Subcommittee on Oversight and Investigations
Committee on Energy and Commerce
U.S. House of Representatives
Hearing on
Oversight and Management of the Government Purchase Card
Program:
Reviewing Its Weaknesses and Identifying Solutions
May 1, 2002 - 10:00 a.m.
2322 Rayburn House Office Building
Statement of Howard G. Price
Procurement Analyst
U.S. Department of Commerce
Before the
Subcommittee on Oversight and Investigations,
House Committee on Energy and Commerce
May 1, 2002 - 10:00 a.m.
Good
morning Mr. Chairman, Ranking Member Deutsch, and members of the
subcommittee. My name is Howard G. Price
and I currently serve as a Procurement Analyst with the U. S. Department of
Commerce. In August 2000, I was a
Supervisory Contract Specialist in the Department’s Office of Acquisition
Management, Office of Acquisition Services.
I appreciate the opportunity to appear before you today. My testimony is provided as a statement of
the facts related to a case of improper use of a Government purchase card.
In
August 2000, my duties included serving as a purchase card Approving Official
for my employees. As an Approving
Official, I was responsible for ensuring the validity and allowability of
transactions of cardholders for which I was responsible. I received written notification from the
Department’s finance office stating that they had not received the signed
monthly purchase card statement of an employee.
This notification concerned me because I had not assigned any work to
the employee that would require them to use the purchase card. I reviewed the statement and observed that
all charges appeared to be not for official purchases.
I
immediately contracted Mr. Michael Sade, who at that time was acting Director
for the Office of Acquisition Management.
After consultation with Mr. Sade, I took the report to the Department’s
Inspector General for Investigations and discussed how we should handle. I also began discussion with our Office of
Human Resources about their support and guidance related to disciplinary
action. The next day an OIG investigator
interviewed the employee. When
interviewed, the employee confessed to having knowingly made all the listed
purchases for personal reasons and without any legitimate government
purpose. The employee attributed their
actions to personal, financial and legal problems. The same day as the employee’s confession to
investigators, the employee was placed on administrative leave. Because the employee’s position of contract
specialist requires a high level of ethics and integrity, the employee was
subsequently informed that the Government proposed to suspend them indefinitely
from their position and in October 2000, the employee was suspended. These actions were deemed appropriate in
accordance with the provisions of Title 5 of the United States Code, Chapter
75, the implementing regulations at 5 C. F. R. Part 752, and Department
Administrative Order 202-751. The
Department’s Offices of General Counsel and Human Resources provided advice and
counsel throughout this administrative process.
The
Office of Inspector General continued with the investigation while the
Department continued with the administrative process. The Justice Department accepted the case for
criminal investigation. During the investigation,
my office provided information about our procedures for using the government
purchase card(s) and identified the manner that the employee deviated from
proper procedure.
On
December 12, 2000, the employee entered a guilty plea in the U. S. District
Court for the District of Columbia to one count of theft of government
property. As part of a plea agreement,
the employee resigned from federal service on December 12, 2000. The employee was subsequently sentenced to
six months imprisonment, followed by home detention for a further two months,
and a three-year period of supervised probation. Restitution to the Department in the amount
of $46,939.48 was awarded by the court.
This
was an unfortunate situation and the Department has implemented additional
procedures to detect, prevent and manage Government purchase card fraud at the
Department. These procedures are:
1.
To prevent
cardholders from circumventing the requirement for Approving Official statement
review and approval, the Office of the Secretary’s (OS) purchase card Agency
Program Coordinator (APC) has instituted a tailored reporting procedure. This procedure is supported by the purchase
card service provider and the Commerce BankCard Center. All Approving Officials within the OS now
receive monthly “no activity” reports for each of their cardholders. If Approving Officials do not receive card
statements for approval by the 30th of each month, and a “no
activity” report has not been received, it is the Approving Official’s
responsibility to investigate further.
2.
In conjunction
with the “no activity” report, a program was implemented for weekly monitoring
of OS cardholder activity through service provider’s on-line system. Suspicious and/or questionable cardholder
activity is identified by Standard Industrial Classification (SIC) and Merchant
Category Code (MCC) identifiers and purchasing patterns. If transactions are identified as suspicious
or questionable, formal APC inquiries to the cardholder and Approving Official
regarding the transactions are made and resolved accordingly.
Thank you again, Mr. Chairman, for the opportunity to testify before the subcommittee. I would be glad to answer any questions you may have at this time.