S. Rept. 112-37 - 112th Congress (2011-2012)
July 18, 2011, As Reported by the Homeland Security and Governmental Affairs Committee

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Senate Report 112-37 - GOVERNMENT CHARGE CARD ABUSE PREVENTION ACT OF 2011




[Senate Report 112-37]
[From the U.S. Government Printing Office]


112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-37
_______________________________________________________________________

                                     

                                                       Calendar No. 104

 
          GOVERNMENT CHARGE CARD ABUSE PREVENTION ACT OF 2011

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                 S. 300

              TO PREVENT ABUSE OF GOVERNMENT CHARGE CARDS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


                 July 18, 2011.--Ordered to be printed
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
       Beth M. Grossman, Deputy Staff Director and Chief Counsel
                     Troy H. Cribb, Senior Counsel
               Carly A. Steier, Professional Staff Member
               Nicholas A. Rossi, Minority Staff Director
              Molly A. Wilkinson, Minority General Counsel
                  Anne F. Terry, Minority DHS Detailee
                  Trina Driessnack Tyrer, Chief Clerk


                                                       Calendar No. 104
112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-37

======================================================================




          GOVERNMENT CHARGE CARD ABUSE PREVENTION ACT OF 2011

                                _______
                                

                 July 18, 2011.--Ordered to be printed

                                _______
                                

Mr. Lieberman, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 300]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 300) to prevent 
abuse of Government charge cards, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill (as amended) do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................4
 IV. Section-by-Section Analysis......................................4
  V. Evaluation of Regulatory Impact..................................6
 VI. Congressional Budget Office Cost Estimate........................7
VII. Changes to Existing Law Made by the Bill, as Reported............7

                         I. Purpose and Summary

    For more than a decade, federal agencies have issued charge 
cards to many of their employees, enabling those employees to 
charge travel and other job-related expenses, with the 
government ultimately footing the bill. Although the use of 
these charge cards saves the government both time and money 
when compared with the traditional, highly bureaucratic system 
of paper submissions and reimbursements, a small number of 
employees have abused their travel and charge cards, causing 
the government to incur unnecessary and sometimes fraudulent 
expenses. S. 300 would address this problem by requiring 
agencies to, among other things, adopt better internal controls 
over the use of these cards, perform credit checks on potential 
recipients of cards issued for travel purposes, and 
appropriately discipline employees who misuse charge cards.

