Federal Government Made $20 Billion in Secret Purchases in Recent Months

The federal government has spent at least $20 billion in taxpayer money this year on items and services that it is permitted to keep secret from the public, according to an investigation by the News4 I-Team.

The purchases, known among federal employees as “micropurchases,” are made by some of the thousands of agency employees who are issued taxpayer-funded purchase cards. The purchases, in most cases, remain confidential and are not publicly disclosed by the agencies. A sampling of those purchases, obtained by the I-Team via the Freedom of Information Act, reveals at least one agency used those cards to buy $30,000 in Starbucks Coffee drinks and products in one year without having to disclose or detail the purchases to the public.

A series of other recent purchases, reviewed by internal government auditors, include wasteful and inappropriate purchases by government employees -- including a gym membership and JC Penney clothing -- that were not detected or stopped until after the purchase was completed.

The I-Team’s findings have been the subject of a Congressional hearing and created scrutiny from taxpayer watchdogs for the Department of Homeland Security, which made the Starbucks purchases and declines to publicly detail them.

A “micropurchase” is a purchase costing less than $3,000 in which a government-issued purchase card is swiped. The U.S. Departments of State, Homeland Security, Veterans Affairs, Transportation, and Defense, each made tens of millions of dollars of “micropurchases” in the past year, according to an I-Team review. But each agency said it does not make public an itemized list of its transactions, limiting the information to internal government reviewers and users of the federal Freedom of Information Act.

The I-Team, using the Freedom of Information Act, received a list of “micropurchases” made by the Dept. of Homeland Security at Starbucks vendors nationwide in 2013. The list includes dozens of transactions, including in Washington, D.C., and Maryland. Several of the purchases were made at an Alameda, California, Starbucks vendor and cost more than $2,400 each, just below the $3,000 threshold for which purchases need not be publicly disclosed. After reviewing the I-Team’s findings, Rep. John Mica (R-FL), chair of a U.S House Oversight subcommittee said, “When you have $10,000 being spent at one Starbucks by DHS employees in one city in six months, someone is abusing the purchasing permission that we have given them."

Anne Richards, an agency auditor, told Mica and committee members, "Most of the purchases seem to be legitimate use of the cards.” She said, “We will be looking at all of those purchase. And as part of our audit ... we will be looking at the types of purchases in which coffee shops jump out at you.”

Some of the Starbucks purchases cost less than $40, indicating a potential small-scale, individual gift-cards or drink purchases.

• DHS Starbucks Purchases

Brian Miller, a former Inspector General for the U.S. General Services Administration, said the coffee purchases raise concerns. “I don’t know the agency’s needs or contingencies, but going to Starbucks seems like a really hard sell,” he said.

He added, “The amount suggests that it may be an expense that could be anticipated. If so, a procurement official should think through how to best procure these items in a systematic way. The competitive process should ensure that the government does not pay too much for an item. To get the best prices, a procurement official should follow the competitive bidding process. The micro-purchase authority allows agencies to respond quickly to contingencies and unforeseen needs.”

Department of Homeland Security spokesman Sy Lee said, “These purchases were made for various reasons, following standard purchase card policy and guidance. The Department of Homeland Security is required to follow the Federal Acquisition Regulation when using appropriated funds to purchase supplies or services on behalf of the federal government. To ensure accountability, all purchase card transactions are approved in accordance with DHS purchase card policy.”

At an October hearing of the U.S. House Oversight Committee -- a hearing triggered in part by the findings of the I-Team -- federal auditors revealed instances of misuse of “micropurchase” authority by the U.S. Labor Department and the Environmental Protection Agency. The Labor Department audit showed a government purchase card was used for JC Penney clothing. The EPA audit showed a credit card holder used the card for a gym membership.

Miller said he unearthed instances of “micropurchase” malfeasance at the General Services Administration, too. “We’ve had a case where a high-level executive used the purchase card for hotel rooms and spas,” he said. “It was a purely personal (purchase).”

Miller said if federal agencies must make large coffee purchases, they should use the traditional federal procurement system, to ensure the best value for taxpayers.

An I-Team review of federal agency purchase records shows each major federal agency spends millions of dollars a year on “micropurchases.” The General Services Administration and Department of Interior each shared details about the “micropurchase” items bought by their agency employees.

But other federal agencies declined.

• U.S. Department of Veterans Affairs spokeswoman: “The VA does not publish the FY’s micropurchases as they are stored by USBank and they include personally identifying information.”
• EPA spokeswoman: “There is no requirement for agencies to collect, report, maintain, or publicly post information on awarded micro-purchases.”
• Department of Transportation: Micropurchase information is available through federal FOIA process
• U.S. State Department spokeswoman: “Nearly all State Department “micro purchasing” – procurements under $3,000 each transaction – are processed using a US Government purchase card. State complies with all current Federal disclosure requirements for micro purchasing and other government data disclosures. We do not have a list of micro purchase to provide. The appropriate mechanism for requesting that information would be a FOIA request.”
• Health and Human Services spokesman: “Bottom line is that the authorities and systems for managing and recording micropurchases (less than $3,000) are distributed widely across HHS and its ten agencies. There is no central database that collects all of this information from across the Dept. and is published publicly. We have received occasional requests over the years via FOIA for micropurchase data, and which we have provided based on the parameters of each request.”
• Department of Homeland Security spokesman: “These purchases were made for various reasons, following standard purchase card policy and guidance. The Department of Homeland Security is required to follow the Federal Acquisition Regulation when using appropriated funds to purchase supplies or services on behalf of the federal government. To ensure accountability, all purchase card transaction are approved in accordance with DHS purchase card policy."

Miller said “micropurchases”, when not abused, benefit taxpayers. He said, “The micro-purchase authority allows front-line personnel to effectively and efficiently support the mission of the agency by allowing them to quickly acquire relatively low-dollar goods and services without the administrative processing costs, and thereby creating efficiency in the procurement process.”