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Travel Card Delinquencies
Report Number I-2001-008
August 2001


While examining issues related to procurement cards, the Office of the Inspector General (OIG) learned that Department of Justice (Department) employees were accruing significant unpaid travel charge card debts. We subsequently determined that this unpaid debt for Department employees over a two-year period (November 1998 to December 2000) amounted to $1.2 million. Immigration and Naturalization Service (INS) employees were responsible for $824,618, or 69 percent, of this unpaid debt. A Bank One official responsible for the Department account told us that if the INS's performance were not included in the assessment, the Department would rank as one of the better government accounts. In a separate Department-wide report, we concluded that the travel card programs administered by the other components were generally effective. 2 We made suggestions for further improvements to these components' programs. Because of the magnitude of the problems with the INS's administration of its travel card program, we are issuing this separate report, that examines INS's problems in-depth and includes specific recommendations to the INS for corrective action.


The Government Travel Charge Card Program was created by the General Services Administration (GSA) as a travel and travel transportation payment and expense control system. It includes employee travel charge cards, automated teller machine (ATM) services, and Government Transportation Accounts (GTAs) for use by government employees traveling on official business. 3 The Federal Travel Regulation (FTR) requires employees to use the government contractor-issued travel charge card for official travel expenses unless an exemption has been granted. Bank One is currently under contract to the GSA and the Department to provide travel charge card services.

As of December 2000, 89,880 Department employees had travel charge cards. INS employees accounted for 23,603 (26.3 percent) of these cards (see Appendix I, Figure 1). The Department's average monthly travel charge card activity from January 1999 through December 2000 was $18.3 million. During this time frame, employees of the INS were responsible for average monthly charges of $5.4 million (see Appendix I, Figure 2).

To administer the travel charge card program, the Department has established a network of coordinators. A Department Agency Program Coordinator, located in the Justice Management Division (JMD), functions as the overall coordinator for the Department's travel card program and works with the components to resolve any issues. The JMD also serves as the Department's liaison with Bank One.

The INS, like other components, is responsible for its own travel charge card program and has a designated national coordinator. The INS also has designated a local coordinator for each program office, district office, border patrol sector, service center, and asylum office. Currently the INS has approximately 130 local coordinators. These coordinators are responsible for the day-to-day management of the travel charge card program. Bank One provides the national and local coordinators with various reports to help them manage the travel charge card program. These reports list such things as current account balances, charges made by cardholders, accounts that are in the process of being suspended or canceled for non-payment, and accounts that actually have been suspended or canceled. When local coordinators reviewing reports from Bank One become aware of possible misuse of travel charge cards or delinquent payments on the part of the cardholder, they are supposed to resolve the situation, generally by notifying the appropriate supervisory or management official.

At the time of our review, when an account became 90 days past due, Bank One suspended the account and blocked all transactions until payment was received. 4 If payment was not received once the account became 120 days past due, Bank One canceled the account. To have the card reinstated after cancellation, the employee is required to undergo a credit check (which was waived as a courtesy to the government when employees first receive their cards). It is difficult to get the card reinstated. When an account has an outstanding balance that is 180 days old, by federal regulation that account is written off as a credit loss to Bank One and is referred to a collection agency or attorney.

Bank One's cumulative net write-offs of Department accounts for the period from November 1998 through December 2000 totaled $1.2 million. This amount represents charges that Department employees were delinquent in paying and that still had not been paid at the time of our review. As shown in the figure on page 3, INS employees are responsible for a disproportionately large amount of the total write-offs.

