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Report: DHS employees put $30,000 worth of Starbucks on government credit card

From an article in The Washington Post:  Federal employees who are issued so-called purchase cards are permitted to spend up to $3,000 — known as “micropurchases” — and do not have to disclose those purchases publicly.

A House Oversight subcommittee held a congressional hearing earlier this month on misuses of the government credit card, asking why federal employees were swiping the card for seemingly personal things like hair cuts, gym memberships and movie tickets.

Scott MacFarlane, investigative reporter at NBC-4 Washington, discovered through Freedom of Information Act requests, that Department of Homeland Security employees put $30,000 of Starbucks on the cards in 2013. Agency employees spent about $12,000 at one Starbucks in Alameda, Calif., and several of those purchases were for just under the $3,000 “micropurchase” threshold, which means they can avoid scrutiny.

“I don’t know the agency’s needs or contingencies, but going to Starbucks seems like a really hard sell,” former Inspector General for the U.S. General Services Administration Brian Miller told MacFarlane in an interview.

Rep. John Mica (R-Fla.), who, his office said, learned of the Starbucks purchases from MacFarlane’s reporting, brought them up during the Oct. 14 hearing, asking why DHS employees needed taxpayers to buy all that coffee.

Anne Richards, assistant inspector general for audits at the Homeland Security Department’s Office of the Inspector General, said they would review those Starbucks transactions to determine if they were appropriate use of the government credit card.

S.Y. Lee, DHS spokesman, told the Loop that the Starbucks purchases “were made for various reasons, following standard purchase card policy and guidance.”

Richards suggested at the hearing that the California Starbucks purchases were to stock dining pantries on Coast Guard ships. A DHS official tells us they were for the Coast Guard Cutter Stratton, “one of the largest cutters in the Coast Guard with a crew of more than 100 personnel, in preparation for an extended deployment.”

But buying the Starbucks as a “micropurchase” means that office avoided having to go through any kind of bidding process that might have turned up cheaper coffee options.

Miller, in an interview with the Loop, said stocking a kitchen is likely an anticipated expense, so buying bulk coffee should probably have gone through a competitive process.

When used correctly, the purchase cards are a “great tool” that “create real efficiencies,” Miller said. “But you can’t substitute that for intelligent purchasing. Something you know is going to come up you can anticipate and do some intelligent planning.”

Richards, in her written testimony, said the purchase cards, which 9,700 DHS employees are authorized to use, are intended to streamline purchasing for low cost items, but she acknowledged there has been instances of improper use.

“Every transaction has inherent risk — the risk of purchase card misuse is greater because of the number of cardholders and the low dollar, decentralized actions, which are subject to fewer reviews and controls,” she said. “However, this increased risk was purposely chosen to reap the benefits — less cost and quicker response — of the simplified procurement process.”

Mica has called on the Government Accountability Office to further investigate “waste, fraud, mismanagement and abuse” of these government-issued credit cards. In 2008, the GAO issued a report that found cardholders had used their purchase cards on Internet dating sites, iPods, and expensive dinners. In 2012, Congress passed a law to implement stricter rules for the cards, but they are still difficult to contain. Government agencies spent overall $20 billion this year on “micropurchases” that do not require public disclosure, according to MacFarlane’s reporting.

With so many purchases of small items, it’s almost impossible to catch all the bad actors, Miller said. Reviewing every purchase would be an exhaustive exercise of time and resources that would defeat the point of the late 1980s program, which was to save time and cut costs.

Royce Christyn
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