APPENDIX V

INCREASING VISA CARD USE IN OTHER AGENCIES

The Department of the Treasury (Treasury) and the Department of Energy (Energy) each used the VISA card for approximately 80 percent of their micropurchases in FY 1995. The Department of Agriculture (USDA), which used VISA for approximately 25 percent of its micropurchases in FY 1995, was implementing a pilot program at the time of our review to automate its VISA program and was working with the General Services Administration to integrate a third party draft system through the VISA contractor. The Department of Veterans Affairs (VA) used the VISA card less than DOJ during FY 1995; however, in FY 1996 VA began to promote card use and implemented a newly-developed VISA automated system.

Officials in these agencies said that successful implementation and increased use of the purchase card in their agencies has been aided by strong direction and senior management endorsement. To overcome resistance to using the VISA card by their offices, they continually promoted the card and educated managers about the program's benefits. Promotional and educational efforts in these agencies have come from the office that had been assigned responsibility for the VISA card program. Three of the four agencies (USDA, Energy, and Treasury) assigned responsibility for the purchase card program to their procurement offices. The VA assigned responsibility to the finance office and designated one of its employees as the VISA program manager.

The following summarizes initiatives that these agencies have taken to increase use of the VISA card:

· Treasury issued a department-wide directive, which states that the VISA purchase card is the preferred procurement method for micropurchases. In addition, not only did Treasury's Chief Acquisition Officer sign a Department pledge to increase VISA card use, but also an official from each bureau within Treasury signed such a pledge. Officials told us that this created a competitive atmosphere in Treasury and helped to spur use of the VISA card throughout the Department.

Within Treasury, an official in the Bureau of Alcohol, Tobacco, and Firearms (ATF) said ATF intends to provide generic VISA cards for its law enforcement officers. These VISA cards will have numbered accounts that do not identify the cardholder as being a government employee. RMBCS can provide the same reporting information as with the other government purchase card; however, because the cards do not have an identifiable government account number, ATF will lose the tax exempt benefits of a federal government entity.

· At Energy, procurement personnel briefed the Secretary about the VISA program, using charts to illustrate the benefits and importance of the program, as well as highlighting which offices were using the card and to what degree. A procurement official told us that VISA card use increased after offices throughout Energy found out that their use of the card was being monitored by the Secretary.

· At VA, the senior procurement and finance managers sent a joint memorandum that strongly encouraged implementation of the VISA program to the maximum extent possible at all VA facilities. In April 1995, the Assistant Secretary for Management established use of the VISA card as the preferred acquisition method for micropurchases. Within VA's three bureaus, two have now mandated use of the VISA card for micropurchases. One of these two bureaus has issued goals for individual facilities. Adherence to these goals is tracked and directors are held accountable for compliance.

· USDA has developed an automated system to further streamline the procurement process using the VISA card. This on-line system is intended to eliminate the cardholder's manual reconciliation of the monthly statement of account. USDA officials told us that they estimate $45.9 million in administrative savings can be achieved over a five-year period with the automated system. An alert system is built into the package to aid in monitoring for misuse. In addition, the General Services Administration is working with USDA to pilot a third party draft capability through RMBCS.

APPENDIX VI

OUTSTANDING ACCOUNTS BY COMPONENT

The following table shows, by component, the Department's outstanding balances, as of October 7, 1996. Credit amounts are owed to the components by Rocky Mountain BankCard System (RMBCS) and delinquent amounts are owed to RMBCS by the components. The causes of credit and delinquent amounts are explained at pp. 22-23 of the report.

* In the OBDs, the Environment and Natural Resources Division is responsible for the entire amount.

SOURCE: RMBCS

APPENDIX VII

U.S. Department of Justice

Washington, D.C. 20530

SEP 22, 1997

MEMORANDUM

TO:              Michael R. Bromwich
                    Inspector General

FROM:        Stephen R. Colgate
                    Assistant Attorney General
                      for Administration

SUBJECT:   Response to Draft inspection Report on Use of the
                    VISA Purchase Card Assignment Number A-96-20

This is in response to Mary Demory's memorandum dated July 30, 1997, requesting comments on the subject draft inspection report. AS you note in the report's Executive Digest, I requested that your office conduct this review to determine the extent of VISA card use, identify any barriers to increased use, and assess the program's internal controls. I am very pleased with your findings which confirm that the Department's VISA program is healthy and steadily growing and appreciate the work of your staff on this project.

My staff reviewed the draft report as well as copies of comments provided to you on the report by the Executive Office for U.S. Attorneys (EOUSA) , the U.S. Marshal Service (USMS) , and the Office of Justice Programs (OJP). We have the following comments to provide.

Recommendation 1:

The Director, USMS; the Assistant Attorney General, OJP; and the Director, EOUSA should complete implementation of the VISA card program by distributing VISA Cards to major field and program offices, which do not have them, or notify the Assistant Attorney General why this is not feasible.

Response:

Each of the three organizations referenced above has made significant progress toward complete distribution of outstanding cards and none has reported any impediments to full implementation of the program.

