consistent application of controls individual and oversight minimize fraudulent or questionable purchase card usage, but the risk cannot be eliminated. never the less, purchase cards give the government flexibility and save money on transaction processing. the department's actions provide reassurance that potential fraud, waste and abuse are minimized, while the added benefit have been maximized. mr. chairman, this concludes my prepared statement. i welcome any questions you have. >> thank you. we will get back to you with questions. turn to our next witness, mr. john lyle, he's the deputy assistant secretary for contracting at the u.s. air force. you are recognized. >> thank you, sir. good afternoon and thank you for the opportunity to testify this

afternoon. because i submitted my complete testimony for the record, i will and based on your question, will i provide a brief summary of my testimony. first and foremost, we in the air force are committed towards ensuring proper spendinging controls are effectively used in the government wide purchase card program referred to as gpc. in summary, when used p place of written purchase orders, it allows us to reduce delen quent payment charges, save $70 per transaction and obtain rebates that further our ability to execute the mission. in fiscal year 2013, air force units saved $105 million on 1.5 million transactions and received 14.7 million in rebates on total expenditures of 1.2 billion. through a variety of controls, we are able to monitor the activities over 26,000 card

holders spread across ten air force major commands, four field operating agencies and three direct reporting units. both domestic and overseas. in accomplishing this, we endeavor to work with the office of secretary defense, procurement and ak wii sigs policy and our partners at u.s. bank and visa to augment the field's ability to protect fraud, abuse and misuse. t the purchase card online pea coles system. it audits 100% of transactions, flags 3% of the high risk transactions for manual audit. since 2002, the air force agency has conducted eight audits. two of the most recent occurring

in 2012 and 2013. these audits used in conjunction with other measures like data mining reports, ad hoc and scheduled inspections and a host of checks and balances that separate the roles and functions have proven invaluable and the stewardship of the program. mr. chairman and ranking member, thank you for the opportunity to testify and i look forward to your questions. >> could i just ask mr. lyle where he is from? >> i am from maine originally and spent a lot of time in massachusetts. >> yep. >> you're pretty good with the rs. but charge and card, i'm from boston. we struggle with those rs. >> we don't have to bring in an ininterpreter tor, fortunately. you're accompanied by mr. hl larry. did you have an opening

statement, sir? >> yes, brief comment. >> yes. good afternoon, thank you for the opportunity today to as i respond to your questions regarding the purchase of espresso machines and accessories in koda, japan. we appreciate the -- matters effecting the readiness of quality of by airmen and their families and remain vigilant. resource management services is somewhat unique because we're responsible for funds proepuated by congress as well as none appropriate funds or navs. they're generated by recreation activities through sales and

fees charged such as the purchase of goods and services and a share of the army and air force services dividends. in 2007, air force services, another proep rated programs migrated from the government purchase card to the nav purchase card to gain further manpower efficiencies and increased rebates. the nav purchase card is used the make authorized purposes for supplies and equipment. in regard to the inquiry into the purchase of espresso machines and accessories, four espresso machines along with accompanying accessories were sourced using none appropriated funds and installed at two

activities. at base coffee shop and base club. this was authorized and approved by appropriate officials -- in acco acco accord answer with procedures. it was determined fair and reasonable based on requirements and competition. wu will kol and ensure these funds are probably used for all airmen and their families to enjoy. we look forward to your continued partnership and delivering the best quality of life to our airmen and their families. again, thank you for the opportunity to be here today. i look forward to working with you and the fellow subcommittee members and i welcome any questions you may have. thank you. >> thank you and we'll get right into the questions since you brought the question up about

the air force base, in japan, where they purchased these three machines for $8,000 apiece. this was not proepuated funds. that's what you're saying? >> that is correct, sir. >> because there was a -- we get the accounts, some are anecdo anecdotal. $8,000 and that was at one location, but it was not taxpayer money. was a card used and paid back? >> from the nonappropriated funds, we have specialists and they have certain dollar thresholds. in this case, when you combine all four machines, it exceeded the nav threshold, so we returned to hur partners. >> again, press reports, we get them.

