1. Federal Acquisition Service U.S. General Services Administration David J. Shea, CPCM, PMP Program Director, Office of Charge Card Management (OCCM) Federal Acquisition Service 12 th Annual GSA SmartPay Training Conference August 10 - 12, 2010 GSA SmartPay Program Update

2. Federal Acquisition Service 2 Value to the Customer  To provide an update on the status of the GSA SmartPay Program and its current initiatives: Innovation Relevant legislation updates The new era of transparency and accountability  Engage with senior leaders from the contractor banks in a discussion around their views on current trends and the future of the GSA SmartPay program

3. Federal Acquisition Service Agenda  Welcome  GSA SmartPay Program Performance  Hot Issues & Trends  Tax Exemption Strategy  Point of Sale Discount  Green Reporting and Sustainability  Overseas Travel  Local Travel  Relevant Legislation/Guidance  The new Era of Transparency & Accountability  Panel Discussion  What’s next for GSA SmartPay2  Hallmarks of an Effective Charge Card Program  Success Stories  Questions 3

4. 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?

5. Federal Acquisition Service Polling the Audience  How many audience members are: A. Level 1 A/OPCs B. Level 2 A/OPCs C. Level 3 A/OPCs D. Unsure  How many audience members are new to the GSA SmartPay Training Conference this year? A. Yes, this is my first year B. No, I have attended the GSA SmartPay Training Conference before ? 5

6. Federal Acquisition Service GSA SmartPay Program Performance

7. Federal Acquisition Service Polling the Audience  What was the program’s FY09 total spend/refunds/transactions/cardholders? A. $30B spend/ $255M refunds/ 92M transactions/ 3.1M cardholders B. $19B spend/ $194M refunds/ 84M transactions/ 2.8M cardholders C. $40B spend/ $200M refunds/ 99M transactions/ 3.0M cardholders D. $15B spend/ $155M refunds/ 72M transactions/ 2.1M cardholders ANSWER: A. $30B spend/ $255M refunds/ 92M transactions/ 3.1M cardholders! ? 7

8. Federal Acquisition Service Program Performance – GSA SmartPay by the Numbers (Omits FY1998 data) 8 Past Performance GSA SmartPay1 (FY1999-2008) GSA SmartPay2 (FY2009) Purchase:$158.7 BPurchase:$19.3 B Travel:$63.2 BTravel:$8.9 B Fleet Card:$9.4 BFleet:$1.5 B TOTAL SPEND:$ 231.3 BTOTAL SPEND:$29.8 B TOTAL REFUNDS:$ 1.1 BTOTAL REFUNDS:$255.1 M

9. Federal Acquisition Service 9 Evolution of the GSA SmartPay Program Epoch 1 Dramatic increase in the number of cards: Cardholders empowered to use cards to conduct Government business Assisted with workload management/loss of acquisition personnel Focus shifted to accountability and compliance: Improved card utilization (reduction in number of purchase cards) Increased internal controls Enhanced security GSA SmartPay solutions evolve as strategic and innovative business tool: Innovative products and services: greater “business intelligence” Tax recovery Increased transparency “Beyond Plastics” Improved data Green purchasing information Epoch 2Epoch 3 Epoch 1Epoch 3Epoch 2

10. Federal Acquisition Service Hot Topics & Key Issues

11. Federal Acquisition Service Polling the Audience  If you are on travel in Georgia using your GSA SmartPay2 Travel Card to pay for lodging, are you required to pay Georgia lodging and occupancy taxes: A. Yes B. No ANSWER: A. Yes! In Georgia, the Federal government is not exempt from Georgia lodging and occupancy taxes when payment is made by an Individually Billed Account (IBA) or Centrally Billed Account (CBA). Each state has different tax exemption rules, and more information can be found on the GSA SmartPay website. ? 11

12. Federal Acquisition Service Tax Exemption Strategy  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:  Identify top five states by travel card spend (as a start)  Address proper treatment of tax for government charge cards by approaching state controller office  Prioritize tax “prevention” for lodging taxes  Continue to improve fleet tax recovery process  Explore other tax issues such as taxes on wireless services and vaccines  Banks will still be held accountable for meeting contractual tax recovery requirements (see section C.2.2.5 of the GSA SmartPay2 Master Contract)  GSA’s Office of Government-wide Policy (OGP) has removed tax information on their website and has redirected users to the GSA SmartPay website  OCCM is updating relevant tax information on the GSA SmartPay website  Note: most states are not exempting Individually Billed Accounts (IBAs), as a result most state forms are outdated, and therefore no longer necessary 12