· JMD has now provided VISA training to every U.S. Attorneys I district. Training was conducted in Washington, DC, at ten field sites and via teleconferencing-Presently, only two districts (out of 93) remain without cards. of these, both have received the requisite training and we expect that cards will be issued to them by the end of Calendar year 1997.

· USMS Headquarters and all but two district offices now have cards. USMS reports the last two offices are expected to be "on-line" in the next few weeks.

· In OJP, personnel from four of the five major program offices have now received requisite VISA training. OJP expects that cards will be issued to these organizations by the end of October 1997- Training for the fifth major program office will be conducted in October 1997 and cards should be issued to this organization by the end of Calendar Year 1997.

My staff will continue to monitor the card distribution progress in these organizations and will continue to encourage increased distribution and usage of the VISA card.

Recommendation 2:

The Assistant Attorney General for Administration should assess actions taken by the USMS, OJP, and EOUSA to complete VISA program implementation and advise us when card distribution is complete.

Response:

Based upon information received, I am satisfied that the above organizations have taken appropriate action to maximize distribution and use of the VISA card. my staff will continue to encourage all organizations to increase card usage farther.

Recommendation 3:

The Assistant Attorney General for Administration should mandate use of the VISA card for micropurchases.

Response:

There will always be micropurchase acquisitions which cannot be made via VISA card. For example, many small companies, such as court reporting firms and other service providers do not consider the card to be financially worthwhile and will never subscribe.

APPENDIX VIII

U.S. Department of Justice

Office of Justice Programs

Office of the Assistant Attorney General Washington, D. C. 20531

AUG 25 1997

MEMORANDUM TO:   Mary W. Demory
                                       Assistant Inspector General
                                        for Inspections

FROM:                           Laurie Robinson
                                       Assistant Attorney General
                                       Office of Justice Programs

SUBJECT:                      Inspection of the Use of the Visa Purchase
                                       Card in the Department of Justice
                                       Assignment Number A-96-20

Thank you for your most recent audit review of the Visa Program at the Office of Justice Programs. My office clearly recognizes the benefits of using the Visa Card for all purchases. Our small purchases section uses the Visa Card to the maximum extent possible. The use of the card is only limited by the nonacceptance of the card by a vendor who does not accept the card. In those cases, vendors are encouraged to contact the current VISA contractor for more information on how to sign up for the program. We are aware and concur with your recommendations to expand the use of the Visa Card to program offices throughout OJP and to further decentralize procurement authority in accordance with recommendations cited in the National Performance Review.

Finding: In the Office of Justice Programs (OJP), none of the five major program offices have VISA Cards.

Recommendation: Complete implementation of the VISA card program by distributing VISA cards to major field and program offices, which do not have them, or notify the Assistant Attorney General for Administration why this is not feasible.

Response: Representatives from four of the major program offices attended Visa training in June of 1997 and will be receiving cards shortly. In addition, representatives from another very large component of OJP have also received training,. The other program offices and divisions wiII be trained in October of 1997. A card has also been distributed to the Program Support Division to help them with critical purchases in support of building maintenance and other facilities management issues. As requested, we will advise your office when card distribution is completed.

In addition to the improvements that our office has already made, we will take steps to ensure that we can electronically pay invoices and receive management reports in order to take advantage of further discounts.

If you have additional questions, please contact Gary N. Silver, Director, Office of Administration, on 307-2534.

APPENDIX IX

U.S. Department of Justice

Executive Office for United States Attorneys

Office of the Director Washington, D.C. 20530

MEMORANDUM

DATE:        AUG 29 1997

TO:             Mary W. Demory
                   Assistant Inspector General for Inspections
                   Office of the Inspector General

FROM:       Carol DiBattiste
                   Director

SUBJECT:  Responses to the Inspection of the Use
                   of the VISA Purchase Card in the Department of Justice,
                   Assignment Number A-96-20

We appreciate the opportunity to respond to your memorandum of July 30, 1997, requesting our comments on the findings and recommendations on the draft report on the use of the VISA Purchase Card in the Department of Justice.

The Executive Office for United States Attorneys (EOUSAs) fully supports the Department's VISA Purchase Card Program. Our response is as follows:

The Inspections Division recommends that the Director, EOUSA:

1. Complete implementation of the VISA card program by distributing VISA cards to major field and program offices, which do not have them or notify the Assistant Attorney General for Administration why this is not feasible.

Agree. To date, the VISA credit card program has been implemented in 91 of the 93 United States Attorneys' offices (USAOs). Only two USAOs (Western District of Kentucky and the District of Guam) have not yet participated in the VISA program. Representatives from these two offices have received VISA training, and the District of Guam has submitted applications for four VISA credit cards as of August 1997. We will continue to work with the Western District of Kentucky to ensure compliance with the program and project by the end of the CY 1997 they will have a VISA credit card.

