Federal Acquisition Service U.S. General Services Administration GSA SmartPay® 2 Purchase Card Basics GSA SmartPay® 2 Purchase Card Basics 11 th Annual GSA SmartPay® Training Conference Phoenix, AZ July 28-30, th Annual GSA SmartPay® Training Conference Phoenix, AZ July 28-30, 2009

Federal Acquisition Service 2 Value to the Customer  Learn about the GSA SmartPay® 2 Program  Learn about the GSA SmartPay® 2 Purchase Charge Card Program  Learn about relevant legislation and regulations  Understand specific roles and responsibilities  Learn about fraud and misuse of charge cards, indicators, and preventative measures  Learn and share best practices of charge card program management

Federal Acquisition Service 3 Agenda  Purchase Charge Card Overview  Purchase Charge Card Performance  Relevant Statutes and Legislation  Roles and Responsibilities  Purchase Card Misuse, Abuse, and Fraud  General Charge Card Management Best Practices  Training Best Practices and Training Resources

Federal Acquisition Service 4 Purchase Charge Card Overview  The purchase card program provides cards to federal employees to make official government purchases for supplies, goods, and services under the micro-purchase threshold of $3,000 per Federal Acquisition Regulation (FAR) The purchase charge card is both a procurement and payment mechanism for micro-purchases For purchases above the micro-purchase threshold, the purchase card may be used as an ordering and payment mechanism, but not a contracting mechanism The following items may not be purchased with the purchase card per GSA SmartPay® 2 Master Contracts: Long-term rental or leasing of land or buildings Travel or travel-related expenses (with the exception of meeting spaces and local transportation services such as Metro fare cards, subway tokens, etc.) Cash advances

Federal Acquisition Service 5 Purchase Charge Card Overview (continued)  All purchase card accounts are Centrally Billed Accounts (CBA), and the liability for transactions made by authorized cardholders is borne by the government  The government is not liable for transactions on the card when the use of the card is by a person who does not have actual, implied, or apparent authority for such use  If the card is used by an authorized cardholder to make an unauthorized purchase, the government is liable for payment and the agency/organization is responsible for taking appropriate action against the cardholder such as: Counseling Cancellation of Purchase Card Notation in employee performance evaluation Suspension and or termination of employment

Federal Acquisition Service 6 Purchase Charge Card Program Performance FY08  In FY 2008 purchase charge cards: Generated over $19.8 billion in spend (up from $18.7 in FY07) Processed 25.5 million transactions Were utilized by 276,000 cardholders  The government saves on processing costs and generates revenue through volume refunds: Productivity refunds: based on the timeliness and/or frequency of payments to the bank (faster payments = higher refunds) Sales refunds: based on the dollar or spend volume during a specified time period Corrective refunds: payments made to the agency/organization to correct improper or erroneous payments on an invoice Did You Know… In FY08, $629 was spent on the purchase card every second

Federal Acquisition Service 7 Relevant Statutes and Legislation American Recovery and Reinvestment Act of 2009 (P.L ) Enacted in February 2009, the Bill includes: A section on the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) Delays the withholding of tax on government contractors until December 31, 2011 (one-year delay from the original date) Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) (P.L ) Section 511 mandates a 3% tax withholding on all payments made to government contractors Office of Charge Card Management (OCCM) is participating in OMB/OFFM Section 511 working group Given commercial charge card payment model, concerned withholding cannot be accomplished in a sensible manner FAR Case Government-wide Commercial Purchase Card Restriction for Treasury Offset Program Debts OCCM provided comments to the FAR Secretariat Proposed rule would prohibit use of purchase card as a payment tool under contracts held by vendors with a Federal debt until such time as the debt is resolved. In the meantime, contract payments would be processed using a method subject to levy

Federal Acquisition Service 8 Relevant Statutes and Legislation Continued Office of Management and Budget (OMB) Circular A-123 Appendix B Establishes standard minimum requirements and best practices for improving the management of government charge card programs For more information, visit website: Additional Resources Federal Acquisition Regulations (FAR) For more information, visit website: Agency/Organization specific policies and established procedures

Federal Acquisition Service 9 Responsibilities of the A/OPC  Agency/Organization Program Coordinators (A/OPCs) are primarily responsible for overseeing the agency’s/organization’s purchase charge card program in support of its mission and operations  A/OPCs work with the Office of Charge Card Management (OCCM), GSA SmartPay® 2 banks, cardholders, and agency/organization management  A/OPC responsibilities are outlined in the GSA SmartPay® Master Contract and will vary among agencies/organizations  “Level 1” A/OPCs are the highest ranking A/OPC within the agency/organization and the primary agency/organization point of contact with OCCM

Federal Acquisition Service 10 Responsibilities of the A/OPC (continued)  A/OPC responsibilities may include tasks such as: Promoting appropriate use of purchase charge card by cardholders Ensuring cardholders receive appropriate training Monitoring account activity and managing delinquencies Taking appropriate action regarding charge card fraud, misuse or abuse Working with the bank to ensure agency and cardholder needs are met Resolving any technical and operational problems between the bank and the cardholder as necessary Managing agency/organization post-transition challenges or issues with the new GSA SmartPay® 2