there are millions of americaning working hard trying to pay their bills, put their kids through school, pay their taxes and mr. con li and i are trying to separate fact from fiction when it comes to the credit card gone wild stories out there. so, yours is an example of where there was a legitimate expenditure. the press account was not correct as i understand it. >> that is correct, sir. >> again, we want the whole truth and nothing but the whole truth, and again, the proper expenditure of taxpayer dollars, as long as we're on coffee and we did espresso machines, actually, i buy just for the record, i buy mcdonald's. try to get the senior coffee for $1 when it's on sale. i'm not promoting any product. >> i'd like to do that, too, but i'm too young. >> you get free refills, too, at

mcdonald's, in any event, that aside, i put out, we absolutely startled when we saw at one starbucks in california, $12,000 worth of purchases. are you aware that those purchases took place on the credit card, government credit cards? >> mr. chairman, your staff shared the list of purchases that you had with us. we've begun to make some preliminary inquirienquiries. we are going to include those transactions as a separate test. >> you have not -- well, again, we have from that one starbucks credit card purchases of $12,000. and i don't begrudge coast guard people or dhs people of you know, where it's legitimate business and possibly buying some coffee for meetings, official meetings or guests. >> mr. chairman, coast guard has provided some initial information for us on their look

at those purchases and many of those -- >> you don't dispute what we have? >> no. >> and then the other thing, too, is we found in looking at other dhs entities, there was $31,000 that we found in starbucks across the other entities, i mean, that just jumps out at you, 12,000, one california starbucks location. >> and the majority of those purchases were to furnish coffee for the dining -- on cutters while operating at sea. >> there may be a legitimate purchase requirement, but for the rest of dhs, it's 31,000 that we've been able to identify. so, again, if you can document that, if it's justified, we don't begrudge. >> and as i said, some of the purchases seem to be legitimate use of the card to supply the

kitchens or gallies on board ships. we will be looking at all of those purchases and will be looking for those types of purpss where the vendors name such as this coffee shops would jump out at you as something you would need to look at. >> again, that jumped out 12 at one location. and we have again, a wide variety of coast guard stations. in fact, my wife even had one of the coast guard cutters, the small ones, named after her, we're very proud of the coast guard and their service, but that kind of catches your eye. you did testify that we had $329 million in credit card purchases. is that dhs wide? >> that is dhs wide, sir. >> okay, we have three inspector general reports here. march for epa of this year.

that was miss casper, mr. lewis was department of labor. april 2014, dhs is january early this year, better part of what we're reviewing here today. the other two, well, in the epa report, miss casper, you testified, we calculated about half of the sample purchases, over half. there was something wrong, misuse abuse or noncompliance. is that correct? >> that's correct. >> and mr. lewis, you, in your testimony, you just testified you found about 35% of the purposes with a credit card were abusive or noncompliant. >> that was just with the prepaid debit cards. could you guesstimate on credit

cards? >> the issue with the travel cards themselves were actually cases where they should have been using the cards and were not, so we lost government air fare. we lost $400,000. >> so, you lost money there. what i'm trying to do is we had 50% of abuse. even with the new law, epa use of credit cards, debit cards or credit cards, at least 35% in your review. you have almost half a billion, miss richards, in dhs, you did not speak to what you found as like a percentage of abuse. is it possible to calculate that or -- what you reviewed? >> in 2013, we did a risk assessment because it was a follow up from work we had published earlier. so, we didn't test individual transactions in that audit, so i cannot at this time estimate any

numbers that purchases would have been inappropriate based o p that work. >> well, again, we're sorting through some of those figures and that's pretty, i mean, it's almost a half a billion dollars and you said you had how many credit cards issues? the department has about 9700 purchase card users. >> there's poor management, poor controls. some was what you had stated that was identified, is that correct? >> yes, sir. >> so, we'd have to assume that a number of those purchases were not compliant. i think you spoke about the lack of compliance or lack of training or whatever. actually, it sounds like a lack of management or administrative

oversight and education of employees that causes this. is that what you found? >> we've done a number of audits of this topic over the years, both my office and our office of emergency management oversight as well as gao and we have found other the audits that we've done that there have been a lack of controls and oversight, but we've also seen the department take our recommendations and implement them and so, they are working hard to improve their internal control, environment and controls in oversight. risk assessment last year and we're in the process -- >> to get them to do that, have you published a manual, set of guidelines? what have you done instead of meetings that you conduct on tra training? >> we published a number of reports. you're looking at our latest report from january 2014. we've published a number of

