GAO: Federal employees misused millions

WASHINGTON — Federal employees charged millions of dollars on government credit cards to pay for lingerie, gambling, iPods, Internet dating services and a $13,000 steak dinner, according to a new audit from the Government Accountability Office (GAO).

The study, released Tuesday by Senate lawmakers, found that nearly half the "purchase card" transactions over the 15-month period it examined were improper, either because they were not authorized correctly or did not meet requirements for the cards' use. The overall rate of problems "is unacceptably high," the audit found.

The review found that nearly 41 percent of roughly $14 billion in credit-card purchases, whether legitimate or questionable, did not follow procedure.

For purchases of more than $2,500, nearly half — or 48 percent — were unauthorized or improperly received.

Out of a sample of purchases totaling $2.7 million, the government could not account for hundreds of laptops, iPods and digital cameras worth more than $1.8 million. In one case, the U.S. Army could not say what happened to computer items making up 16 server configurations, each of which cost nearly $100,000.

Agencies often could not justify questionable purchases. Investigators also found that federal employees sometimes double-billed or improperly expensed lavish meals and Internet dating for many months without question from supervisors; the charges were often noticed only after auditors or whistle-blowers raised questions.

The audit is the culmination of a series of GAO reports over the past decade that have uncovered improper use of government-issued purchase cards at agencies, including the Defense Department and the Department of Homeland Security. Government employees spent nearly $20 billion last year using "SmartPay" cards and related convenience checks.

Purchase cards, used by about 300,000 government employees in 2007, are essentially the federal government's equivalent of corporate credit cards. They are primarily for transactions less than $2,500 but can be used for larger contract payments. All transactions are supposed to comport with federal purchasing guidelines, including authorization and documentation.

The report calls for the General Services Administration (GSA) and Office of Management and Budget (OMB), both of which help administer the government's credit-card program, to set guidance to improve accounting for purchased items.

OMB and GSA were also urged to tighten controls over convenience checks, which are a part of the credit-card program, and to remind federal employees that they will be held responsible for any items if the purchases are later deemed improper.

In response, both OMB and GSA agreed with portions of the report. But GSA administrator Lurita Doan noted the vast majority of federal employees use their cards properly and many oversight measures already are in place. She acknowledged there is room for improvement but added that by using purchase cards the federal government saves about $1.8 billion in administrative costs each year.

"We agree that no level of abuse or misuse is acceptable," Doan wrote.