Legislative Requirements for Improvements in the DOD Purchase Card Program

In response to the concerns we expressed about DOD’s management of the  purchase card program, the Congress included Section 1007 in the National  Defense Authorization Act for fiscal year 2003 (Public Law 107-314) and  Section 8149 in the fiscal year 2003 DOD Appropriations Act (Public Law  107-248) to require DOD to take specific actions to improve the  management of the purchase card program, and in particular the  weaknesses we identified. The report identified 182 cardholders who potentially used  their purchase cards inappropriately or fraudulently. 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. Objectives, Scope, and Methodology

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. 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. GAO observation on the  status of recommendation 21. DOD is seeking  additional legislative action required to implement  credit checks. compromised purchase card accounts. 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.
Why GAO Did This Study

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.

What GAO Found

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.