Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - February 18, 2005)

By Ms. COLLINS (for herself and Mr. FEINGOLD):

S. 457. A bill to require the Director of the Office of Management and Budget to issue guidance for, and provide oversight of, the management of micropurchases made with Governmentwide commercial purchase cards, and for other purposes; to the Committee on Homeland Security and Governmental Affairs.

Ms. COLLINS. Mr. President, I rise today with my colleague, Senator RUSS FEINGOLD, to introduce the "Purchase Card Waste Elimination Act of 2005," to help eliminate wasteful spending that can occur when the Government neglects to pay attention to where it makes its purchases.

Last year, the Senate Committee on Governmental Affairs, now the Committee on Homeland Security and Governmental Affairs, explored the Government's use of purchase cards and we learned about ways to save an estimated $300 million annually through better management of purchase cards. Purchase cards are, in essence, credit cards that agencies give to its employees for the purpose of obtaining goods and services for the Federal Government. In fact, under Federal acquisition law, purchase cards are the Government's preferred method for making what are known as "micropurchases"-that is items costing $2,500 or less. Although Government employees spend billions of dollars with purchase cards each year, Federal agencies do very little to analyze the items obtained with purchase cards in an attempt to get a better price for the Government.

The American people have the right to expect the Federal Government to spend their tax dollars carefully and wisely. While this is true at all times, it is never more so than today when the Government is running large budget deficits. The Senate Committee on Homeland Security and Governmental Affairs has a special role to play in reducing wasteful spending, and I have made this role a priority at the Committee. This legislation is one aspect of our committee's efforts to reduce waste, fraud and abuse in Government spending.

Purchase cards came into Federal Government-wide use in 1989. They allow Government employees to easily and efficiently purchase routine items such as office supplies, computers and copying machines. While they are generally used for small purchases, they accounted for more than $16 billion in Federal spending in 2003. In 1994, they accounted for only $1 billion.

This increase in use is good news because it means that more Government spending is being executed in an expeditious manner that reduces red tape and saves on administrative costs. At the same time, the use of purchase cards should enable us to conduct comprehensive analysis of how this $16 billion is spent and where. This information could be analyzed and used to further reduce the Federal Government's costs. At present, however, this is not being done.

Last year, Senator FEINGOLD, Representative SCHAKOWSKY and I released a report by the Government Accountability Office identifying missed opportunities for savings. According to that report the missed savings were due to both a lack of training and a lack of management attention and oversight. According to GAO, too many purchase cardholders failed to obtain readily available discounts on purchase cards buys. Even where the Government and the vendor had negotiated a discounted price for items through the General Services Administration schedules, Federal employees with purchase cards failed to take advantage of the discounted prices and their managers were completely unaware of those lost opportunities to save. One example of a repeated lost opportunity to save was the Department of the Interior's purchases of printer toner cartridges. One GSA schedule vendor offered the toner for only $24.99. Yet, of the Department's 791 toner cartridge purchases, only two were at or below that price. Some cartridges were purchased for $34.99, which is about 40 percent higher than the GSA schedule price.

In addition to failing to use available schedule prices, GAO found that agencies failed to negotiate lower prices with vendors with whom they frequently used purchase cards. In the private sector, most companies that use the same vendor for a lot of purchases would negotiate some sort of volume discount. But before they would attempt to negotiate savings the company would first need to understand its spending patterns. Because Federal agencies lack a comprehensive understanding of where its employees are using Government purchase cards, Federal agencies are unable to replicate this practice.

At my request, GAO analyzed purchase card use at the six Federal agencies that account for 85 percent of Government purchase card usage. As a result of that analysis, GAO estimated that $300 million per year could be saved if agencies improved their purchase card buying practices.

Under our legislation, the Office of Management and Budget, OMB, would direct agencies to better train their cardholders and more effectively analyze their spending data. It would also direct the GSA to increase its efforts to improve its efforts to secure discounts with vendors and provide agencies with more guidance to reduce wasteful spending.

The American people have the right to expect the Federal Government to spend their tax dollars wisely. I urge our colleagues to cosponsor and support this legislation.

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