Federal Acquisition Service 11 Responsibilities of Cardholders  Use the charge card appropriately, in accordance with agency/organization policy, laws, and governmental regulations  Keep up-to-date with required program and agency/organization specific training, including refresher training  Look out for communications from A/OPCs and take appropriate action

Federal Acquisition Service 12 Responsibilities of Approving Officials (AO)  Approving Officials are responsible for: Ensuring that all purchases made by the cardholder are appropriate and charges are accurate Resolving all questionable purchases with the cardholder Certifying the monthly invoice resulting from the purchases of the cardholders within his/her account structure Verifying receipt of the purchase

Federal Acquisition Service 13 What is Purchase Card Misuse/Abuse and Fraud?  The use of a purchase card for anything other than official federal government goods and services is considered to be misuse/abuse of the card. Fraud may be involved depending on the facts  Common examples of misuse/abuse include: Personal use or unauthorized purchases Use for or by someone other than the cardholder Purchases exceed the cardholder’s limit Purchases that do not comply with the Federal Acquisition Regulation (FAR) and/or other applicable procurement statutes and regulations

Federal Acquisition Service 14 Non-Cardholder Fraud  Non-cardholder fraud involves use of the card or cardholder data by an unauthorized person  High-risk situations for non-cardholder fraud include: The card was never received The card was lost The card was stolen Altered or counterfeit cards Account takeover

Federal Acquisition Service 15 Possible Indicators of Misuse/Abuse or Fraud  Merchant category code (MCC) appears to be outside the cardholder’s general area of responsibility  The account has been closed due to fraud and a new card has been reissued  The cardholder frequently disputes transactions  The cardholder has had multiple authorizations declined  The cardholder makes transactions on non-work days  The cardholder consistently hits his/her monthly limit  The merchant address appears to be a home address

Federal Acquisition Service 16 Possible Indicators of Misuse/Abuse or Fraud (continued)  The cardholder has several transactions with the same merchant within a short period of time (e.g., 48 hours), and the transactions total more than $3,000 (micro-purchase threshold)  The cardholder is unable to provide proof of purchases, such as receipts  The cardholder has multiple transactions of even dollar limits (e.g., $20, $100)  The cardholder repeatedly does business with the same merchants (minimal rotation of sources)

Federal Acquisition Service 17 Addressing Misuse/Abuse and Fraud  A/OPCs have the responsibility to report any suspected or actual fraud to the appropriate authorities within the government  If fraud is suspected of a cardholder, merchant, or other third party, A/OPCs should file a complaint with the agency’s Inspector General for investigation  Many agencies/organizations provide a fraud hotline number for reporting misuse/abuse and fraud

Federal Acquisition Service 18 Consequences of Misuse/Abuse and Fraud  Reprimand  Counseling  Cancellation of card  Notation in employee performance evaluation  Suspension of employment  Termination of employment  Criminal prosecution

Federal Acquisition Service 19 Best Practices for Preventing Misuse/Abuse and Fraud  Set reasonable spend limits  Restrict use through MCC Blocks  Deactivate cards as appropriate  Review cardholder activity through reports generated from bank Electronic Access Systems

Federal Acquisition Service 20 Purchase Charge Card Program Management Best Practices  Engage management at the highest levels  Train A/OPCs and cardholders  Review credit limits and lower as appropriate  Use the bank’s Electronic Access System (EAS), data mining tools, and/or agency/organization technology to run reports for monitoring questionable transactions

Federal Acquisition Service 21  Provide the GSA SmartPay® card-sized booklet, “Helpful Hints for Purchase Card Use”, with each cardholder application  Publish frequently asked questions (FAQs) related to the purchase card on your agency’s/organization’s website  Create a monthly newsletter to reinforce agency/organization charge card policies and procedures  Monitor spend by developing ad hoc reports that can be generated via Electronic Access Systems (EAS)  Perform an annual review of all issued cards to determine if each cardholder meets the criteria for continued participation in the federal government purchase charge card program Purchase Charge Card Program Management Best Practices (continued)

Federal Acquisition Service 22 Training Best Practices  Provide comprehensive face-to-face cardholder training as orientation for new cardholders  Address standards of conduct/ethics and clearly state consequences for misuse  Discuss agency/organization policy  Ensure cardholders and A/OPCs fulfill the required refresher training requirements at a minimum every three years, or more frequently as per agency/organization policy  Ensure that training is easily accessible

Federal Acquisition Service 23 Training Resources  Purchase-specific GSA SmartPay® online training: Cardholders: A/OPCs:  Agency/organization-provided training  Bank-provided training  GSA SmartPay® Annual Training Conference  Materials available online, and hard copies may be ordered by visiting the Blueprint for Success: A Guide for Purchase Card Oversight Mini card-sized brochure – “Helpful Hints for Purchase Card Use”

Federal Acquisition Service Questions? Please provide your feedback and thoughts about the current and future program at: under “GSA SmartPay® Program Feedback Form ”