Objective:
Our objective was to determine whether the DoD’s purchase card and travel card reporting on fraud, waste, abuse, and misuse was complete and accurate. Specifically, we reviewed the DoD’s FYs 2015 and 2016 quarterly statistical travel card reports, quarterly statistical purchase card reports, and semiannual violation purchase card reports that the DoD submitted to the Office of Management and Budget (OMB). Additionally, Title 10 United States Code § 2784 requires the DoD Office of Inspector General (OIG) to conduct periodic audits and review of the purchase card program.
During the audit, OMB guidance changed on June 15, 2017, to no longer require that agencies submit quarterly reports on travel and purchase card misuse or delinquencies. OMB still required the department to continue to maintain statistical, narrative, and violation information for DoD use. Even though reporting to OMB is no longer required, collecting and maintaining accurate information on misuse and delinquencies is valuable data for DoD decision makers to use to effectively manage the travel and purchase card programs.
During the audit the previous Director, DPAP, was nominated to a new post. The current Director performs two roles and is now Director, Defense Pricing (DP)/Defense Procurement and Acquisition Policy (DPAP). This report discussed both the previous Director, DPAP, for meetings and actions taken during the audit and the Director, DP/DPAP for recommendations, responses, and planned actions.
Background:
OMB reporting requirements use the word misuse as a broad term that includes various categories of improper transactions such as fraud, waste, abuse, personal use, other loss, and misappropriation of funds or assets. As a result, we use the word misuse throughout this report as a general term when referring to improper charge card transactions.
This audit is the third report the DoD OIG has produced regarding travel card misuse. The first report focused on identification of improper travel card use and the second focused on the DoD’s response to the improper use identified in the first report. This audit focuses on purchase card and travel card reports that the DoD was required to submit to OMB.
Findings:
We determined that the DoD provided incomplete and inaccurate charge card information to OMB during FYs 2015 and 2016. Specifically, we found that DPAP officials reported inaccurate, incomplete, and unsupported quarterly and semiannual purchase card information to OMB. For example, on the semiannual violations report to OMB, for the second half of FY 2015, the Military Services sent 1,043 misuse transactions to DPAP to be reported; however, DPAP only reported 47 to OMB. In addition, during FYs 2015 and 2016, quarterly statistical reports provided to OMB were incomplete because they did not include over 51,000 delinquencies in purchase card payments, as required by OMB. This occurred because DPAP personnel did not provide sufficient oversight of the purchase card program or its supporting functions. Specifically, DPAP did not:
- implement the processes or procedures necessary to compile accurate, complete, or supported reports to OMB;
- provide effective oversight of the subordinate purchase card program managers for the Army, Air Force, and Defense agencies; or
- evaluate whether the Purchase Card On-line System (PCOLS) was suitable to oversee the purchase card program.
As a result, DPAP and purchase card officials within the DoD purchase card program, which spent $10 Billion during the two years we reviewed, will be unable to identify patterns of improper transactions, opportunities to improve the program’s efficiencies, or areas where program reviewers should focus their emphasis until DPAP corrects these problems.
In addition, we found that Defense Travel Management Office (DTMO) officials significantly underreported to OMB the number of administrative or disciplinary actions taken for travel card misuse, including delinquencies. Specifically, for FYs 2015 and 2016, DTMO reported only 139 cases of “administrative and/or disciplinary actions.” However, we determined that DTMO should have reported at least 263,160 actions for the 2-year period. This significant underreporting occurred because the DTMO used only one incomplete source, the Defense Civilian Personnel Data System, to report on travel card misuse, did not implement a tool that tracks misuse, and did not report delinquency data. Because of the underreporting, DTMO officials and Component program managers (CPMs) were unable to establish a reliable baseline of misuse, implement sufficient management controls to prevent misuse, or increase reviewer emphasis on key areas of misuse and delinquencies in the travel card program.
Corrective Actions Taken:
During this audit, DoD officials took actions to correct and improve their reporting to OMB. Specifically, the previous Director, DPAP, issued guidance on the reporting process and clarified definitions. Based on OMB guidance, DPAP revised its policy to state that the purchase card program will continue to maintain statistical, narrative, and violation information for DoD use, but will no longer submit the information to OMB.
In addition, DTMO officials took actions to correct and improve their reporting to OMB. Specifically, starting with second quarter FY 2017 reporting, DTMO included delinquencies and misuse identified using Visa IntelliLink; it also updated guidance to require reporting of all misuse to DTMO. In addition, DTMO is working with travel card management personnel to develop a process for receiving the results of each agency program coordinator review.
Recommendations:
We recommend that the Director, DP/DPAP:
- Obtain, review, and oversee transaction level details for misuse to improve reporting; and
- Complete an evaluation of the costs and benefit of PCOLS.
We recommend that the Director, DTMO, revise the Government Travel Charge Card Regulations to require CPMs and designated agency program coordinators to use available contractual tools, to include the Visa IntelliLink rules, queries, and case disposition modules.
Management Comments and Our Response:
The Director, DP/DPAP, did not meet the intent of Recommendation A.1.c to conduct monthly statistically valid samples of reviewed transactions to determine whether accurate conclusions were made on the validity of the transactions and its compliance with applicable criteria. Therefore, this recommendation remains unresolved. The recommendation was designed to provide assurance that transaction reviewers made accurate conclusions on the validity of the transactions flagged in PCOLS and the transaction compliance with applicable criteria. However, the DPAP response focuses on the effectiveness of the data mining system’s business rules in producing the desired result, rather than on the accuracy of conclusions made by lower level reviewers on flagged transactions. Therefore, we request that the Director, DP/DPAP, provide the detailed corrective actions that will be taken to conduct statistically valid samples of reviewed transactions to determine whether accurate conclusions were made on the validity of the transaction and its compliance with applicable criteria.
The Director, DP/DPAP, agreed with all other recommendations which we consider resolved but remain open. We will close these recommendations once we verify that the agreed upon corrective actions were completed.
The Director, DTMO, agreed with our recommendation to revise the Government Travel Charge Card Regulations to require Component program managers and designated agency program coordinators to use all available contractual tools to assist in the reviews of monthly travel card activity for misuse. Therefore, the recommendation is resolved but remains open. We will close the recommendation upon receipt of the updated regulations, memorandum, and verification of the implementation of the IntelliLink analytics Module.
The Director, DTMO, stated that a tool was available to track delinquent accounts and acknowledged that not reporting on those delinquencies was a result of misinterpreting the reporting requirements, As a result we have clarified in the final report that DTMO did not develop or implement a tool that tracks misuse, and that delinquencies were not reported to clarify the condition.