Federal Acquisition Service U.S. General Services Administration David J. Shea, CPCM, PMP Program Director, Office of Charge Card Management (OCCM) Federal Acquisition Service GSA Training Conference & EXPO May 4-6, 2010 GSA SmartPay® Program Update

Federal Acquisition Service 2 Value to the Customer  Gain a general understanding of the GSA SmartPay® Program and its current initiatives: Innovative products and services Relevant legislation updates The new era of transparency and accountability

Federal Acquisition Service Agenda  Welcome  What’s next for GSA SmartPay® 2  GSA SmartPay® 2: More than One Flavor  State/Local Tax Exemption  The Leading Edge Charge Card Program  Relevant Legislation  The new Era of Transparency & Accountability  Questions 3

Federal Acquisition Service 4 Welcome  What are your objectives for this session?  What issues would you like to discuss?  What questions would you like to have answered as a result of this session?

Federal Acquisition Service What’s Next for GSA SmartPay® 2?

Federal Acquisition Service 6 GSA SmartPay® Program Overview  The GSA SmartPay® program, established in 1998, enables over 350 Federal agencies/ organizations to obtain charge card products and services through master contracts that GSA established with three banks: Citibank, JP Morgan Chase, and U.S. Bank  Agencies/organizations issued task orders against these master contracts to obtain charge card products and services  Agencies/organizations pay no direct fees to use the program  Period of performance for existing contracts is through 2018 DID YOU KNOW… $943 was spent on the charge cards every second in FY09

Federal Acquisition Service How We are Encouraging Innovation  Comprehensive and flexible master contract  Strong customer orientation and frequent customer contact/support  Test and share best practices  Ongoing market research and regular meetings with industry  “Beyond Plastics” strategy and conferences  Balanced customer advocacy and program leadership  Training workshops, guides and annual conference  GetSmart Quarterly newsletters  Monthly meetings  Available desk officers  Strong Web presence  Ad hoc working groups  Customer satisfaction surveys  Unstructured monthly conference call  Social Networking exploration 7

Federal Acquisition Service GSA SmartPay®: More Than One Flavor

Federal Acquisition Service Innovative Products & Services in Action Product/Service Features Payment Card (in use) Department of State Used to pay for specific recurring services that occur on a monthly or other frequent basis such as courier services or utility charges Used for specific purpose and are blocked for all Merchant Category Codes (MCC) except for the specific need at hand Cardless Account (in use) Department of Veterans Affairs Provides established vendor-specific charge account without physical cards Lowers transaction processing cost Prepaid Cards (in process) Department of Commerce Provides a re-loadable and re-usable card solution Card can be activated immediately Controlled Spend Cards (in process) US Air Force Intended for use by personnel under active travel status (who do not have a travel card) Spending limits established based on estimated trip cost Eliminates the need for prepaying an account and reduces the opportunity for misuse Foreign Currency Card (in use) Department of State Intended for use by personnel residing in foreign countries transacting business in foreign currencies Eliminates currency conversion fees 9  The GSA Office of Charge Card Management (OCCM) continues to focus on encouraging smarter use of cards and card-related services to meet the evolving needs of agencies/ organizations Products & Services that are being implemented to meet evolving needs of agencies/organizations

Federal Acquisition Service Innovative Products & Services in Action (cont’d) 10 Grants Funding Initiative:  GSA OCCM is collaborating with agencies/ organizations to explore the use of a grants funding card or cardless payment system Point of Sale Discount Initiative:  Ensuring that GSA SmartPay® purchase cards are recognized at the point of sale and that GSA Schedule prices are automatically applied, as well as any other applicable merchant discounts  Leverage the Federal Government’s purchasing scale  Increased cardholder buying power and refund potential  Requirement for the new Federal Strategic Sourcing Initiative (FSSI) Blanket Purchase Agreements (BPAs) for office supplies DID YOU KNOW… If 10% of Federal discretionary grant spending transacted with a GSA SmartPay® solution, the Federal government could realize ~$260 million in annual refunds* *Applied an average 40 refund basis points to eligible population

