SmartPay purchase cards, or P-cards, are government-issued credit cards that are supposed to help agencies reduce costs for the myriad small purchases that are essential to the operation of a typical office. Instead of pens, pencils and steno pads, however, these cards have also been used in recent years to purchase fancy steak-and-cocktail dinners, lingerie, iPods, and even breast implants.
This is an issue that POGO has been following for many years. In April, we wrote about a GAO report that found "unacceptably high" problems with the SmartPay program at several federal agencies. (Those looking for more background on SmartPay should read this July report by the Congressional Research Service, which was brought to our attention by former POGO intern Mike Zhou.)
The latest chapter in the story of SmartPay program abuse is brought to you by Fluor Hanford, prime contractor for the Department of Energy at the Hanford, Washington nuclear reservation, and a business unit of Fluor Corporation, one of the contractors in POGO's Federal Contractor Misconduct Database. Fluor Hanford has announced that it recently fired three employees it believes had misused a P-card at the Hanford site. According to the company, a single card was used to make fraudulent purchases of tools and electronic equipment over the past four years. Fluor Hanford started its own investigation several months ago, and in June notified the DOE Office of Inspector General (DOE-IG), which is conducting a criminal investigation. The company is keeping tight-lipped in light of the pending IG investigation, declining to identify the fired employees or disclose the total value of the improper purchases and the specific items that were purchased (one wonders if "electronic equipment" = iPods).
This isn't the first time a Fluor division working for the DOE has gotten in trouble for its P-card practices. A March 1999 DOE-IG audit of P-card usage at a uranium facility cleanup project in Fernald, Ohio found that Fluor Daniel incurred about $42,000 in unallowed, non-reimbursable charges in fiscal year 1998. According to the IG report, "this occurred because credit cardholders were not provided adequate guidance on items considered unallowable and managers were not consistently monitoring purchases."
Fluor Hanford did not explain what systemic factors led to this most recent incident of abuse, but we have no doubt that the same causes identified in the 1999 audit--inadequate training of card users and lack of oversight by managers--played a role.
-- Neil Gordon
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