              II. Background and Need for the Legislation

    Since 1998, federal departments and agencies have utilized 
government charge cards through the General Service 
Administration's (GSA's) SmartPay program. GSA offers two main 
types of charge cards: purchase cards and travel cards. Agency 
employees use purchase cards to buy commercial goods and 
services on behalf of their agencies, and the agencies pay the 
bills for those cards directly to their contractor bank. 
Employees use government travel cards to pay for official 
travel expenses. Depending on the particular card, the bill 
might be sent to the employee, who then pays it and obtains 
reimbursement from his or her agency, or the contractor bank 
bills the government directly.
    Agencies use government charge cards as a low-cost method 
to streamline government acquisition and travel processes. 
According to GSA, it costs nothing for agencies to obtain 
charge card services, but the use of the cards has generated 
more than $1 billion in gross agency rebates over the past 10 
years under contractual provisions requiring the credit card 
companies to pay rebates, also known as refunds, to agencies 
based on amounts charged to the cards.\1\ GSA also estimates 
that agencies avoid an estimated $1.8 billion in agency 
administrative processing costs annually by using charge cards 
instead of paper-based procurement processes.
---------------------------------------------------------------------------
    \1\According to GSA, in fiscal year 2010, agencies made 
approximately 98.9 million transactions and charged $30.2 billion using 
SmartPay charge cards, creating $325.9 million in rebates.
---------------------------------------------------------------------------
    Although the program has been highly successful, it has 
suffered from recurring cases of waste, fraud, and abuse. 
Numerous Government Accountability Office (GAO) reports over 
the last decade have identified inadequate and inconsistent 
controls across federal agencies with respect to both purchase 
and travel cards.\2\ The lack of adequate management has led to 
the waste of millions of dollars in taxpayer money on 
fraudulent, questionable or unnecessarily expensive purchases. 
Additionally, late or non-payment of travel card bills by 
federal employees triggers contractual provisions allowing the 
vendor banks to reduce rebates, causing the government to 
forfeit millions of dollars in lost rebates.\3\
---------------------------------------------------------------------------
    \2\ See, e.g., GAO, Purchase Cards: Control Weaknesses Leave DHS 
Highly Vulnerable to Fraudulent, Improper, and Abusive Activity, GAO-
06-1117 (Washington, D.C.: Sept. 28, 2006); GAO, DoD Travel Cards: 
Control Weaknesses Resulted in Millions of Dollars of Improper 
Payments, GAO 04-576 (Washington, D.C.: June 9, 2004); GAO, Purchase 
Cards: Increased Management Oversight and Control Could Save Hundreds 
of Millions of Dollar, GAO-04-717T (Washington, D.C.: April 28, 2004); 
GAO, Purchase Cards: Steps Taken to Improve DOD Program Management, but 
Actions Needed to Address Misuse. GAO-03-156 (Washington D.C.: Dec. 2, 
2003); GAO, Travel Cards: Internal Control Weaknesses at DoD Led to 
Improper Use of First and Business Class Travel, GAO-04-88 (Washington, 
D.C.: Oct. 24, 2003); GAO, Purchase Cards: Control Weaknesses Leave 
Army Vulnerable to Fraud, Waste, and Abuse, GAO-02-844T (Washington, 
D.C.: July 17, 2002); GAO, Purchase Cards: Control Weaknesses Leave Two 
Navy Units Vulnerable to Fraud and Abuse, GAO-02-32 (Washington, D.C.: 
Nov. 30, 2001).
    \3\For example, in one review, GAO found that the Army collected 
only $635,000 of a possible $3 million in rebates in fiscal year 2001 
due to untimely payment of accounts. GAO, Travel Cards: Control 
Weaknesses Leave Army Vulnerable to Potential Fraud and Abuse, GAO-03-
169 (Washington, D.C.: Oct. 11, 2002) at p. 17.
---------------------------------------------------------------------------
    GAO issued a report in March 2008 entitled, Governmentwide 
Purchase Cards: Actions Needed to Strengthen Internal Controls 
to Reduce Fraudulent, Improper, and Abusive Purchases.\4\ This 
report found that, despite previous GAO reports on this issue 
and new regulations, various government agencies still lacked 
adequate internal controls over government purchase cards, 
leading to waste, fraud, and abuse. Using a statistical sample 
of purchase card transactions, GAO estimated that nearly 41 
percent of the transactions failed to meet basic internal 
control standards, and GAO found numerous instances of 
fraud.\5\ For example, one cardholder used the purchase card 
program to embezzle over $642,000 over a period of six years 
from the Department of Agriculture.\6\ A postmaster at the U.S. 
Postal Service used his government purchase card to 
fraudulently subscribe to two internet dating services from 
April 2004 to October 2006.\7\
---------------------------------------------------------------------------
    \4\GAO-08-333 (Washington D.C.: March 14, 2008).
    \5\Id. It is worth noting that GAO did not assert that 41 percent 
of the charges were improper; rather, the failure to follow internal 
control standards raised the risk to the government of waste, fraud and 
abuse. GAO's investigation was not designed to determine the overall 
extent of fraudulent, improper, or abusive charge card transactions.
    \6\GAO 08-333, supra note 4, at p. 7.
    \7\Id.
---------------------------------------------------------------------------
    The Government Charge Card Abuse Prevention Act is based 
largely on GAO's recommendations for preventing this recurring 
waste, fraud, and abuse. The bill mandates a consistent set of 
core internal controls for every agency to utilize to prevent 
and detect improper use of government charge cards. For 
example, it mandates the use of systems, techniques, and 
technologies to prevent or identify improper purchases. These 
measures could include use of controlling merchant codes to 
prevent a card from being used at a business that does not 
provide goods and services that are appropriate to the function 
for which the card is issued. The measures could also include 
utilizing statistical machine learning and pattern recognition 
technologies that assess the risk of every transaction. 
Commercial credit card issuers currently use these technologies 
to flag purchases that do not fit normal purchasing patterns 
for particular cardholders.
    The Government Charge Card Abuse Prevention Act also 
requires each agency Inspector General to periodically conduct 
risk assessments of agency purchase card and travel card 
programs and perform periodic audits to identify potential 
fraudulent, improper, and abusive use of government charge 
cards. GAO and agency Inspectors General have successfully used 
techniques like data mining to reveal instances of improper use 
of government charge cards. Having this information more 
routinely available would help strengthen and maintain a 
rigorous system of internal controls to prevent future 
instances of waste, fraud, and abuse with government charge 
cards.
    In addition, GAO's investigations often have found 
inconsistent or nonexistent consequences for federal employees 
who misused or abused government charge cards.\8\ The 
Government Charge Card Abuse Prevention Act requires agencies 
to adopt a disciplinary policy to better ensure that employees 
who abuse government charge cards face consistent and 
appropriate consequences, including dismissal where 
appropriate, thus creating a deterrent effect that will prevent 
future misuse.
---------------------------------------------------------------------------
    \8\See,. e.g., GAO-08-333, supra note 4, at p. 7; GAO-06-1117, 
supra note 2, at pp. 3, 10-11; GAO-04-717T, supra note 2, at pp. 2-3. 
11-12.
---------------------------------------------------------------------------
    The Committee urges federal agencies, in implementing the 
requirements of the Government Charge Card Abuse Prevention 
Act, to review and utilize best practices for running their 
purchase card and travel card programs. In this respect, GAO's 
Audit Guide: Auditing and Investigating the Internal Control of 
Government Purchase Card Programs provides a useful summary of 
the best practices for establishing and monitoring internal 
controls for government purchase card programs.\9\
---------------------------------------------------------------------------
    \9\GAO-04-87G (Washington, D.C.: Nov. 1, 2003).
---------------------------------------------------------------------------