reports, one in '13 and one in '12. >> i have a copy of your report, but it talks about some of the problems. it's sort of audit or overview of what's going on. is there a simple guideline you publi publish? >> we provide recommendations on what they should include in the guidelines. >> have they published that to your satisfaction? >> yes, they have. again, we have some compliance at significant levels. let me see. mr. lyle, was it, you testified that we save about, the department of dfs or the air force, you calculate that you save about $70 per transaction by using the credit card or i

don't know if you use debit cards, but you don't have the paper work or administrative costs. is that how you calculate the savings? >> yes, as opposed to traditional government contracting. >> and probably, i just talked to one of my dod contractors from my district who have kind words about federal defense contract i contracti contracting but probably is one of the most difficult to proceed with. that's where you calculate $70 per transaction. >> correct. >> and you have $1.2 billion worth of purchases with credit cards just at air force. >> just at air force. >> that's got to be huge dollars. we've gone from $12,000 worth of starbucks purchases to 1.2 and

you said 26,000 credit cards at the air force. >> 26,000 card holders, yes. >> and why shouldn't dod and the air force be subject to the same provisions of the 2012 law? >> i can't speak for the entire department of defense, but i know for the air force, we're very proud of our accomplishments in that system i talked about during my brief summary that's included in my summary. that system audits 100% of all tra trance actions and 3% of the other items, like gym memberships or hair salons things like that in the card code, if they pop up in this report, they'll flag a risk item and then that will require a manual insight or someone from the card holders supervisor, the

approving official or the agency and the program coordinator will go in and look at each one of those transactions. >> do you conduct that, do you have a system you set up internally or use iing a system that does it for you? >> that's a system that's been established within the department of defense and the director of procurement policy, that office administers the system across the department. >> is that with a private contractor that operates it? >> sir, i have to take that -- >> probably would be. >> believe that it is. i believe that a private contractor established that system and it rides along with the gpc program. >> u.s. bank provided that. >> okay. >> because i do know some of the credit card folks are incredible.

i gave my card to by staff for sandwiches one day. i don't spring that often, but somebody picked up the credit card number and that was at lunchtime. by 7:00, i was called by this happened to be american express and they said that we've examined your purchases and your wife usually doesn't spend $5,000 at nordstroms and they had contacted me. they canceled the card immediately because someone had gotten the number in six, seven hours and was charging things, so, you have that type of system that can check out? >> yes, sir, what you're talk ing about though is a potential fraud abuse that someone unraut rised get the card? >> yes, but you're using the same principles.

the credit card has -- do we have anything like that in dhs, you're a huge -- >> i don't know that we have a specific program designed, but we have the data and we do do data analytics on the day to to identify those might be, i don't know if your model -- again, we need as many assurances that they're properly used. there's some -- when you're this and other agencies, she's not dhs isn't quite caught up with the force, but half a billion is set, and --

>> the 96%, the 4% is usually turnover. 100% of card holders in the system are very confident. about six months earlier this year, weshl down to about 91% -- to guard against fraud, waste and abuse. we elevated our registration back -- >> my question was originally would you have a problem under similar revisions. and we may have to revise some after this hearing, is there any reason air force should be exempt? >> because of the internal controls with we have already with the pcoles as well as the

30-day audits by the assessing officials as well as by the area, our agency and program coordinators, that's been working very well. about .45% of all of our transactions, we had of those transactions, .45%, we had some potential risk violations. a total of about 1910. each one was reviewed and we found that 26 resulted in ucmj or civilian personnel actions we'll have to take. you do investigate every one of them. >> yes. >> but that still doesn't answer my question as to whether you would object. i guess you can't speak for that policy.

>> i can't speak for the entire department of defense. i would have to take that for the record and ask d pap to answer that, but from an air force perspective, i can see how the act you passed is definitely something that's viable and worthwhile and we'd look at it and see how it might -- >> well, it has had some successes. we heard the department of labor, but we still have obvious i don't want to say rampant abuse, but significant abuse and we don't have credit cards, government credit cards gone wild tamed yet. left with that, i have more questions, but let me yield to mr. conley, who's been waiting. >> thank you, mr. chairman. i want i wanted to make sure i followed your answer to the $25,000 espresso machines.