EOUSA, in coordination with the Justice Management Division, Simplified Acquisitions Service (JMD/SAS), sponsored VISA micropurchase training to over 400 USAO and EOUSA personnel in 1997. EOUSA is working with the JMD/SAS to develop a training program to train an estimated additional 500 cardholders in FY 1998, to include Assistant United States Attorneys and other litigative personnel. There are presently 483 VISA cardholders in the United States Attorneys offices.

The Inspections Division recommends that the Assistant Attorney General for Administration:

2. Assess actions taken by the EOUSA to complete VISA program implementation and advise us when card distribution is complete.

EOUSA's response was not requested.

The Inspections Division recommends that the Assistant Attorney General for Administration:

3. Mandate the use of the VISA card for micropurchases.

EOUSA's response was not requested, however, we are concerned with the phrasing of this recommendation. Items related to litigation support of the attorneys are difficult to obtain using the VISA card. Nationwide, there are many small businesses that do not accept the VISA card, such as District Court reporters, Privacy Act records, and legal filings with state and local agencies.

We recommend instead: "Mandate the use of the VISA card for micropurchases, when possible."

If you have any questions, please contact me on 514-2121 or have a member of your staff contact David W. Downs, Deputy Director, Administrative Services, on 616-6600.

APPENDIX X

U.S. Department of Justice

United States Marshals Service

Director 600 Army Navy Drive

Arlington, VA 22202-4210

September 10, 1997

MEMORANDUM TO:  Mary W. Demory
                                      Assistant Inspector General For Inspections

FROM:                          Eduardo Gonzalez
                                      Director

SUBJECT:                     Inspections of the Use of the VISA Purchase
                                      Card in the Department of Justice

Thank you for the opportunity to review the subject report. I agree with Recommendation 1, which indicates the U.S. Marshals Service (USMS) should continue the implementation of the VISA purchase card within the agency, In fact, I would like to take this opportunity and inform you that over the last 6 months the USMS has implemented the recommendation.

The USMS has fully implemented use of the VISA purchase card within the agency. In December 1996, I sent out a memorandum informing all USMS components of the preferred method of purchasing, which is the VISA credit card. In addition, I encouraged all districts and Headquarters offices to raise the single purchase limit to $25,000 on the VISA card for those employees who had a procurement warrant at that level. Further, offices were encouraged to have staff obtain the 40 hours of simplified acquisition training in order to have a single purchase limit of $25,000 on the VISA IMPAC card. Through this effort, I am pleased to report that all Headquarters offices have cardholders, and all but two district offices are using the credit card. We expect them to be on line in the next few weeks.

We are continuing efforts to help USMS offices effectively use the IMPAC credit card by reviewing associated policies and procedures. As a result of the past 6 months effort, offices are using, the card and finding, it reduces delays in purchases. To this end, the USMS has seen its invoice increase significantly over the past 6 months. I fully expect the increase to continue.

APPENDIX XI

U.S. Department of Justice

Federal Bureau of Investigation

Washington, D.C. 20535

September 4, 1997

Ms. Mary W. Demory
Assistant Inspector General for Inspections
1425 New York Avenue, N.W. Suite 6100
Washington, D.C. 20530

Dear Ms. Demory:

I am pleased to respond to your letter of July 30, 1997, in which you enclosed, for our review, two copies of the draft report on the use of the VISA Purchase Card in the Department of Justice, A-96-20.

The draft report was carefully reviewed by the managers of the FBI's Procurement Unit in our Finance Division. The FBI notes that the report contains no specific recommendations affecting the FBI requiring a response.

The FBI does not take issue with either the substance of the draft report or its findings and recommendations. Therefore, we do not propose any comments or addenda for inclusion in the final report.

We do appreciate the assistance of the office of the Inspector General on this matter and being given the opportunity to review the draft report and to comment upon its findings and recommendations.

Sincerely yours,

William Lueckenhoff
Unit Chief
Organizational Program
Evaluation & Analysis Unit

1 - Vickie L. Slone
      Director
      Audit Liaison Office (DOJ-OIG)

APPENDIX XII

OFFICE OF THE INSPECTOR GENERAL'S ANALYSIS
OF MANAGEMENTS' RESPONSES

On July 30, 1997, the Inspections Division sent copies of the draft report to all of the Department's components that were reviewed during the inspection. We made recommendations to four of these components--the Justice Management Division (JMD), United States Marshals Service (USMS), Executive Office for United States Attorneys (EOUSA) and Office of Justice Programs (OJP). Our analysis of the responses from the components follows.

1. Recommendation 1 - Resolved-Closed. We agree with the corrective actions provided by the USMS, EOUSA, and OJP. Please inform JMD when corrective actions have been completed. We require no further response.

2. Recommendation 2 - Resolved-Closed. We agree with JMD's assessment of the corrective actions taken by the USMS, EOUSA, and OJP. We require no further response.

3. Recommendation 3 - Resolved-Open. This recommendation will remain open pending receipt of JMD's memorandum to all Department of Justice components advising them to use the VISA card for micropurchases to the maximum extent possible. We have made the appropriate change in the report by adding JMD's proposed language to the relevant recommendation.

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