                        III. Legislative History

    The Government Charge Card Abuse Prevention Act of 2011 was 
originally introduced in the 111th Congress as S. 942 by 
Senator Chuck Grassley on April 30, 2009, and was referred to 
the Committee on Homeland Security and Governmental Affairs. 
Chairman Lieberman, Ranking Minority Member Collins, Senator 
Carper, and Senator Begich cosponsored the bill. On May 20, 
2009, the Committee favorably reported S. 942 by voice vote. S. 
942 passed the Senate by unanimous consent on October 7, 2009 
and was subsequently referred to the House Oversight and 
Government Reform and House Armed Services Committees. Neither 
Committee took further action on the bill.
    Senator Grassley reintroduced the bill this Congress on 
February 8, 2011. S. 300 was again referred to the Committee on 
Homeland Security and Governmental Affairs. Chairman Lieberman, 
Ranking Member Collins and Senator Tester cosponsored the bill. 
On April 13, 2011, the Committee favorably reported S. 300 by 
voice vote. Senators present for the vote were Lieberman, 
Levin, Akaka, Carper, Begich, Collins, Coburn, McCain and 
Johnson (Wisconsin).

                    IV. Section-by-Section Analysis


Section 1. Short title

    Section 1 designates the name of the act as the 
``Government Charge Card Abuse Prevention Act of 2011.''