13. Federal Acquisition Service Polling the Audience  How much did the Federal government spend on office supplies in FY09? A. $875,000,000 B. $1,600,000,000 C. $1,100,000,000 B. $900,000,000 ANSWER: B. $1.6 billion! And 50% of that $1.6 billion was spent at retail, paying full price. ? 13

14. Federal Acquisition Service Point of Sale (POS) Discount 14  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  New and Improved Federal Strategic Sourcing Initiative (FSSI) Office Supply Blanket Purchase Agreements (BPAs) focused on socioeconomic factors and lowest price awards  Agencies committed to using FSSI Office Supplies are estimated to save between 7% - 10% annually with government-wide savings of $48 million annually  Opportunity for additional savings through volume discounts as combined spend across the government hits a series of spend thresholds  11 of 12 vendors are small businesses with 2 SDVOSB* awards  Ease of use * SDVOSB refers to Services-Disabled Veteran-Owned Small Business

15. Federal Acquisition Service Point of Sale Discount (Cont’d)  FSSI Office Supply BPAs were established in June 2010 with 15 vendors: BPAVendorSocio-EconomicWebsite GS-02F-XA001Capitol Supply Inc.Swww.capitolsupply.com GS-02F-XA002Document Imaging DimensionsS/Wwww.did-inc.com GS-02F-XA003Independent Stationers Inc.Swww.isgroup.org/gsasearch GS-02F-XA004Metro Office Products LLCS/Dwww.mymetroofficeproducts.com GS-02F-XA005Shelby Distribution Inc.SDVOSBwww.expressop.com GS-02F-XA006SITA Business Systems Inc.S/D/Wwww.sitabs.com GS-02F-XA007WECSYS LLCS/Dwww.wecsysllc.com GS-02F-XA008EZ Print Supplies Inc.S/Wwww.ezpsonline.com GS-02F-XA009Office DepotLbds.officedepot.com GS-02F-XA0010ASE Direct Inc.SDVOSBwww.asedirect.com GS-02F-XA0011Cartridge Savers Inc.S/Dgov.cartridgesavers.com GS-02F-XA0012New York Inkjet LLCS/Wwww.newyorkinkjet.com GS-02F-XA013Stephens Office SupplyWwww.theofficestore.com GS-02F-XA014Staples, Inc.Lwww.Staples.com GS-02F-XA015Imaging Systems LLC dba Access SystemsSDVOSBwww.accessproductsinc.com Key for Socio-Economic Labels S: Small Business S/W: Small Women Owned Business S/D: Small Disadvantaged Business S/D/W: Small Disadvantaged Woman Owned Business SDVOSB: Service Disabled Veteran Owned Small Business 15 More information on this topic will be provided during the “Federal Strategic Sourcing Initiative” (Session 7, Wednesday 12:30pm, C102 and Session 11, Thursday 9:30am, C102

16. Federal Acquisition Service Green Purchase Reporting  Federal agencies are required to use sustainable practices when purchasing goods and services*  The Federal green purchasing program requires cardholders to purchase recycled content products, energy efficient products and environmentally preferable products  The Office of Management and Budget (OMB) and the Office of the Federal Environment Executive (OFEE) are seeking improvements in the reporting of green purchases  GSA Advantage!® tracks green purchases made by the GSA SmartPay purchase card through Advantage Spend Analysis Program (ASAP) reporting by the: Sub-agency/Bureau level Payment method, including GSA SmartPay purchase card spend or Activity Address Code (AAC)  Please visit: www.asap.gsa.gov to run a report on your agency (note: GSA Advantage!® registration is required to run ASAP reports)www.asap.gsa.gov *Executive Order 13514 – Federal Leadership in Environmental, Energy and Economic Performance Executive Order 13423 – Strengthening Federal Environmental, Energy, and Transportation Management 16

17. Federal Acquisition Service Developing Issue for Travelers Overseas  Isolated cases of merchants and ATMs overseas are refusing to accept non-chip charge cards  Issue is related to misunderstanding by a limited number of merchants, incorrect ATM signage, and one ATM network with software problems  Visa advises cardholders:  Request that merchants swipe the charge card regardless of chip – and it should work  Swipe card at ATMs in spite of “Chip only” signage  Visa plans to test non-chip card acceptance in the near future 17 Note: chip cards are available under the GSA SmartPay2 Master Contract

18. Federal Acquisition Service Use of the GSA SmartPay Card for Local Travel  Changes to the Federal Travel Regulation (FTR) have been issued to remove references to local travel  In accordance with this Direct Final Rule, the effective and applicable date of this change was June 4, 2010  New optional use of the card for local travel will be for civilian agencies, at their discretion  DoD Joint Travel Regulations already permits use of the Travel Card for local travel expenses  OCCM recommends agencies/organizations develop and issue internal policies addressing oversight and internal controls for managing use of the travel card for local travel 18

