit the Number of Purchase Cards Issued
paragraphs: 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.
section_title: Train Cardholders and Approving Officials
paragraphs: 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, self- paced 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.
section_title: Monitor Purchase Card Program
paragraphs: 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 report summarizing the results of in- depth 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  Member of the House Committee on Government Reform, Subcommittee  on Government Efficiency, Financial Management and Intergovernmental  Relations.
section_title: Disciplining Cardholders
paragraphs: 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.
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.
section_title: Credit Worthiness
paragraphs: 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.
section_title: Status of Our Recommendations to Improve Purchase Card Operations
paragraphs: 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.
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  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.
subsections: section_title: Limited Disciplinary Actions Taken
paragraphs: 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  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.
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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendations for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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  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.
section_title: Objectives, Scope, and Methodology
paragraphs: 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  Management Office, which are reprinted in appendix V.  We have  incorporated suggested changes as appropriate.
section_title: Status of Army Actions to Implement GAO Recommendations
paragraphs: 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:  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.
Identified in Army SOP Section 15. leaves the Army, is reassigned, or no  longer has a valid need for the card. 3.  Span of control of the approving officials.
Identified in Army SOP Section 5.
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.
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.
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.
Identified in Army SOP Section 9. oversight system for program coordinators  that includes standard activities and  analytical tools to be used in evaluating  program results.
GAO observation on the  status of recommendation 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.
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.
Identified in SOP Sections 12 and 18.
Identified in SOP 13.
12.  Independent review by an approving official  of the cardholder’s monthly statements and  supporting documentation.
Identified in SOP Section 11.
Identified in SOP Section 11. 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 12. invoices that support their purchases and  provide the basis for reconciling cardholder  statements.
Identified in SOP Appendix E. 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 Section 19. 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 SOP Section 8. implementation of coordination and  reporting procedures to help ensure that  accountable property bought with the  purchase card is brought under appropriate  control.
Identified in SOP Section 18 and Appendix D. 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. 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.
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.
GAO observation on the  status of recommendation 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 data- mining 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.
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.
section_title: Status of Navy Actions to Implement GAO Recommendations
paragraphs: Purchase Cards:  Control Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse (GAO-02-32, Nov. 30, 2001) 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.
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.
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.
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.
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.
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.
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.
GAO observation on the  status of  recommendation 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.
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.
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.
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.
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.
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.
GAO observation on the  status of  recommendation 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.
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.
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.
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.
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.
GAO observation on the  status of  recommendation 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.
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.
All compromised accounts are closed. compromised purchase card accounts. 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.
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. documented justifications and procurement  management approval for types of items that can  be acquired with a government purchase card.
GAO observation on the  status of  recommendation 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.
GAO observation on the  status of  recommendation 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.
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.
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.
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.
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.
GAO observation on the  status of  recommendation Purchase Cards:  Navy Is Vulnerable to Fraud and Abuse but Is Taking Action to Resolve Control Weaknesses (GAO-02-1041, Sept. 27,  2002)
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. 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.   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 e- mail 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. 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.
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. approving official’s overall workload and  determine whether the approving official has the  time necessary to perform the required review  functions.
GAO observation on the  status of  recommendation 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.
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).
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 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 Navy- wide contracts should be established.
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.
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.
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.
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.
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.
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.
GAO observation on the  status of  recommendation 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.
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.
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.
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.
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.
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.
section_title: Status of Air Force Actions to Implement GAO Recommendations
paragraphs: 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.
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 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.
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.
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.
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.
GAO observation on the status of  recommendation 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.
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. 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.
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.
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.
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.
GAO observation on the status of  recommendation 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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
Anticipate publication of revised AFI in March  2004.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
GAO observation on the status of  recommendation 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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
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. compliance with requirements in the law  that DOD purchase card policies and  procedures require reconciliation of  purchase card statements prior to  payment.
GAO observation on the status of  recommendation 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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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. 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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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. documentation of timely and independent  receiving and acceptance of items  obtained with a purchase card.
Anticipate publication of revised AFI in March  2004.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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. purchase card statements associated  with accounts that were “shut down”  (suspended) in July 2002 due to lack of  cardholder reconciliation and approving  official review.
GAO observation on the status of  recommendation 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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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. 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.
GAO observation on the status of  recommendation 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.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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. recording all pilferable and sensitive  property, including digital cameras, palm  pilots, and cell phones, in installation-  accountable property records. At a  minimum, require installations to follow  DOD policies and procedures on  accountable property.
Anticipate publication of revised AFI in March  2004.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
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. 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. 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.
Anticipate publication of revised AFI in Mar 04. purchase card and revoke purchase  cards issued to organizations that do not  have authority to participate in the  governmentwide purchase card program.
Reported partially implemented  pending March 2004 issuance of  revised Air Force Instruction 64-117.
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.
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.
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.
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.
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. officials to reimburse the government for  any unauthorized or erroneous purchase  card transactions that were not disputed.
GAO observation on the status of  recommendation 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.
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.
section_title: Comments from the Department of Defense
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: Staff making key contributions to this report were Francine DelVecchio,  Gail Luna, Jerrod O’Nelio, Harold Reich, John Ryan, Quan Thai, and Gary  Wiggins.
section_title: GAO’s Mission
paragraphs: The General Accounting Office, the audit, evaluation and investigative arm of  Congress, exists to support Congress in meeting its constitutional responsibilities  and to help improve the performance and accountability of the federal government  for the American people. GAO examines the use of public funds; evaluates federal  programs and policies; and provides analyses, recommendations, and other  assistance to help Congress make informed oversight, policy, and funding  decisions. GAO’s commitment to good government is reflected in its core values of  accountability, integrity, and reliability.
section_title: Obtaining Copies of GAO Reports and Testimony
paragraphs: The fastest and easiest way to obtain copies of GAO documents at no cost is  through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full- text files of current reports and testimony and an expanding archive of older  products. The Web site features a search engine to help you locate documents  using key words and phrases. You can print these documents in their entirety,  including charts and other graphics.
Each day, GAO issues a list of newly released reports, testimony, and  correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site  daily. The list contains links to the full-text document files. To have GAO e-mail this  list to you every afternoon, go to www.gao.gov and select “Subscribe to   e-mail alerts” under the “Order GAO Products” heading.
subsections: section_title: Order by Mail or Phone
section_title: To Report Fraud, Waste, and Abuse in Federal Programs
section_title: Public Affairs