Section 2. Management of purchase cards

    Subsection (a) requires the head of each executive agency 
that issues and uses, for purposes of official government 
procurements, purchase cards and convenience checks--checks 
written against a purchase card account--to establish and 
maintain safeguards and internal controls to ensure effective 
management, such as: keeping a record in each executive agency 
of each holder of a purchase card issued by the agency for 
official use; assigning each cardholder an approving official; 
requiring reconciliation of the charges by the purchase 
cardholder and approving official with supporting 
documentation; ensuring payments are made promptly for valid 
purchases; retaining records of each purchase card transaction 
in accordance with government policies on disposition of 
records; invalidating purchase cards for employees who cease to 
be employed by the agency or transfer to another unit of the 
agency; and providing appropriate training to cardholders.
    Subsection (b) provides that no later than 180 days after 
the date of the enactment of this Act, the Director of the 
Office of Management and Budget (OMB) shall review the existing 
guidance and, as necessary, prescribe additional guidance 
governing the implementation of the safeguards and internal 
controls required by subsection (a) by executive agencies.
    Subsection (c) requires the head of each executive agency 
to provide for appropriate adverse personnel actions or other 
punishment, including dismissal of the employee as appropriate, 
in cases in which an employee of the agency violates agency 
policies implementing the guidance required by subsection (b) 
or makes improper, erroneous, or illegal purchases with 
purchase cards or convenience checks. This subsection also 
requires that the guidance required by subsection (b) mandate 
that each head of an executive agency with more than 
$10,000,000 in purchase card spending annually, and each 
Inspector General of such an executive agency, on a semi-annual 
basis, submit to the Director of OMB a joint report on 
violations of the guidance.
    Subsection (d) requires the Inspector General of each 
executive agency to conduct periodic assessments of the 
agency's purchase card or convenience check programs to 
identify and analyze weaknesses; perform analyses or audits, as 
necessary, of purchase card transactions designed to identify 
potentially illegal, improper, erroneous, and abusive uses of 
purchase cards, patterns of such uses, and categories of 
purchases that could be made by means other than purchase 
cards; and report to the Director of OMB on the implementation 
of recommendations made to the head of the executive agency to 
address findings of any analysis or audit of purchase card and 
convenience check transactions.
    Subsection (e) provides that the term ``executive agency'' 
has the meaning given such term in section 4(1) of the Office 
of Federal Procurement Policy Act (41 U.S.C. Sec. 403(1)), 
except as provided under subsection (f).
    Subsection (f) clarifies that subsections (a) through (d) 
do not apply to the Department of Defense, which is subject to 
similar requirements under 10 U.S.C. Sec. 2784. This subsection 
makes further conforming amendments to 10 U.S.C. Sec. 2784 in 
order to harmonize military and civilian regulations. The 
subsection also requires the Inspector General of the 
Department of Defense to conduct periodic assessments similar 
to those required in subsection (d) and to submit, jointly with 
the Secretary of Defense, a semi-annual report to the Director 
of OMB.

Section 3. Management of travel cards

    Section 3 amends Section 2 of the Travel and Transportation 
Reform Act of 1998 (Public Law 105-264; 5 U.S.C. Sec. 5701 
note) by adding a new subsection that requires the head of each 
executive agency that issues travel cards (charge cards issued 
for use on official government travel) to its employees to 
establish and maintain internal control activities over travel 
charge cards, including: maintaining a record of each holder of 
a travel charge card issued on behalf of the agency for 
official use; monitoring rebates and refunds based on prompt 
payment, sales volume, or other actions on travel charge card 
accounts; conducting periodic reviews to determine whether each 
travel charge cardholder has a need for the travel charge card; 
and providing appropriate training to travel card holders.
    The new subsection also requires that each executive agency 
ensure its contractual arrangement with travel charge card 
issuing contractors contains a requirement to evaluate the 
creditworthiness of an individual before issuing that 
individual a travel card, and that no individual is issued a 
travel card if that individual is found not creditworthy as a 
result of the evaluations. (This same requirement has been 
imposed for several years on agencies on a year-to-year basis 
by annual appropriations Acts.) An agency is not precluded from 
issuing a restricted use travel card or pre-paid card when the 
individual lacks a credit history or has a credit score below 
the minimum credit score established by OMB. The section 
requires the Director of OMB to establish a minimum credit 
score for determining the creditworthiness of an individual 
based on rigorous statistical analysis of the population of 
cardholders and historical behaviors.
    Additionally, this section requires that, not later than 
180 days after the date of enactment, the Director of OMB must 
revise, as necessary, guidance on the management of travel 
cards. The section further requires that each agency take 
appropriate adverse personnel actions, including removal where 
appropriate, against employees who have failed to comply with 
travel charge card terms or agency regulations, or have 
committed fraud with respect to a travel charge card. The 
section also requires that each head of an executive agency 
with more than $10,000,000 in travel card spending annually, 
and each Inspector General of such an executive agency, on a 
semi-annual basis, submit to the Director of OMB a joint report 
on such violations. Additionally, the section requires the 
Inspector General of each federal agency to conduct periodic 
assessments of travel card programs and controls.