Federal Acquisition Service Challenges to Innovation/Expansion  Need to help customers better comprehend range of products/services available  Personal card use knowledge can be inhibiting – focus customer on fully identifying business issue  Develop better tools to address significant educational/outreach challenge  Limited customer time and attention to issue  Card management largely a collateral duty in Federal Government  Significant Legislative/Regulatory challenges  Implementing Tax Increase Prevention and Reconciliation Act (TIPRA) Section 511 withholding requirements – opportunity or doom? 11

Federal Acquisition Service State/Local Tax Exemption  OCCM is developing a tax education/reclamation strategy, which begins by evaluating states by program spend to develop a customized approach for prioritizing jurisdictions; next steps include:  Assess potential value proposition of tax strategy by each jurisdiction  Establish timeline for negotiations and implementation  Section C of the GSA SmartPay®2 Master Contract addresses tax reclamation as it pertains to contractor banks and requires banks to assist the government to reclaim taxes by:  Providing a detailed plan to the Government to maximize recovery of taxes paid on charge cards  Passing all detailed transaction data, as specified in C.3.2 Program and Transaction Data, to include tax information  Developing Electronic Access System (EAS) functions that allow for increased reporting of tax information (e.g., ability to flag transactions that have paid tax, and generate reports by agency/organization and state)  Preparing tax reclamation documentation on behalf of the agency/organization for submission to states and merchants 12

Federal Acquisition Service Use of the GSA SmartPay® Card for Local Travel  Changes to the Federal Travel Regulation (FTR) are in the process of being made, which will enable OCCM to permit use of the GSA SmartPay® Travel Card for local travel expenses  This change has been approved by the GSA Administrator and is awaiting Federal Register publication of the Direct Final Rule  OCCM is developing implementation guidance, revised travel card training, and a slightly modified card design to be introduced as travel cards are re- issued in the normal course of business  This new optional use of the card for local travel will be for civilian agencies, at their discretion (note: DoD JTR currently allows this use for local travel)  Agencies/organizations will need to request authority from OCCM before implementation 13

Federal Acquisition Service The Leading Edge Charge Card Program

Federal Acquisition Service Hallmarks of an Effective Charge Card Program  Have you analyzed your business processes?  Are there areas where GSA SmartPay® 2 products and services can be utilized to provide more streamline, efficient, and transparent solutions for your agency/organization?  Are you taking action to reduce the total dollar amount and total number of convenience checks at your agency/organization?  Have you considered the information management implications?  Open government initiative (M-10-06)  Do you maximize your refund potential?  Are you utilizing all the services available to you?  Reach out to your GSA SmartPay® point of contact and/or your contractor bank to discuss business challenges and potential solutions 15

Federal Acquisition Service Relevant Legislation, Guidance

Federal Acquisition Service Relevant Legislation/Guidance  Memorandum for the Heads of Departments and Agencies, Improving Government Acquisition (M-09-25)  How does this guidance affect GSA SmartPay® 2? Legislation/ LawDescriptionIssue/Status Memorandum for the Heads of Departments and Agencies, Improving Government Acquisition M (July 29, 2009) OMB provides guidance in reducing procurement spend in M-09-25, as it relates to the President’s Memorandum on Government Contracting (March 2, 2009) The Administration has set a target of cutting $40 billion a year in procurement spend Each agency is required to develop a plan to save 3.5% of baseline contract spending in FY10, and a further 3.5% in FY11 Savings can be realized in many ways, one of which is reengineering ineffective business processes and practices to reduce cost to spend These savings may be used to meet the budget targets in OMB’s June 11, 2009 guidance on FY 2011 budget submissions Use of the GSA SmartPay® program is a potential way for agencies to achieve savings in their acquisition activities, as use of the GSA SmartPay® program provides refunds and reduces administrative costs for agencies 17

