Tuesday, September 4, 2012

Baltimore Procurement Cards Plagued by Questionable Expenses

The Baltimore Sun recently released a scathing article questioning a large portion of the half million dollars charged to city schools credit cards. The cards, which the school district calls procurement cards, have been used to pay for:
  • Expensive retreats for agency staff (up to $450/person)
  • Roughly $67,000 in administrators' travel expenses (in spite of a policy against using the cards for travel)
  • Dinners sometimes topping $100/person (including a student leadership conference dinner at a Hooters)
  • $13,600 in catering for the district's central office
Officials defend charges:  The school district has taken some steps, such as launching an investigation into a few of the charges and beginning work on an overhaul of card use guidelines. 

However, the district CEO and other officials staunchly defend many of the expenses as key to the district's mission. For instance, they describe travel as important to professional development and the district's national reputation, expensive dinners as a vital setting for working out deals and contracts, and pricey catering as encouraging office "fellowshipping."

Policies and public perception:  While some of charges may indeed be viewed as a gray area (when do travel expenses for training and conferences become excessive, for example), many reveal a lack of clear, well-enforced policies. At a minimum, the issues being covered by the press reveal card users who appear to be out of touch with public perception. 

Managing procurement cards:  There are three main components to responsibly managing a purchasing card program - and avoiding a front-page scandal:
  • Clear policies:  The first step is making sure there are clear rules reflecting the agency's mission and values that define acceptable use of an agency credit card 
  • Education:  Proper training should be mandatory for anyone who who uses an agency credit card. Employees should also be required to sign a statement acknowledging the policies surrounding use of the card and the consequences for using it improperly.  
  • Enforcement:  All purchases with a card should be documented and regularly reviewed to ensure they are appropriate uses of the card and do not violate agency policies. Timely review is essential to identifying and resolving problems before they get out of hand. 
Additional information:

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 

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