what are unproepuated funds. >> we call them a nonappropriated fund. on a base, a golf course, a bowling center, when you buy a hamburger, pay a round of golf, the dollars that airman and family is going to pay, those are nonappropriated fund dollars. >> generated by those activities. >> were government issued purchase cards or debit cards used for that ak cquisition? >> no, sir. >> okay. let me ask our igs. is it ever permissible to use a government issued purchase card, debit card or the like for a hair salon session, gym membership, personal gym membership or personal gift

cards? miss casper? >> hair salons, we didn't have it in our transactions, but we did some research on the idea of gym membership and there is a comptroller general decision that says in some circumstances, it is permissible if it's part of some health and welfare program. >> authorized by your employer. >> right. >> rig. >> obviously, it's not -- b. >> let's put that aside for a minute. is it ever permissible to go to a hair salon or your personal gym unrelated to that exemts or purchase gift cards? >> not unless it has a government associated and approved use. >> and are the policies you look at at epa explicit about that prohibition?

>> they are not. that was part of the report, they be more explicit about the use of gym memberships. epa is in the process of improving their policies in that area, but have not complete d their policies in that area. >> that doesn't sound complicated. what goes through one's mind, i need groceries tonight. why not just put it on the government card? i'm not saying anyone has ever done that, but clearly, some alarm bell ought to go off in your head, that's not a proper use of a government issued credit card. >> normally, you would expect most people to think that, but t there are apparently people that think, you know what? no one's looking at this. >> temptation is a different issue. that's right. i look forward to the epa's --

it is amazing to me, mr. chairman, they don't have one. but mr. lewis, what about the department of labor? same question. >> i can't think of a case, there would have to be b some nexus and i don't know what that would be in the department of labor. zwl i suppose if you were the department of labor and you were going to meet queen elizabeth, we might say yeah, get your hair done, but other than that, i can't think of an exceptiemptio a hair salon. >> we have a look at the general cards across the department, so we're still looking at how well

that's done. in terms of this audit -- >> is there an explicit prohibition in the department of labor's own saying you can't use credit cards for those purposes. >> i d not know what the policy says for the purchase cards in general. that's what we're currently looking at. for what we have looked at in the job corps program, it was explicit at to what you used the cards for. in this case, there were only two uses, but not explicit in prohibited activities. >> no. explicit in terms of -- two only things. >> in my life, i often will engage in various things and the question that always comes to mind that you ought to ask is what could go wrong with that. so, not having explicit, may not use it for personal purposes. i don't understand what's hard about that, but it's as toupd

i tounding me they didn't have one. >> in the case of these debit cards where there were only two uses. baggage fees when traveling, students were traveling and the allowance they get from meals while traveling. >> miss richards. >> the department of homeland security. >> i can't think of instances where those would be appropriate, but you'd have to look at the -- >> my question is predicated on no, there's no nexus. this is personal. >> the department of homeland securities regulations do state that government purchase cards are to be used for government business and not personal business. we don't have an exclusive prohibition using those items, of personal use. >> that guidance. >> yes. >> okay.

>> understanding you can't speak for policy from the air force, can you can of a reason why we wouldn't want to include the pentagon and by ek tension, the air force and government wide consistent set of standards enforcement mechanisms and with respect to such -- you are the biggest user. >> i can't speak for the department of defense. we are a part of office of s secretary defense. director of acquisition policy.

i'm not saying that these internal controls would would not need the government control act as far as the transaction, the government charge card prevention act. not saying we wouldn't benefit from that. i can just tell you a little about our internal control process we have now in addition to the pkoems. we have six levels of control. we have a separation of function requiring organization or a person that has a need. have one person to prevent those kind of frauds. the only way that can happen is all three would have to be in collusion together to be able to execute fraudulent type action of that caliber.

that's something we can certainly look at. as far as those six levels i was talking about the agency or the coordinator reviews monthly and reviews every transaction, an annual review, the approval official of the card holder looks at every transaction. >> has the air force audits, these cards? >> yes, the air force agency has. i'm not aware of the ig look in at these cards. they usually refer that to the air force contracting organization if they suspect or if anyone reports a problem with a government purchase card, they refer those issues. >> it's just when you're spending $1.2 billion, with