Cumulative Net write-offs, Nov. 1998- Dec. 2000

The individual cardholder, not the INS, is held personally liable for delinquent payments. Various governmental regulations and policies-including the FTR, ethics standards, and INS policies-mandate that the cardholder make payment of financial obligations and that the charge card not be used for personal purposes. The INS travel card program guidance states, "It is INS policy that employees are required to remit to the Travel Card Contractor immediately upon receipt of their reimbursement." Additionally, by signing the cardholder agreement, the employee has made a contractual agreement with Bank One to pay for charges incurred. It is in the INS's best interest to ensure that employees pay their travel card charges in a timely manner because of the effect delinquencies can have on operations. Loss of a charge card can limit an employee's ability to travel, and therefore negatively impact the INS's mission. Nonpayment of debt also can affect an employee's suitability for continued employment with the INS because financial problems can make employees vulnerable to corrupting influences, a situation that the INS needs to monitor because of the sensitive nature of many of its positions.

Although a high delinquency rate does not have a direct effect on the cost of the travel charge card contract, it does have indirect effects. Contracting banks consider delinquency rates when deciding whether or not to assume a federal agency's contract. Therefore, a high delinquency rate could diminish the available pool of contractors. A high delinquency rate also can affect the amount of the rebates that the contracting bank provides to federal agencies based upon the volume of charges and the timeliness of payment. Because high delinquency rates also increase the administrative costs to the bank of collecting the delinquent funds, the contracting bank could reduce the amount of rebates to cover these costs.

Under the prior contract with Bank One, the INS did not experience a direct financial impact when an employee defaulted on a bill; however, this situation has changed with a contract modification recently implemented by GSA. Currently the Department's components receive a rebate based on the amount of charges made, excluding ATM charges. The GSA contract modification allows the contracting bank to offset a portion of the amount of its credit losses from the travel card program (i.e., the uncollected amounts that are 180 days or more delinquent) from the rebates that the components have earned.

If delinquencies in the travel charge card program continue at the current level, under the contract modification the INS will experience a substantial decrease in rebates from the individual travel charge card program. For example, according to Bank One records, the INS earned $54,954 in net travel card rebates during the period October through December 2000. During this period, the INS experienced a credit loss of $83,205. If the contract modification had been in place during that time period, the INS's rebate would have been reduced from $54,954 to $25,500. 5

Scope and Methodology

We conducted a review of Department travel charge card delinquencies using a snapshot of Department cardholders who were 120 to 180 days delinquent as of January 1, 2001. The list of delinquent cardholders provided by Bank One consisted of 150 cardholders owing a total of $361,087. The INS cardholders accounted for $246,477, or 68 percent, of this total. From the list, we selected a sample of cardholders who owed at least $5,000 or who were employed in Department locations with three or more delinquent cardholders. Our resulting sample included 64 cardholders, in 25 locations, owing a total of $236,718. The INS's portion of the sample consisted of 54 cardholders, in 19 locations (nine district offices, five border patrol sectors, two headquarters offices, one regional office, one processing center, and one regional service center), owing a total of $190,623 (see Appendix II).

We then telephonically contacted the designated travel card coordinators for the locations in our sample to assess their procedures for monitoring delinquencies and to obtain detailed information on individual delinquencies. We asked the coordinators to explain what they had done regarding the delinquencies, and, in some cases, we acquired information about an individual delinquency from the delinquent employee's supervisor. We also contacted the overall travel card coordinator for each Department component to discuss how the coordinator administers the travel card program and to assess written procedures (if they existed). We also discussed procedures with a Bank One official responsible for the Department's account and examined a variety of Bank One reports and data.

  1. The other components included in our review were the Bureau of Prisons (BOP); the Drug Enforcement Administration (DEA); the Federal Bureau of Investigation (FBI); the Offices, Boards, and Divisions (OBDs); the Office of Justice Programs (OJP); UNICOR (BOP's Federal Prison Industries); and the U.S. Marshals Service (USMS).

  2. A GTA is a centrally billed account used to procure common carrier transportation services.

  3. Subsequent to our review, Bank One revised its practices regarding suspensions. Beginning in the summer of 2001, accounts will be suspended when more than 60 days past due.

  4. The contract modification provides a formula for calculating the net amount of the rebate.