Government Credit Cards

While your March 16 article on the American Express government travel card makes for interesting reading, it grossly distorts the facts. The truth is that using the card has produced greater savings, simplicity and scrutiny--with no taxpayer liability!

Starting with the award of the initial travel card contract to Diner’s Club in 1983, there has been a push by financial managers to cut administrative costs in all areas of the federal government, including travel. Applying lessons from the private sector, one way we accomplished this was by expanding the use of electronic transactions and outsourcing travel services. In October 1993, after intense competition, American Express won the government’s travel services contract.

For instance, over the past two years the federal government has received $47 million in rebates from American Express. These funds are disbursed proportionately to agencies to help defray travel-related costs. In addition, it is estimated that the federal government saves at least $250 million annually in administrative costs and perhaps several million dollars more annually in cash management and float costs. With greater use of private sector contracts and principles, the government stands to save, by con- servative estimates, over $300 million.

Moreover, the taxpayer is not liable for monies spent on cards issued to federal employees. Each individual cardholder is responsible for the entire balance charged to the card. The government then reimburses the individual for only allowable travel expenses as governed by law and regulation. If there are other expenses on the card, the individual must pay the balance. Should they fail to do so, there are several collection measures American Express can take, as allowed by the contract. Individuals are also subject to disciplinary action by their agency. There is also greater scrutiny.

Beneath all the sensational rhetoric in news reports and press releases lie the facts. With increased saving, simplicity and scrutiny, the federal government’s travel card program is based on businesslike, common sense principles.

DENNIS J. FISCHER

Chief Financial Officer

U.S. General Services

Administration, Washington