26,000 purchase cards in just the air force, it's hard to believe there hasn't been some misuse. that would put you at radical variants from other federal agencies. >> if your numbers are accurate, then maybe we need to have the u.s. air force take over the issueance of all federal cards. >> if you give us the resources, we'll be glad. >> that's quite a record, mr. lyle. >> very proud of our

accomplishments. i'm not aware of any fraudulent issues other than the 26 i mentioned. i don't know what each and every one of those are, but i am very proud of the accomplishments of the government card holders. >> again, if the numbers you cite are accurate, you should be. >> i have no reason to believe they aren't. >> let me ask again, our three igs, are there -- questions a layman might ask, are there just too many cards in circulation for us to really get our arms around it holding in advance, mr. lyle's testimony, and are there too many employees authorized to use such purchase cards? should those numbers beled in terms of the numbers? >> within epa, they do conduct an annual review to make sure we've got the right number of people with purchase cards. the idea is also they be at the

local level and that they be supervised locally. whether or not 2,000 is the right number, i can't say. >> how many employees total? >> 16,000. >> so, what if i said everyone who's an employee, when you become an employee of the epa, we're going to issue one of these cards to you. because you might need it. and you know, they're working so well, why not everybody have one. what would be wrong with that? >> it would be wrong because you'd have to have quite a few controls. >> that's my point. do we have any idea about what is an optimum number versus that's too many? i mean, you with hold judgment in 2000, but exercise judgment on 16,000. >> i'm not aware what the

optimal number is and i'm not aware that epa knows. >> when you looked at this problem, was it your impression that the epa is challenged with managing this number of cards issued to this number of people? is that beyond their management skill or you think it's just right? >> epa was challenged in mana managing that number because they left it up to each of the officials to come up with their own operating procedures. >> there's a lacking uniformity in standards. that doesn't sound loick -- >> one of the things epa has done based on a audit report is implemented standard auditing procedures that will be implemented in the hopes o f trying to level things out and institute more controls. >> well, that's a novel thought.

when credit cards were issued, there was a policy. we didn't leave it up to local managers to decide how a card could be used or when it would be issued or to whom. we had standards and it workeded for a very large, wide company. mr. lewis, you indicated that 98 of 104 senators, job senators, had improper travel purposes. is that correct? >> correct. >> miss richards had a piece of testimony where she thinks the problem in dhs is not with the design of standards, it's with the enforcement. >> yes, sir. >> do you think the design of

standards are satisfactory or is there a problem with the design of standards itself? >> in this instance, i think it's the lack of design as well as enforcement of oversight over these. but again, this was, is a very i guess kind of narrow and unique issue within the job corps program to utilize these debit cards. and in answer to your previous question, i think the conclusion in this case was that one debit card was too many debit cards. even if they are such small individual purchases that were being handled in this manner that even if you put all the controls in place to ensure purchases were proper, it would cost a lot more to administer that and be worth. the department was buying, the job corps centers valued from $10 to $60. they paid $6 apiece for a card,

so a $10 card cost them $16. so, no matter how you administer that, it was not going to be an effective tool. and the fact they had so many of these cards on handmade it much more tempting to people to misuse them. switch to either using the travel cards charp able to pay for some of these expenses or the smallest thing such as a $5 meal allowance, it would be best to give the student cash for that rather than pay an additional $6 to provide a debit card. >> exactly. >> issued three previous reports on a card since 2010. is that correct. each report contained recommendations, has the agency, has the department of home

security acted on those previous recommendations? >> yes, sir, they have. i would have to get back to you with a list of specific actions they take on each of those recommendations. >> i'd like to see that because we don't want to see recommendations ignored and it tells us something here when an agency is making a good faith effort to comply. thank you very much. thank you, mr. chairman. >> thank you. a couple of questions. first, miss richards, we were looking through your testimony and then your report and it said you reported, is this 900, 925 million purchases totalling 439 million dollars. that's in the testimony.

is that correct? >> some trans anchors were smaller than others. >> i just don't think that's accurate, but you repeated that in your testimony. >> those are numbers i had. those are department reported numbers. >> that's the report we have, too, but again, something doesn't make sense there. if you could check that and we will be leaving the record open for a period of two weeks. the number allowed air force out -- 2012 law allowed

employees to be fired, dismissed, terminated, prosecuted, can you tell us, miss casper, epa how many that you know of terminated discipline or prosecuted? >> we recommended in a report that epa take action. epa was supposed to be taking action by september 30th. we haven't done a follow up review for those actions. >> do you know of any? >> i am not aware of any. >> could you check that? >> yes. >> when you say take action, does that include and if so, how many, referrals for prosecution? >> that could potentially be among the actions that they could take. . >> gyu bu you didn't make that recommendation.

