Federal ‘purchase cards’ abused

WASHINGTON – Federal employees used government credit cards to pay for lingerie, gambling, iPods, Internet dating services, and a $13,000 steak-and-liquor dinner, according to a new audit from the Government Accountability Office, which found widespread abuses in a purchasing program meant to improve bureaucratic efficiency.

The study, released Tuesday by Senate lawmakers, found that nearly half the “purchase card” transactions 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 GAO also found that agencies could not account for nearly $2 million worth of items identified in the audit.

Sen. Norm Coleman, R-Minn., who requested the study along with Sen. Carl Levin, D-Mich., said money “intended to pay for critical infrastructure, education and homeland security is instead being spent on iPods, lingerie and socializing.”

“Too many government employees have viewed purchase cards as their personal line of credit,” Coleman said. “It’s time to cut up their cards and start over.”

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, for items ranging from pencils to computers to utility trucks.

Purchase cards, used by about 300,000 government employees in 2007, are essentially the federal government’s equivalent of corporate credit cards. Issued by five major banks, they are primarily for transactions under $2,500 but can be used for larger contract payments. All transactions are supposed to comport with federal purchasing guidelines, including proper authorization and documentation.

The report singles out incidents for special criticism as either “abusive,” “improper” or “fraudulent.”

In the fraudulent category, a longtime employee of the U.S. Forest Service in Oregon, Debra Durfey, wrote convenience checks worth more than $640,000 from 2000 to 2006 to a live-in boyfriend, who used the money for gambling, car expenses and mortgage payments, according to the GAO and the Justice Department.

The fraud went undetected until a whistleblower forwarded a tip to the Agriculture Department’s inspector general. Durfey, who headed her unit’s purchasing office, pleaded guilty last year and was sentenced to 21 months in prison and restitution.

In a case the GAO deemed “abusive,” the Postal Service spent $13,500 in 2006 on a dinner at a Ruth’s Chris Steak House in Orlando, Fla., including “over 200 appetizers and over $3,000 of alcohol, including more than 40 bottles of wine costing more than $50 each and brand-name liquor such as Courvoisier, Belvedere and Johnny Walker Gold.” The tab came to more than $160 a head for the 81 guests, the report said.

Postal Service spokesman Gerry McKiernan said the dinner was held to entertain large postal customers who were already in Florida for another conference, and actually saved money because it combined four events into one.

In another case at the State Department, a cardholder spent $360 at the Seduccion Boutique in Ecuador to buy “women’s underwear/lingerie for use during jungle training by trainees of a drug enforcement program.” The report does not include further details but says a State Department official “agreed that the charge was questionable.”