meet a variety of government needs. If properly used, purchase cards can also help to fulfill other objectives, such as providing opportunities for small, disadvantaged businesses.2 The Federal Acquisition Regulation (FAR) designates the purchase card as the preferred method for making micropurchases.3 At the time of our audit, a micropurchase was defined as any purchase under $2,500.4 In addition to making micropurchases, government purchase cards may also be used to make payments under established contracts. According to the General Services Administration (GSA), the purchase card program had substantially improved procurement efficiencies, which resulted in about $1.8 billion in annual savings, as compared to prior paper-based procurement processes. GSA also asserted that in fiscal year 2007, the five credit card banks provided government agencies with refunds exceeding $170 million5 from card activity.
The purchase card program had brought substantial cost reduction to the federal procurement process. However, since calendar year 2001, we have testified and reported on the purchase card programs at a number of agencies, which demonstrated that if not properly managed and controlled, use of the purchase card results in fraud, waste, and abuse (see app. I for previous GAO reports). For example, in September 2006, we reported that weaknesses in the Department of Homeland Security’s (DHS) purchase card program resulted in over 100 lost (and presumed stolen) laptop computers; unauthorized acquisition and excessive cost related to the purchase of 20 flat-bottom boats, 12 of which were missing; and thousands of meals ready-to-eat stored in a warehouse in El Paso, Texas, more than 7 months after they were purchased for DHS employees assisting with the response to hurricanes Katrina and Rita.6
2Other objectives of the simplified acquisition procedures include promoting efficiency and economy and avoiding unnecessary burden.
3See 48 C.F.R. § 13.201.
4Micropurchase means an acquisition of supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the micropurchase threshold except for construction or in other specific instances. The threshold subsequently was increased on September 28, 2006, to $3,000.
5The total amount of refunds obtained from the five credit card banks was not audited.
6GAO and Department of Homeland Security, Office of the Inspector General, Purchase Cards: Control Weaknesses Leave DHS Highly Vulnerable to Fraudulent, Improper, and Abusive Activity, GAO-06-1117 (Washington, D.C.: Sept. 28, 2006).
GAO-08-333 Governmentwide Purchase Cards