Section 4. Management of centrally billed accounts

    Section 4 requires the head of an executive agency that has 
employees who use a travel charge card that is billed directly 
to the United States Government to establish and maintain 
internal control activities to compare items on an employee's 
travel voucher to items paid for using a centrally billed 
account. This section also requires the OMB Director to 
prescribe guidance for implementing internal control 
requirements for centrally billed accounts not later than 180 
days after the date of enactment of this Act.

Section 5. Construction

    Section 5 provides that nothing in the Act shall be 
construed to excuse the head of an executive agency from the 
responsibilities established in 31 U.S.C. Sec. 3512 (relating 
to executive agency accounting and other financial management 
and plans), or in the Improper Payments Act of 2002 (31 U.S.C. 
Sec. 3321 note).

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill. It concurs with 
the Congressional Budget Office that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would not affect state, local, 
and tribal governments. The enactment of this legislation will 
not have significant regulatory impact.

             VI. Congressional Budget Office Cost Estimate

                                                    April 26, 2011.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 300, the Government 
Charge Card Abuse Prevention Act of 2011.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 300--Government Charge Card Abuse Prevention Act of 2011

    S. 300 would require each executive branch agency to 
establish controls on the use of government credit cards. The 
bill would require each agency's inspector general (IG) to 
assess the risk of illegal or improper credit card use and to 
conduct periodic audits to identify potentially fraudulent 
activities. The bill also would allow agencies to dismiss 
employees who are found guilty of misusing government credit 
cards.
    CBO estimates that implementing S. 300 would cost less than 
$500,000 a year, subject to the availability of appropriated 
funds. The bill also could affect direct spending by agencies 
not funded through annual appropriations, such as the Tennessee 
Valley Authority and the Bonneville Power Administration; 
therefore, pay-as-you-go procedures apply. CBO estimates, 
however, that any net increase in spending by those agencies 
would not be significant. Enacting S. 300 would not affect 
revenues.
    Under current law, agencies must take certain actions to 
manage the use of government credit cards, including 
establishing policies and procedures, conducting oversight, and 
penalizing unauthorized use of government cards. Most of the 
provisions of S. 300 would codify current policies and 
practices. Based on information from the Office of Management 
and Budget (which sets procurement policy), the General 
Services Administration (the contract administrator for federal 
credit cards), and several agency IGs, CBO estimates that 
implementing the bill would add a small amount of 
administrative costs to the oversight of the use of government 
charge cards.
    S. 300 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. This estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

       VII. Changes to Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 300 as reported are shown as follows (existing law proposed 
to be omitted is enclosed in brackets, new matter is printed in 
italic, and existing law in which no change is proposed is 
shown in roman):

                         TITLE 10--ARMED FORCES

                    Subtitle A--General Military Law

               Part IV--Service, Supply, and Procurement


Chapter 165--Accountability and Responsibility

           *       *       *       *       *       *       *



SEC. 2784. MANAGEMENT OF PURCHASE CARDS.