Federal Acquisition Service Relevant Legislation/Guidance (Cont’d)  Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA)  How does this legislation affect GSA SmartPay® 2? Legislation/ LawDescriptionIssue/Status Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) TIPRA requires Federal, State, and local government entities to withhold income tax when making payments to persons providing property or services (in an amount equal to 3% of such payment) Withholding requirements will not apply to any payment that is less than the payment threshold amount of $10,000 “Payment,” for purposes of proposed Treasury IRS regulation, occurs at the point of sale when the government charge card or payment card is tendered and not when the government entity pays the serving contractor bank Government travel expenses reimbursed from an agency/organization are exempt from the 3% withholding rule Proposed regulation has not been finalized at this point If finalized, the primary impact of TIPRA is on purchase card use for contracting payments; however any payment under $10,000 is not subject to withholding Generally affects all payments at the point of sale, not just those made by charge cards Travel and Fleet charge cards are largely unaffected 18

Federal Acquisition Service Relevant Legislation/Guidance (Cont’d)  Housing Assistance Tax Act (HATA) of 2008, Section 6050W  How does this legislation affect GSA SmartPay® 2? Legislation/ LawDescriptionIssue/Status Housing Assistance Tax Act (HATA) of 2008, Section 6050W Section 3091 of HATA establishes a new section of the IRS Code, Section 6050W. This section will shift the responsibility of 1099 reporting to payment settlement organizations for most transactions beginning January 1, 2011 Merchant acquiring banks will have to report all payment card transactions, regardless of size This reporting shift does not include transactions that are processed through other third party payment processors (e.g. PayPal) or payments that are not linked to a charge card account (i.e. B2B transactions completed in systems such as Power Track), and therefore agencies/organizations will still need to be report these transactions Proposed regulation has not been finalized at this point If finalized, Section 6050W will alleviate government agencies/organizations from a large portion of 1099 reporting requirements OCCM is facilitating meetings with GSA SmartPay® 2 contractor banks and the Department of Treasury to discuss general payment procedures in order to assist with 6050W implementation 19

Federal Acquisition Service The New Era of Transparency & Accountability

Federal Acquisition Service Open Government Directive  The Office of Charge Card Management (OCCM) is focused on principles or an open government: transparency, participation, and collaboration  Open Government Directive (M-10-06) released on December 8 th, 2009 requires agencies to: Publish government information online Improve the quality of government information Create and institutionalize a culture of open government Create an enabling policy framework for open government 21

Federal Acquisition Service USAspending.gov Initiative  In September 2009 OMB requested that OCCM provide more detailed charge card transaction data to USAspending.gov  OCCM formed a USAspending.gov Working Group with customer agencies/organizations to respond to these requirements and developed a phased approach and timeline OCCM is leading this initiative as a value-added service for customer agencies/organizations OCCM continues to represent agencies/ organizations to OMB on this initiative  OCCM has prepared more detailed data aggregated by 30 Merchant Category Code (MCC) Clusters as Phase 1, ready to be delivered to OMB 22 DID YOU KNOW… USAspending.gov was launched in December 2007 as a result of the Federal Funding Accountability and Transparency Act of 2006, which requires the full disclosure of all organizations receiving Federal funds

Federal Acquisition Service What are the next steps?  Release of version 2.0 and 2.1 of USAspending.gov including Phase 1 data reported at the MCC cluster level has been delayed – release timeframe is TBD  Currently OMB posts annual spend data on USAspending.gov  OCCM is waiting to hear back about a specific release time frame, therefore the timeline for reporting more detailed data is subject to change  For the subsequent phases, OCCM will work with agencies/organizations and OMB to:  Determine what additional data is not appropriate for display on USAspending.gov and provide justification (as required by OMB)  Assist in providing context information regarding unusual purchases, for potential posting on USAspending.gov  Remain engaged and involved with the USAspending.gov initiative 23

Federal Acquisition Service Questions

Federal Acquisition Service 25 Thanks for your time and attention! David J. Shea, CPCM, PMP (703) Please provide your feedback and thoughts about the current and future program at: under “GSA SmartPay® Program Feedback Form” Please note this updated version of the presentation will be available in June, 2010 on the GSA SmartPay website (