Using Government Credit Cards: New Problems or New Opportunities?

There is a new credit limit for some government charge cards.

Government charge cards have created problems at numerous federal agencies. The GAO or agency Inspectors General have had a field day looking for a finding waste, fraud and abuse in federal agencies on the issue.

In fact, for awhile it seemed like all any agency Inspector General or the GAO had to do in order to find waste, fraud and abuse was to check out the internal controls and spending by federal employees on government credit cards program.

Some of the more interesting items charged by federal employees on the government plastic included:

  • visits to a tattoo parlor,
  • a subscription to NFL games on television,
  • an aquarium,
  • purchases of “exotic” clothing, and
  • various visits to pornographic internet sites or the purchase of pornographic movies.

In short, probably most of the various human failings that have always been with us seemed to show up on the government cards at one time or another.

So why bring this up now? Congress has seen fit to increase the credit limit on some charge cards to a maximum of $250,000–from what was a typical limit of $2500. The new limit is part of the hurricane recovery money approved to alleviate the devastation done by Hurricane Katrina.

Or, depending on the viewpoint of the reader, it may be a new opportunity to take advantage of the government charge card system.

Some readers see the problems involving the purchase of charge cards in different ways. Here are a few of the comments on this issue that have popped up in the past.

  • An IT specialist with the Air Force wrote: “When you force people to get credit cards who don’t know how to use them, you can expect this type of stupidity.”
  • A budget analyst with DoD said: “[N]o one is accountable, until someone is held accountable, this abuse will continue.”
  • A contract specialist with HHS said: “…I will not lose sleep, develop ulcers or otherwise spin myself into a tizzy over this. Why? Because this is US Federal Government business as usual….”
  • A contract specialist with the Navy wrote: “So, if I am correct, the VA has a 99% success record on credit card purchases and less than 1% on fraud. Those wasteful, wasteful people.”

Of course, a number of readers had other views. This IT manager for DOD spoke for several readers when he proposed this solution to the problem: “If you intentionally misuse a government credit card, you’re fired on first offense.”

And one reader took offense at our article on “Where’s the Outrage” when discussing problems with charge cards at the Department of Agriculture. He said, in effect, that USDA was no worse than other agencies and “If you’re going to go off at Ag, let’s give other agencies the same treatment, please.”

The reader is right–the Department of Agriculture is probably no worse than other agencies–it was just that when we wrote the article, the kiting scheme scenario was unusual in that we usually think of these schedmes with regard to organized crime rather than federal civil service employees so it seemed newsworthy.

When Senator Charles Grassley, Chairman of the Senate Finance Committee, learned about the new credit limit, he expressed his outrage and noted that someone had “slipped” the requirement into the bill. He says he is going to try and reduce the new limit to $50,000.

GAO has been singing the blues about charge cards and their misuse in agencies for a few years. Perhaps the problem has gotten better and Congress decided the problem was under control so it was okay to dramatically increase the limit on some cards.

For those who have been around government for some time though, that probababiity does not seem very likely. In fact, just last month, the Office of Management and Budget issued new guidance and told agencies what they needed to do in order to improve the management of this program–presumably because of the problems agencies were having with controlling the program.

The money involved in this program is substantial. According to George Washington University Law Professor Steven Schooner, the government had more than $16 billion in charge card purchases in 2003–more than 26 million purchase card transactions. And that was before the limit was raised to its new limits.

The government charge card program is a good idea. The readers who say the abuse is only a small percentage of government money are no doubt correct. But a small percentage of billions and trillions of dollars is a tremendous amount of money. The temptation for abuse for some people will be overwhelming.

Here is my prediction: There will be abuse of the new credit card limit. There won’t be large numbers of federal emplyees abusing the system but there will be enough to cause an outcry months or years down the road. The politicians and the investigative machinery will come looking for the miscreants and they will find some of them and there is a good chance that a few will be shuffled out as an example of how government is working to get rid of the crooks.

Federal employees are probably more ethical than the majority of the American public. But there are lots of federal employees and some of them want or need more money. Promises by OMB that the internal controls of agencies will work when they implement the new OMB guidance don’t ring true. There will be plenty of abuse. It will just take awhile for government to find it.

If you have a government credit card, use it wisely and be sure you are authorized to make the purchases you are going to buy. Use the new credit limit sparingly and the uses for which it was intended. This recent increase in the credit card limit has gotten a lot publicity and there will be people and organizations looking for the problems–just to shift the blame away from Congress or the administration if for no other reason.

On the other hand, if you were one of those previously using a government charge card at tattoo parlors, strip joints, or to watch pornographic movies, this may be a new opportunity. The French Quarter of New Orleans will be opening again in a few days and some of the folks running those businesses there will probably open up quickly and will want your help in rebuilding the entrepreneurial spirit in this aspect of the New Orleans culture. Just keep looking over your shoulder for your agency’s Inspector General if you use your charge card to purchase those services.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47