PRESS RELEASE

Government Purchase Card Oversight: Open Acquisition System (OAS)

The U.S. Environmental Protection Agency, Office of Inspector General released a report titled Ineffective Oversight of Purchase Cards Results in Inappropriate Purchases at EPA (Report No. 14-P-0128, of March 4, 2014.)

The impact of this report has led to a number of articles on abusive use of Pcards, a subject also highlighted in a House hearing this month.

The significance of the report resides in two facts:

  1. 50% of the transactions sampled were prohibited, improper, or erroneous.
  2. An average of 2 internal control issues occurred on 96% of the transactions sampled.

While audits tend to seek out high risk transactions, the 50% misuse rate and the widespread violations of internal control policy are significant issues. They demonstrate poor adherence to the provisions and intent of the Government Charge Card Abuse Act of 2012, which was created specifically to bolster Pcard controls.

 

A Daunting Task

With about 3.5 million SmartPay charge card accounts representing $29.2 billion in purchases in 2012 for GSA cards alone, the 50% OIG misuse rate raises serious concerns. And the OIG study is not alone in its estimates. A 2008 audit report by the GAO found that 41% of the credit card transactions it examined did not observe government purchasing rules, and 48% of the transactions over $2,500 violated federal rules.

Pcard misuse has been around since Pcards were created and the problem hasn’t gone away. In fact, if you explore the Internet to find incidents of card abuse you will notice a pattern of audits and related articles that appear as periodic crusades. But periodic surges in interest are not effective. The government has put policies and laws in place. They need to be followed and enforced on a consistent basis. What is needed is effective oversight.

Fortunately, there is a tool to help provide that oversight- the Open Acquisition System (OAS).

 

OAS and Oversight

Figure 1 shows the internal control issues noted in the OIG report, paired with OAS functionality that addresses these issues. As can be seen in this comparison, OAS addresses most items very well. In addition, OAS’ flexibility enables easier customization of new solutions on a customer by customer basis.

Figure 1

 

Reports on Pcard purchases are run in OAS in real time to enable immediate validation and reconciliation of all transactions. Comprehensive WorkFlows enable customized approvals that match organizational policies. Detailed records are kept of all actions, approvals, supporting paperwork, comments, funding, and more- a complete electronic audit file on every Pcard purchase- and all in one place.

 

What's at Stake

The government purchase card program was created over 30 years ago to streamline the federal acquisition processes by providing a low-cost, efficient vehicle for obtaining goods and services directly from vendors. This means doing things faster, easier, and at lower cost.

Every time a report surfaces about someone obtaining a $58K BMW on lease, or a group of Pcard users who purchased home theater systems for personal use, it undermines the public’s confidence and engages negative stereotypes of government workers.

What is worse is that of all the types of fraud and waste, Pcard misuse should be one of the easiest to identify and stop. With existing Pcard processes and policies in place, it takes the collusion of dishonest individuals and lax oversight to succeed. If we can address the lax oversight, losses will be minimized, worker honesty vindicated, and public confidence restored.