Pentagon Reforms Don't Eliminate Fraud

CNSNEWS.COM ^ | August 19,2003 | Lawrence Morahan

[yoe]

Despite an overhaul of Pentagon purchasing practices under reform-minded Defense Secretary Donald Rumsfeld, an intelligent thief still can find a way to profit from day-to-day business transactions at the Defense Department, experts said Monday.

The latest example of the system's vulnerability came from Marine Corps Staff Sgt. Sherry Pierre, who used a military credit card to pay for breast enhancement surgery.

Pierre also made improper purchases of a car, a motorcycle and other items totaling almost $130,000 in unauthorized sprees during 2000 and 2001.

Despite the abuses, the system is much improved since senior Pentagon officials announced a crackdown on credit card abuse in March of last year, said Ken Beeks, vice president of Business Executives for National Security, a Pentagon management watchdog.

"These credit cards have the potential to be a great boon in making the day-in and day-out functioning better," he said.

The purchase cards enable officials to shop at stores such as Office Depot or Staples and purchase items off the shelf, saving on lengthy authorization procedures.

When officials finally get a system inside the Pentagon that can track expenditures rather than appropriations, then a lot of these problems with fraud will go away, Beeks said.

"Something like this pops up where it's a case of malfeasance on somebody's part and it's something that shouldn't have happened and they'll fix it, but it would be a real mistake to throw the baby out with the bathwater on this one," Beeks added.

At a court martial in New Orleans in June, Pierre pleaded guilty to stealing from the government using a Navy Marine Corps purchase card. She received a 14-month sentence in a military prison, a bad conduct discharge and a fine of $30,000.

Defense Undersecretary Dov S. Zakheim, the DoD comptroller and chief financial officer, in March 2002 announced the creation of a task force to investigate credit card abuse within the agency.

In fiscal 2001, $3.4 billion was expended from travel cards and another $6.1 billion through purchase cards, enabling the Pentagon to cut costs and create the potential for accountability, officials said.

Congressional investigators found that 46,572 Defense Department employees had defaulted on $62 million in travel expenses charged on government cards as of November 2001.

There was less abuse of purchase cards, which are used to buy goods and services up to $2,500. About 7.5 percent of the Pentagon's purchase card transactions were found to be delinquent, or more than 60 days overdue.

The Pentagon's delinquency rate was 1.5 percent on all credit cards, as opposed to 5 percent delinquency rate in the private sector.

The Defense Department has laid out new policy guidance in an attempt to make acquisition less constrictive and to give program managers more freedom to operate, Beeks said.

Ivan Eland, a senior national security analyst with the Independent Institute, agreed that fraud happens in all branches of government.

But Eland added: "The problem with the Defense Department is that they've had so many regulations to combat small-scale fraud and large-scale fraud on weapons systems. They spend more taxpayers' money policing that and regulating it than the fraud itself."

[yoe]

Call in all credit cards - re-issue to only a few people in each department, it is not just the Pentagon that is misusing these credit cards. There are thousands of these cards in use throughout the bloated Bureaucracy in Washington, D.C. Call your congressmen today and register a complaint about the fraud in government use of credit cards.

[proxy_user]

Security and convenience are always at war. They could do as you suggested, but then the next story we'll see is that some guy had to fill out eight forms, get twelve signatures, and wait two weeks before he could replace the gas cap on his government vehicle.

I would suggest lowering the credit limits to $250 and requiring all bosses to review expenses monthly.

Eliminate fraud? At the Pentagon? That would be like stopping all teenagers from having sex. The best you can hope for his getting them to cut back.

[Fudd]

To encourage bosses to review expenditures, they should share in the liability of ongoing fraud that occurs over the course of months and years.