19. Federal Acquisition Service Polling the Audience  Does you agency/organization plan to exercise optional use of the GSA SmartPay2 Travel Card for local travel? A. Yes B. No C. I don’t know ? 19

20. Federal Acquisition Service Relevant Legislation/Guidance

21. Federal Acquisition Service Polling the Audience  True or False: The proposed Treasury implementation regulations for the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) 3% payment withholding applies to all GSA SmartPay2 purchase card transactions, effective January 1, 2012? A. True B. False C. I don’t know ANSWER: B. False. If finalized as proposed, the primary impact of TIPRA is on purchase card use for contracting payments; any payment under $10,000 is not subject to withholding. ? 21

22. Federal Acquisition Service Relevant Legislation/Guidance  Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA)  How does this legislation affect GSA SmartPay2? Legislation/ Law DescriptionIssue/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 IBA 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, not just those made by charge cards Travel and Fleet charge cards are largely unaffected 22

23. Federal Acquisition Service Polling the Audience  True or False: If finalized, the proposed Treasury regulations implementing the Housing Assistance Tax Act (HATA) of 2008 Section 6050W will alleviate government agencies/organizations from a large portion of 1099 reporting requirements? A. True B. False C. I don’t know ANSWER: A.True. If finalized as proposed, merchant acquiring banks will have to report all payment card transactions, regardless of size, beginning January 1, 2011. However, this reporting shift does not include transactions that are processed through third party payment processors or payments that are not linked to a charge card account. ? 23

24. Federal Acquisition Service Relevant Legislation/Guidance (Cont’d)  Housing Assistance Tax Act (HATA) of 2008, Section 6050W  How does this legislation affect GSA SmartPay2? 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 SmartPay2 contractor banks and the Department of Treasury to discuss general payment procedures 24

25. Federal Acquisition Service Relevant Legislation/Guidance (Cont’d)  Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203)  How does this proposed bill affect GSA SmartPay2? Legislation/ Law DescriptionIssue/Status Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) “An Act to promote the financial stability of the United States by improving accountability and transparency in the financial system to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.” Initially proposed on December 2, 2009 in the House (H.R. 4173) and in the Senate Banking Committee (S. 3217) to promote financial stability of the United States by improving accountability and transparency to the financial system Ensures that the fees small business are charged for accepting debit cards are reasonable and proportional to the costs incurred Limits charge card networks from imposing anti- competitive restrictions on small business Signed into law by President Obama on July 21, 2010; contains language that prevents the networks from issuing rules that require merchants to accept all cards for all transaction amounts Permits the regulation of interchange fees on debit cards; with the exception of government issued debit cards or general-use prepaid cards Allows merchants to set $10 minimum transaction limits on credit card purchases 25

26. Federal Acquisition Service Relevant Legislation/Guidance (Cont’d)  Memorandum for the Heads of Departments and Agencies, Improving Government Acquisition (M-09-25)  How does this guidance affect GSA SmartPay2? Legislation/ LawDescriptionIssue/Status Memorandum for the Heads of Departments and Agencies, Improving Government Acquisition M-09-25 (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 to help/assist agencies/ organizations achieve savings in their acquisition activities, as use of the GSA SmartPay program provides refunds and reduces administrative costs for agencies 26

27. Federal Acquisition Service The New Era of Transparency & Accountability

28. 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 28

29. 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 29 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

30. Federal Acquisition Service What are the next steps?  Release of version 2.1 of USAspending.gov including Phase 1 data reported at the MCC cluster level has been delayed – release timeframe is TBD  Version 2.0 was released on May 21, 2010 which posts annual spend data by agency/organization and business line on USAspending.gov  OCCM is waiting for a specific release date for version 2.1, 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)  In coordination with customer agencies/organizations, assist in providing context information regarding unusual purchases, for potential posting on USAspending.gov  Remain engaged and involved with the USAspending.gov initiative 30

31. Federal Acquisition Service Panel Discussion  Citibank  JPMorgan Chase  U.S. Bank 31

32. Federal Acquisition Service What’s Next for GSA SmartPay2? 32

33. Federal Acquisition Service What are the Hallmarks of an Effective Charge Card Program? 33

34. Federal Acquisition Service What are Some of the Success Stories for the GSA SmartPay2 Program? 34

35. Federal Acquisition Service Questions? ? ? 35

36. Federal Acquisition Service 36 www.gsa.gov/gsasmartpay Thanks for your time and attention! David J. Shea, CPCM, PMP david.shea@gsa.gov (703) 605-2867 Please provide your feedback and thoughts about the current and future program at: www.gsa.gov/gsasmartpay under “GSA SmartPay Program Feedback Form”