The Breakdown of the United States Government Purchase Card Program and Proposals for Reform

20 Pages Posted: 6 Nov 2012

See all articles by Jessica Tillipman

Jessica Tillipman

George Washington University - Law School

Date Written: 2003

Abstract

The Government Purchase Card Program introduced purchase cards to streamline the acquisition of items and services under $2,500. Purchase cards have proved to be extremely efficient, with some estimates putting the savings for the Government at $75 per transaction. Unfortunately, the Government has failed to maintain effective controls over cardholders and this has led to systemic abuse, preventing the Government from realizing the full potential of the purchase card program.

There are three main problems with the current scheme. First, cardholders are ignoring internal controls, resulting in purchases that supervisors cannot verify as consistent with procurement regulations. Second, the proliferation of cardholders has also led to a lack of control. In some agencies, one out of every four employees carries a purchase card, making it difficult to accurately supervise spending. Finally, cardholders do not receive enough training before being authorized to spend taxpayer money.

This paper recommends a thorough overhaul of the purchase card program. The GAO has recommended several initiatives, including; pre-approval of purchase card transactions; establishment of documentation requirements; and a reduction in the number of cardholders. In addition to adopting these recommendations, the Government must improve its relationships with financial institutions and take advantage of the data-mining software those institutions have available. The Government should also learn from the private sector by implementing a policy of stringent oversight, to include daily and monthly spending limits; blocks on specific categories of expenditure; and “24/7 monitoring” of spending. These improvements would allow the Government to truly benefit from this efficient method of procurement.

Keywords: procurement, federal agencies, purchase card, fraud, government credit card, abuse, waste, government contracts, internal controls, Government procurement, micropurchase

JEL Classification: H57

Suggested Citation

Tillipman, Jessica, The Breakdown of the United States Government Purchase Card Program and Proposals for Reform (2003). 12 Public Procurement Law Review 229 (2003), GWU Legal Studies Research Paper No. 2012-116, GWU Law School Public Law Research Paper No. 2012-116, Available at SSRN: https://ssrn.com/abstract=2171388

Jessica Tillipman (Contact Author)

George Washington University - Law School ( email )

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