Study says Pentagon should tackle military credit card abuse

Associated Press WriterWASHINGTON (AP) -- A Pentagon task force says there should be tighter management and tougher prosecution to cut military credit card abuse -- but hasn't settled on exact ways to do that.

"The recommendations being announced today will greatly reduce the likelihood of any misuse," Dov S. Zakheim, the Pentagon's comptroller and chief financial officer, said Thursday. "But the department's work is not over."

Indeed, many require further action such as identifying different ways to prosecute the fraud and developing a new training program for how to use the cards. But the department says it can make most of the changes administratively, that is without legislation.

The recommendations result from a 60-day task force review ordered by Secretary of Defense Donald H. Rumsfeld to investigate charges that the military has done little to correct credit card abuses uncovered a year ago.

Congressional investigators found that more than 46,000 Defense Department employees had defaulted on $62 million in official travel expenses charged on government cards as of last November.

The task force said bad debt write-offs have been reduced from an average of $1.7 million a month before last October to $300,000 a month since then, thanks to the decision to begin docking the pay of soldiers and many civilian defense workers with delinquent government travel accounts.

The Department uses two major card programs -- 1.4 million people have travel cards that are billed to employees, who are supposed to use them only for official government travel and pay the bills when reimbursed. Another 207,000 purchase cards have been issued to make buying more efficient.

Zakheim's task force is recommending -- and has submitted legislation to Congress -- to make abusers of purchase cards liable for illegal buys. It also said the department should find additional ways to prosecute, perhaps using it's own criminal investigation division and state and local courts rather than already burdened federal courts.

It also recommended a decrease in the number of cards each review officer is responsible for overseeing; development of new technology to detect suspicious transactions; and reduction of the number of travel accounts in existence by canceling expired and inactive cards.

Of the 1.4 million travel cards issued, some 400,000 have not been used in a year and 100,000 of that number have expired. Though it appears the cards aren't needed, the accounts have remained open and so could be abused, the report said.

"This is not a simple matter," Zakheim said of credit card abuse. "We hope it is one that, with remedies, will go away."

He stressed that the vast majority of card holders use them responsibly and that the credit program saves money.

Purchase cards allow the department to save an estimated $20 per transaction compared to the previous system of processing purchase requests. Savings over the past eight years exceed $900 million, according to a press statement released Thursday.

"You don't want to throw the baby away with the bath water," Zakheim told a Pentagon press conference.

Officials have said defense workers charged $3.4 billion on travel cards last year. Zakheim said at the outset of the study that 11.7 percent of the amount owed at that time on travel cards billed directly to employees was more than 60 days overdue.

The purchase cards were used last year to buy $6.1 billion in goods and services. In March the delinquency rate was 7.5 percent on cards billed directly to the government, he said at the time.

He said Thursday that as of April, the delinquency rate on purchase cards was 3.4 percent.