Managing Your Purchase Card Program

1
Managing Your Purchase Card Program

• Kristann Montague
• Federal Supply Service

2
Agenda

• Overview of the GSA SmartPay Program
• Purchase Card Program Facts and Statistics
• Creditworthiness
• Management and Oversight Best Practices
• Considerations for the Future
• Questions and Answers

3
GSA SmartPay Program

• Provides Purchase, Travel, and Fleet charge cards
  to over 350 Government agencies and organizations
• 5 Bank Contractors Bank of America, Bank One,
  Citibank, Mellon Bank, and US Bank
• Contract Period of Performance 5 year base
  period with 5 one-year options (1998 through
  2008)
• Each agency negotiates separate task orders
  tailored to their needs or pools with other
  agencies

4
Purchase Card Program StatisticsSpend in U.S.
Dollars (Billions)
5
Purchase Card Program StatisticsTransactions
(Millions)
6
Purchase Card Program StatisticsCardholders
7
Purchase Card Program StatisticsUS Dollar
Refunds (Millions)
8
Creditworthiness

• 2004 Omnibus appropriations act mandates agencies
  must determine the creditworthiness of
  prospective cardholders before issuing new cards
  also mandates agencies develop policies and
  procedures for disciplinary actions resulting
  from cardholder misuse
• Applies to purchase travel cardholders
• Law took effect immediately after passage in
  January 2004 and expires 9/30/04
• Other legislation is pending that may make this
  requirement permanent

9
CreditworthinessImplementation strategies

• Three strategies
• Establish Government-wide thresholds for
  creditworthiness (e.g., FICO scores) and perform
  credit checks of prospective cardholders
• Create a standard form for creditworthiness
  self-certification
• Combination approach

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Creditworthiness Implementation Challenges

• Prospective cardholders must provide consent to
  credit checks
• If consent is not given, agency cannot perform
  credit check per Fair Credit Reporting Act
• Credit checks are virtually never performed on
  centrally billed accounts banks have legal
  concerns about implementing this requirement

11
Management and Oversight

• Necessity at any size program
• Best practices
• Strong commitment and leadership by senior
  management
• Commit the necessary resources
• Make training mandatory
• Right-size the program
• Additional best practice for program growth
• Palmer study organizations that experienced the
  most benefit from purchase card use were the ones
  who decentralized control and proliferated the
  cards throughout the organization to empower
  individual end users

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Management and OversightBest Practices

• Training
• Risk mitigation
• Management oversight
• Account reconciliation
• Finance systems
• Electronic Access Systems

13
Management and OversightTraining

• Is training required prior to appointment?
• Are copies of training certificates kept on file
  in a centralized location?
• How often is refresher training provided?
• How do you track training completion?
• Are learning objectives properly defined and
  tested?

14
Management and OversightDelegation of Contract
Authority

• FAR 1.603-3(b) Agency heads are encouraged to
  delegate micro-purchase authority Individuals
  delegated this authorityshall be appointed in
  writing in accordance with agency procedures
• Are your cardholders, approving officials, and
  A/OPCs appointed in writing?
• What procedures are in place when these
  appointments are terminated?

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Risk MitigationAccount Establishment

• What is your criteria for establishing cardholder
  and approving official accounts?
• How are reasonable single and monthly purchase
  limits determined?
• Are merchant category codes not needed for
  mission blocked from usage?
• Are there criteria in place for deactivating or
  canceling cards?

16
Risk MitigationSpan of Control

• Recommended range One Approving Official for 5
  10 cardholders
• Consider volume/timeliness
• Familiar with operations
• Able to act independently

17
Management and OversightOversight and
Surveillance

• Establish audit/review periods of cardholders and
  approving officials
• Define responsibilities of A/OPCs and agency
  auditors
• Use existing management and oversight tools
• Verify compliance with policy
• OMB recommendation Conduct reviews as needed,
  but not less than annually, to evaluate the
  numbers of accounts and transactions

18
Management and OversightAccount Reconciliation

• Documentation requirements
• Receipt of cardholder account and approving
  official billing statement paper or electronic
• Procedures for appointing approving officials
  (and alternates) who can determine transactions
  proper and act independently

19
Management and OversightFinance Systems

• Does your agency policy maximize the opportunity
  for refunds?
• Faster payments higher refunds
• Larger payments (i.e., lower outstanding
  balances) higher refunds
• Electronic Invoicing/Payment/Reallocation

20
Management and OversightElectronic Access
Systems (EAS)

• How is your agency using this tool?
• Account establishment
• Management, oversight, and surveillance
• Invoice receipt, reconciliation, and payment

21
Management and OversightElectronic Access
Systems (EAS)

• Reports assist with cardholder oversight
• Declined transactions
• Unusual spending activity (exceptions)
• Disputes

22
GSA SmartPay ProgramConsiderations for the
Future

• Piloting new technologies (data mining,
  pre-authorization, electronic commerce)
• Leveraging Governments buying power
• Balancing risk and reward
• Legislative compliance
• Learn more about all these topics at the GSA
  SmartPay conference, August 24-26, 2004 New
  Orleans, LA

23
GSA SmartPayQuestions and Answers

• Kristann Montague kristann.montague_at_gsa.gov
• [phone]
• You will find a wealth of contract and program
  information, training, publications, and points
  of contact at our website www.gsa.gov/gsasmartpay