Statement of The Honorable Linda M. Springer
Controller, Office of Federal Financial Management
Office of Management and Budget
Committee on Governmental Affairs
United States Senate
April 28, 2004
Thank you for allowing me the opportunity to provide written testimony for
the record for the hearing before the Senate Committee on Governmental Affairs
on the issue of the government-wide management of purchase cards.
Improving agency performance of purchase card programs is an important component
of the Administration's efforts to strengthen overall financial management
in the executive branch and to eliminate improper payments of all kinds
throughout the government. The Office of Management and Budget (OMB) is
pleased that your Committee is taking the time to evaluate the governments
purchase card programs.
I would first like to provide some history on this issue, as well as clarify
the relevant roles and responsibilities of the specific offices at OMB that
oversee efforts to improve the management of purchase card programs.
In April of 2002, then OMB Director Mitchell Daniels issued a memorandum
to executive agencies in which he expressed concern about agency purchase
and travel card programs. This memo also directed agencies to submit to
Office of Federal Procurement Policy (OFPP) reports on how they planned
to manage risk using internal controls. Shortly thereafter, OFPP established
an interagency task force to explore problems and identify best practices
in the purchase card program. In October of 2002, Director Daniels issued
a second memorandum that shared several of these best practices and established
a quarterly reporting requirement to ensure continued and consistent monitoring
of the purchase card programs.
In the past, OFPP has generally been responsible for all aspects of agency
purchase card management and performance. Last year, however, the decision
was made by the OMB Deputy Director for Management to shift some of the
purchase card oversight responsibility to the Office of Federal Financial
Management (OFFM). This decision was based in part on OFFMs ownership
role of the Presidents Management Agenda (PMA) initiative to improve
financial management and its responsibility to oversee efforts to eliminate
agency improper payments, such as delinquent payments, misuse and fraud.
OFPP oversees Federal acquisition efforts and sets policies and procedures
to ensure that agencies enter into fair and reasonable contracts that are
in the best interest of the taxpayer. OFPP works with the General Services
Administration (GSA) the agency responsible for the operations and
contract management of the purchase, travel, and fleet card programs
and other agencies to ensure that purchase card programs reflect sound and
efficient business practices, such as implementing appropriate strategic
OFFM is now responsible for evaluating agency efforts to carry out purchase
card activity in an efficient manner, so that fraudulent and inappropriate
purchases are avoided and bills are paid on time. As part of this oversight,
OFFM oversees the collection of the quarterly reports from Federal agencies.
Since the purchase card reporting requirement began in January of 2003,
the following improvements have been demonstrated:
As we analyze these reports, we are working with agencies
to ensure that effective internal controls and process improvements are
implemented to manage purchase card programs.
In my role as OMB Controller, I meet frequently with agency
Chief Financial Officers (CFOs) and Inspectors General (IGs) to discuss
strategies for strengthening purchase card controls and overall management.
As a result of these discussions, additional best practices among agencies
have been brought to our attention. For example, some agencies have established
automated processes in which an email is generated and distributed to
an approving official when a purchase card is used for a purchase. Other
agencies also use an automated reconciliation processes to ensure each
transaction is valid before the approving official reviews statements
for payments. Through the CFO Council and other relevant venues, OFFM
has begun working to develop strategies to expand the implementation of
these and other best practices government-wide.
We have also begun evaluating a government-wide approach
to ensure that Federal employees that pose a credit risk are either not
issued cards or are issued cards with significant restrictions and/or
additional controls. As you know, Section 638 of the 2004 Omnibus Appropriations
Act requires Federal agencies to conduct an assessment of an employees
creditworthiness before issuing that employee a travel or
purchase card. In order to carry out this provision, OMB has convened
an interagency task force and is in the process of reviewing a variety
of options for implementation. It is our goal to develop a cost-effective
approach that can be fairly and uniformly applied across the government.
OMB appreciated the opportunity to respond to a draft
of the General Accounting Office (GAO) report entitled Contract
Management: Agencies Can Achieve Significant Savings on Purchase Card
Buys. OMB representatives from OFPP, OFFM, and the Office of General
Counsel provided input to GAO throughout the process regarding ongoing
efforts to monitor the purchase and travel card programs through the quarterly
In addition to participating in information-gathering
conference calls with GAO in December of 2003, OMB provided oral comments
to GAO at the end of January of 2004 on the general recommendation to
use the quarterly reports to capture strategic sourcing information. OMB
agreed that agencies should generally increase their focus on purchase
card pricing issues. However, OMB recommended that agencies not necessarily
be required to submit sourcing information through the quarterly reports.
Rather, we recommend that information on strategic sourcing be collected
and shared using the existing cross-agency forums sponsored by GSA
such as annual purchase, travel, and fleet card conferences, regular roundtable
discussions with agency purchase/travel card managers and agency IGs,
and other existing forums.
We are pleased that GAO included information on the existing
periodic cross-agency forums in its report.
Thank you again for the opportunity to provide a written
statement for the record. We look forward to continuing to work with you
and the other members of the Committee on this important issue.
Ratio of approving officials to purchase cardholders has generally decreased,
thereby improving the span of control.
Number of cards has decreased government-wide.
Rebate amounts have generally increased.