>> no, we just said they take the appropriate action. >> thank you, mr. chairman. >> well, again, we can pass a law if the law has to be enforced and there has to be consequences. had rudy giuliani here years ago, and i was fascinated by his zero tolerance. man, they threw the book at you and new york today has the residual effect of the zero tolerance policy. people you know, were taken the task, prosecuted, gone after, but we passed the 2012 law, we put tools in an epa site and labor, mr. lewis, you had cited several. were there others? that was in a miami instance. terminated, anyone prosecuted or disciplined? >> to my knowledge, there's no one prosecuted, but i'd have to get back to you on that.

>> we'd like to -- >> we did refer all the instances we found to our investigators. >> this law has been in place for such actions. i think in this case, these were contractor employees and so, they had -- for the record, i have to put this in. my own area in central florida had a housing authority and a director who came in after i had gotten housing authority taken over by hud, it was so mismanaged. they brought in another housing director. when i came to office, the first thing was housing authority director coming to me

complaining that state attorney was going after her and part of it was credit card abuses, making false payments. and asked me to weigh in for her. i asked her to find the door because the list of charges were just incredible. then i go back to having hud take over the same housing authority, they put in another housing director, who when i found out about his reputation, tried not to get him appointed. washington overrode me, atlanta, hired him. we had spent millions to bring the thing back up, turned it back over. hud took control and within seven, eight years, he ran it

down. there were years of credit card abuses. i wish i had remembered this before we had this hearing today. should have had hud in here. but hud investigated the ig, made a criminal referral to the department of justice -- we asked justice, they never pursued it. so, we have agencies who are abuse i abusing, employees abusing the public trust and mechanisms to go after them. gone in with a mask and a gun held up and taken 10% of what they, what was gone, but again, just have to recall that for the record. miss richards, you're next. anyone prosecuted, terminated or disciplined at dhs?

>> at dhs, those records would not be managed centrally, so i would not have the ability to get the scope of all the actions that might have been taken. >> well, if you could review that, let us know for the record, b too, we're leaving that open. we're trying, we passed a law in 2012 to try to be better stewards of public money. you can save money by using these for small transactions and there's a lot of benefit, but there are also a lot of abuses. epa today, about half of the sampling abuse, labor, 35% on the debit cards, dhs, hasn't come totally clean with us, but we'll get the information one way or the other. we have our methods, extracting

the information, just teasing. just teasing. we will, we are relying on you to report to us. again, we would like to kind of get a better handle on what is taking place. and my last question, any recommendations for tightening up the law. this is interesting because some is poor management practices or poor administration. some is not having the proper protocalls in place that are sort of standard and can take the law to implementation with better understanding and performance and compliance by federal employees. but tell us if you can if there's any tool missing or anything we can do. the other thing, too, is omb should possibly have some role

in this or requiring at least that an agency come up with some set of protocalls that are missing in some of the agencies who are compliant. so, miss casper, any casper, an recommendations for myself and the committee? >> the law contains many of the controls that are necessary and almost all the controls that are necessary regarding purchase cards. the issue at epa was epa was not overseeing to make sure that those actual controls were being i wa implemented. >> lack of compliance. >> right. >> we might look at some mechanism to ensure that. mr. lewis? >> we haven't found anything that would require legislation. ours was a case of complete lack of oversight or attention to this. the requirements were already there for that to be in place.

the focus that this act has put on the periodic risk assessments and audits has been good and that is working to start bringing these things. >> you have cited some successes in bringing about compliance and also implementing the intent and purpose of the law. mr. lyle, the air force has cited what they have done to try to get the proper use of these cards. ms. richards, anything you see we need to do from the law or procedural stand point? >> no, sir, not at this time. the law very wisely puts in place the regular risk assessments and reporting to the oigs and the requirements for us to take a look back at what the departments are doing. i think as that plays out over

time, it will better inform any changes you have to make in the future. >> okay, mr. conley, did you have something? >> first of all, i'll answer your question. i certainly one thing that came out of this hearing for me is we need prohibition on the personal use of these cards, period. there cannot be any circumstance of unjob related use of a credit card issued by the government. that is wrong is and we need to make prohibition it seems to me. and it ought to be required of any federal agency that issues such cards. at any rate, that would be one thing i would answer your question in terms of how we might update the law. other than that, i'm glad to hear the 2012 laws are helpful. >> does omb enforce the law or put out any guidelines?

