Acquisition Reform:

Purchase Card Use Cuts Procurement Costs, Improves Efficiency

NSIAD-96-138: Published: Aug 6, 1996. Publicly Released: Aug 6, 1996.

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Louis J. Rodrigues
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Pursuant to a legislative requirement, GAO reviewed federal agencies' progress in using purchase cards, focusing: (1) the extent to which card use has led to administrative savings or other benefits; (2) the potential for growth in card use; (3) agencies' management controls; and (4) opportunities to improve agencies' purchase card programs.

GAO found that: (1) the use of purchase cards for small purchases can reduce agencies' mission support, labor, and payment processing costs 50 percent by moving simple purchases from procurement offices to program offices and consolidating payments; (2) some agencies have found that purchase card use has helped them absorb the impact of administrative staff reductions and improve service delivery; (3) although the use of purchase cards has increased since 1990, there is potential for greater card use; (4) in fiscal year 1995, the average purchase card transaction was $375, well below the micropurchase threshold of $2,500; (5) there is no evidence of increased abusive use of purchase cards despite tremendous growth in the purchase card program; (6) electronic records of all purchase card transactions allow close and detailed monitoring of card use; (7) agencies' management controls are adequate to protect the government's interest and agencies are addressing control weaknesses and failures to follow proper procurement procedures; (8) most agencies are trying to improve their card programs by emphasizing card use, reengineering their processes, and increasing their use of automation; and (9) opportunities to improve the card program include revising the Federal Acquisition Regulation (FAR) to address card use more thoroughly and establishing a mechanism so agencies can share their innovations and experiences.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The reorganization of FAR Part 13 includes language emphasizing the use of the purchase card. The new Part 13, Simplified Acquisition Procedures, now includes new FAR subpart 13.301, Simplified Acquisition Methods: Governmentwide commercial purchase card. This subpart states clearly that the card may be used to acquire supplies, services, or construction. It further states that: (1) agency procedures should not limit card use to micropurchases and should encourage card use as appropriate in greater dollar amounts; (2) the card may be used, if authorized, for task or delivery orders; and (3) the card may be used for payments, if the contractor agrees to accept payment by card. This language is responsive to GAO's recommendation that the FAR provide clear guidance on the use of the card.

    Recommendation: The Administrator for Federal Procurement Policy should ensure, in conjunction with the Federal Acquisition Regulatory Council, that FAR provides clear guidance on the appropriate uses of the purchase card as a means for making payments, purchases, and orders from established contracts.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

  2. Status: Closed - Implemented

    Comments: Acquisition Reform Net (ARNet), administered by the Office of Federal Procurement Policy, has been modified to include links to GSA's home page for the purchase card. The purchase card home page includes such information as agency contact names and numbers, sales and transactions by agency, actual and potential sales governmentwide, and links to agency procurement pages and Visa's home page. To respond to GAO's concern that OFPP provide for interactive exchanges and not just one-way communication, ARNet also includes the purchase card in its electronic discussion forums. Here, agency officials communicate with each other electronically about procurement issues. Also, the names of the links between ARNet's home page and the purchase card page have been made more intuitive so agency officials can navigate them more easily.

    Recommendation: The Administrator for Federal Procurement Policy should establish a site on one of the government's electronic media, such as the Acquisition Reform Network on the Internet, to facilitate agency efforts to exchange information about problems or progress with purchase card use.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy


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