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Feds Roll Back Spending Limits on Government Credit Cards

By Martin H. Bosworth
ConsumerAffairs.com

October 4, 2005
Facing a barrage of criticism from government watchdogs and Congress, President Bush has ordered a reduction of government-issued credit card purchase limits from $250,000 to $2,500 for normal expenses, and $15,000 for "contingency operations."

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Last month, Bush authorized the "micro-purchase" spending threshold raised to as much as $250,000 to allow "streamlined" purchasing of equipment and services for the Hurricane Katrina relief effort.

The Office of Management and Budget's (OMB) director of procurement policies, David Safavian, who was later arrested on ethics violation chages, said that the rules change would "ensure that taxpayers' dollars are spent efficiently and responsibly in support of disaster victims."

The move drew heavy opposition from groups such as the Project on Government Oversight (POGO), and from members of Congress who claimed the huge purchase limit increases and lack of oversight would lead to wasteful spending and abuse of taxpayer money.

Safavian resigned his position on Sept. 16th. He was arrested on the 19th on charges of lying to a federal officer, and obstructing the investigation of notorious lobbyist Jack Abramoff.

The OMB issued a press statement yesterday detailing the purchase limit reduction.

"[During] the first days after the hurricane, several regulations were streamlined to remove barriers to the quick delivery of needed, life-saving aid…As the recovery has advanced, we do not envision that agencies will need to utilize the higher thresholds," Deputy Director Clay Johnson III said.

POGO's Beth Daley hailed the rollback as a sign of "new leadership and cooler heads."

"The public is watching," she said. "They care, and they're not going to let this kind of abuse be ignored."

Usage of government-backed credit cards for purchases and expenses has led to several scandals and investigations of abuse, including instances in which Navy personnel used their cards to pay for lap dances and trips to brothels, and one civilian employee purchased breast implants for his girlfriend with his card.

Other abuse concerns in the wake of Katrina included the ability of contractors to purchase equipment from companies they were friendly with, and to escape any oversight of the expenses due to the long periods between making purchases with the cards and the government actually receiving the bill.

In addition, usage of the government cards to acquire contracts and cover expenses for the Katrina rebuilding effort contributed to many Gulf Coast-based businesses being left out. Many of the purchases and contracts instead went to major, well-connected corporations based in other parts of the country, locking small businesses out.

Sen. Byron Dorgan (D-N.D.), an opponent of the increased spending limits, applauded the rollback.

"It's the right move," he told The Washington Post. Without it, Congress would have forced that decision…It would have set the taxpayers up for a substantial amount of waste, fraud and abuse."

POGO's Daley said she "remains hopeful" that contractors looking to take advantage of the disaster for their own profit "aren't gonna get what they want."

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