is that their role? i'm not sure. >> omb put out a circular a123, i think it was updated based to comply with the new law. >> you mean the 2012 law? >> do you think that's adequate? i'm not aware of the provisions. >> i'm not aware that there's any issues or problem. >> mr. lewis, anything? >> they have publishing reports where they are collecting information from the departments and the i.g.s on what issues we're identifying with purchase cards and the status of recommendations. >> ms. richards? >> i agree with my fellow assistant i.g.s. omb has put out additional guidance and they are following up on publishing the results. >> but they really don't go back that much to check. have you seen them -- any

compliance of their -- >> omb puts out the guidance and it's up to the individual departments to enforce it. >> you all oversee some of that as inspector generals. >> mr. chairman, the only thing that strikes me here, though, correct me if i'm wrong, in a sense, neither the 2012 law nor omb guidance give explicit guidance for criteria of who gets a card and when can a card be used. would that be fair? if i understood you, even within epa, there was broad discretion about that dguidance. that would suggest that isn't government wide. >> i'm not aware of any guidance as to who can get it or how many can be distributed. >> and both mr. lewis would agree with that? >> same here. and our current audit, we're looking at the utilization of these cards. some people have them and they don't use them. evidently they do not need them.

>> we're also looking at it and it's a matter of in the department of homeland security because we're gee graphically dispersed. you'd want a card at a locate, but we want to minimize the number of cards out there. >> that's always a challenge for us up here too. you don't want to have -- you don't want to codify things like guidance and unwittingly make it impossible to achieve the savings and efficiencies such cards can provide. on the other hand, the absence of any guidance does allow for even within an agency a myriad of standards that can lead to mis. use, deliberate and nondeliberate. obviously, that's of concern to us. i would echo the chairman's invitation to all of you upon reflection, upon this hearing, if you've got suggestions for

how we might improve the law, we would certainly welcome them. thank you, mr. chairman. >> thank you. one final thing, a renowned tight wad and i try to get as much for my buck whether it's the taxpayer's buck or my own. just out of curiosity, i use several cards. you get a cash back with one. do any of you have any detail in negotiating with these? because again, right now the federal government is broke. we're borrowing 40 cents on every dollar. our job is to not only see that fraud, waste and abuse are eliminated, but to get the most going out. you're shaking your head yes. have you found some good return

for the government? >> in addition to the transactions we discussed earlier, we received $14.7 million in rebates this past year. we're increasing the use on the government purchase card for preestablished contract instruments prepriced so it will protect the taxpayer's dollars from that perspective. we wouldn't card holders to negotiate, but they are going to increase the use of the card to the threshold $150,000 to take advantage of that transaction savin savings as well as the rebates. that's what we're really going after is the rebates from u.s. bank. >> ms. richards, dhs 2012-2013, $2.6 billion in credit card purchases. just heard the success story of air force. are you familiar with any

savings? >> i don't have the dollar figures available, but the department does receive a rebate when they use the purchase card. >> would you also make that part of the record? >> i will, sir. >> we're looking for waste, fraud and abuse, but we're also looking for savings. >> same, i know there are rebates, but i don't know the dollar amount. >> ms. casper? >> i also know there are rebates. they get rebates depending on how fast they approve the purchase to be paid. but i don't know exactly what the amount of the rebates was. >> again, this is a small sampling of federal agencies. we appreciate your cooperation. we're looking to see how a law we passed in 2012 worked. there are a number of i.g. reports dating back to january of this year and subsequent reports that we have reviewed for this hearing. pleased that each of you would take time to come in today.

our job is to be good stewards of taxpayer dollars and yours are too, particularly the inspector generals, well, all of us, as federal employees. any closing comments? i thank mr. conley and the staff for working during this particular timeframe to make certain we did this. i think we have done a record number of hearings. appreciate your cooperations. many of them like this, meat and potatoes, but important to the people we represent. there being no further business before the subcommittee on government operations, this hearing is adjourned. thank you.

next a conversation with purdue university president and former indiana governor mitch daniels. that's followed by a debate on genetically-modified foods and a look at how bees are being used today by the military. next a conversation with purdue university president mitch daniels. the fomer indiana governor and budget director spoke with viewers as part of our special series on universities in the big ten conference. this is about 45 minutes.