Credit Card Abuse Costs Federal Government Plenty

The Federal Executive branch employs a great deal of people. They travel a great deal as well. A reform from several years ago was to issue credit cards for travel to these employees similar to what many large companies do.

The Associated Press writes about a report by the Congressional Research Service (CRS) on abuse of travel credit cards by Federal employees. The misuse of the cards extend not just to buying airline tickets or travel costs there were not used or appropriate, but using them for non-travel related costs. In one of the worst cases a Federal Aviation Administration (FAA) employee used theirs for laser eye surgery.

Some of these cases are abuses and some is just poor administration. The Department of Defense for example buys a great deal of airline tickets that were not used. The department failed to get the refunds or credits they are due. The Defense Department has over three million employees most of whom have such cards. With such a large number of cards and transactions being made it is not surprising that some fraud and misuse or problems occur, but in this day and age of budget deficits every dollar counts and needs to be spent properly.

The Project on Government Oversight (POGO) also has done research that shows many of the Federal agencies are delinquent in paying their bills on time. In cases where the agency was responsible for paying the bill compared to the individual employee the rate was almost three times as much — 19.2 percent compared to 6.25. This lateness cost money in interest as well as lost rebates. “Under the terms of their travel card contracts, agencies can receive rebates based on the dollar volume of their charge card transactions and payment performance. Typically, the more users spend, and the quicker agencies and individual cardholders make their payments, the greater the rebates.” according to POGO. These rebates are valuable income to the Federal government as well.

The problems with travel administration in the past has led the Department of Defense to automate it as much as possible rather then hand carrying and processing forms. The current system used to do this is the Defense Travel System (DTS). This is a web based system and has been used for a few years. An example of its size and cost may be found by the fact that the U.S. Navy just awarded Immersion Consulting Group a three year $3.3 million contract to assist in improving the system. This contract is just to improve the Navy’s usage and functionality which means the other services, Agencies and commands that make up DOD might have their own contract.

Anytime a large group of people is entrusted with other persons money to spend you will see abuses. It is up to some system of review, audit and administration to prevent this. Based on the POGO and CRS reports DOD and the other Executive Branch departments have a way to go.