    (a) * * *
    (b) Required Safeguards and Internal Controls.--Regulations 
under subsection (a) shall include safeguards and internal 
controls to ensure the following:
          (1) * * *

           *       *       *       *       *       *       *

          (11) That each purchase cardholder and individual 
        issued a convenience check is assigned an approving 
        official other than the cardholder with the authority 
        to approve or disapprove transactions.
          (12) That the Department of Defense utilizes 
        effective systems, techniques, and technologies to 
        prevent or identify fraudulent purchases.
          (13) That the Department of Defense takes appropriate 
        steps to invalidate the purchase card of each employee 
        who--
                  (A) ceases to be employed by the Department 
                of Defense, immediately upon termination of the 
                employment of the employee; or
                  (B) transfers to another unit of the 
                Department of Defense immediately upon the 
                transfer of the employee unless the Secretary 
                of Defense determines that the units are 
                covered by the same purchase card authority.
          (14) That the Department of Defense takes appropriate 
        steps to recover the cost of any erroneous, improper or 
        illegal purchase made with a purchase card or 
        convenience check by an employee, including, as 
        necessary, through salary offsets.
          (15) That the Inspector General of the Department of 
        Defense conducts periodic assessments of purchase card 
        or convenience check programs to identify and analyze 
        risks of illegal, improper, or erroneous purchases and 
        payments and uses such risk assessments to develop 
        appropriate recommendations for corrective actions.
    (c) * * *
    (d) Semi-Annual Report.--The Secretary of Defense and the 
Inspector General of the Department of Defense, shall submit to 
the Director of the Office of Management and Budget on a 
semiannual basis a joint report on illegal, improper, or 
erroneous purchases and payments made with purchase cards or 
convenience checks by employees of the Department of Defense. 
At a minimum, the report shall include the following:
          (1) A description of each violation.
          (2) A description of any adverse personnel action, 
        punishment, or other action taken against the employee 
        for such violation.
          (3) A description of actions taken by the Department 
        of Defense to address recommendations made to address 
        findings arising out of risk assessments and audits 
        conducted pursuant to this section.

              TRAVEL AND TRANSPORTATION REFORM ACT OF 1998

(Public Law 105-264; 5 U.S.C. Sec. 5701, note)

           *       *       *       *       *       *       *


    (a) * * *

           *       *       *       *       *       *       *

  (h) Management of Travel Charge Cards.--
          (1) Required safeguards and internal controls.--The 
        head of each executive agency that has employees that 
        use travel charge cards shall establish and maintain 
        the following internal control activities to ensure the 
        proper, efficient, and effective use of such travel 
        charge cards:
                  (A) There is a record in each executive 
                agency of each holder of a travel charge card 
                issued on behalf of the agency for official 
                use, annotated with the limitations on amounts 
                that are applicable to the use of each such 
                card by that travel charge cardholder.
                  (B) Rebates and refunds based on prompt 
                payment sales volume, or other actions by the 
                agency on travel charge card accounts are 
                monitored for accuracy and properly recorded as 
                a receipt of the agency that employs the 
                cardholder.
                  (C) Periodic reviews are performed to 
                determine whether each travel charge cardholder 
                has a need for the travel charge card.
                  (D) Appropriate training is provided to each 
                travel charge cardholder and each official with 
                responsibility for overseeing the use of travel 
                charge cards issued by an executive agency.
                  (E) Each executive agency has specific 
                policies regarding the number of travel charge 
                cards issued for various component 
                organizations and categories of component 
                organizations, the credit limits authorized for 
                various categories of cardholders, and 
                categories of employees eligible to be issued 
                travel charge cards, and designs those policies 
                to minimize the financial risk to the Federal 
                Government of the issuance of the travel charge 
                cards and to ensure the integrity of the travel 
                charge cardholders.
                  (F) Each executive agency ensures its 
                contractual arrangement with each servicing 
                travel charge card issuing contractor contains 
                a requirement to evaluate the creditworthiness 
                of an individual before issuing that individual 
                a travel charge card, and that no individual be 
                issued a travel charge card if that individual 
                is found not creditworthy as a result of the 
                evaluation (except that this paragraph shall 
                not preclude issuance of a restricted use 
                travel charge card or pre-paid card when the 
                individual lacks a credit history or has a 
                credit score below the minimum credit score 
                established by the Office of Management and 
                Budget). The Director of the Office of 
                Management and Budget shall establish a minimum 
                credit score for determining the 
                creditworthiness of an individual based on 
                rigorous statistical analysis of the population 
                of cardholders and historical behaviors. 
                Notwithstanding any other provision of law, 
                such evaluation shall include an assessment of 
                an individual's consumer report from a consumer 
                reporting agency as those terms are defined in 
                section 603 of the Fair Credit Reporting Act.
                  (G) Each executive agency utilizes effective 
                systems, techniques, and technologies to 
                prevent or identify improper purchases.
                  (H) Each executive agency ensures that the 
                travel charge card of each employee who ceases 
                to be employed by the agency is invalidated 
                immediately upon termination of the employment 
                of the employee.
                  (I) Each executive agency utilizes, where 
                appropriate, direct payment to the holder of 
                the travel card contract.
          (2) Guidance on management of travel charge cards.--
        Not later than 180 days after the date of the enactment 
        of this Act, the Director of the Office of Management 
        and Budget shall review the existing guidance and, as 
        necessary, prescribe additional guidance for executive 
        agencies governing the implementation of the 
        requirements in paragraph (1).
          (3) Penalties for violations.--
                  (A) In general.--Consistent with the guidance 
                prescribed under paragraph (2), each executive 
                agency shall provide for appropriate adverse 
                personnel actions to be imposed in cases in 
                which employees of the executive agency fail to 
                comply with applicable travel charge card terms 
                and conditions or applicable agency regulations 
                or commit fraud with respect to a travel 
                charge, including removal in appropriate cases.
                  (B) Reports on violations.--The guidance 
                prescribed under paragraph (2) shall require 
                each head of an executive agency with more than 
                $10,000,000 in travel card spending annually, 
                and each inspector general of such an executive 
                agency, on a semi-annual basis, to submit to 
                the Director of the Office of Management and 
                Budget a joint report on violations or other 
                actions covered by subparagraph (A) by 
                employees of such executive agency. At a 
                minimum, the report shall set forth the 
                following:
                          (i) A description of each violation.
                          (ii) A description of any adverse 
                        personnel action, punishment, or other 
                        action taken against the employee for 
                        such violation or other action.
          (4) Risk assessments and audits.--The Inspector 
        General of each executive agency shall--
                  (A) conduct periodic assessments of the 
                agency travel charge card program and 
                associated internal controls to identify and 
                analyze risks of illegal, improper, or 
                erroneous travel charges and payments in order 
                to develop a plan for using such risk 
                assessments to determine the scope, frequency, 
                and number of periodic audits of travel charge 
                card transactions;
                  (B) perform periodic analysis and audits, as 
                appropriate, of travel charge card transactions 
                designed to identify potentially improper, 
                erroneous, and illegal uses of travel charge 
                cards;
                  (C) report to the head of the executive 
                agency concerned on the results of such 
                analysis and audits; and
                  (D) report to the Director of the Office of 
                Management and Budget on the implementation of 
                recommendations made to the head of the 
                executive agency to address findings of any 
                analysis or audit of travel charge card 
                transactions or programs for compilation and 
                transmission by the Director to Congress and 
                the Comptroller General.
          (5) Definitions.--In this subsection:
                  (A) The term ``executive agency'' means an 
                agency as that term is defined in subparagraphs 
                (A) and (B) of section 5701(1) of title 5, 
                United States Code.
                  (B) The term ``travel charge card'' means any 
                Federal contractor-issued travel charge card 
                that is individually billed to each cardholder.