1. U.S. General Services Administration Federal Acquisition Service GSA SmartPay® Program Update David J. Shea, CPCM, PMP Director, Office of Charge Card Management GSA SmartPay Virtual Forum July 29 to July 31, 2014

2. Federal Acquisition Service 2 Program Overview Today’s topics include discussions of major GSA SmartPay® Program trends and issues:  Spending  Compliance and Internal Controls  State Tax Compliance  Training Approaches  Regulatory Changes

3. Federal Acquisition Service 3 SmartPay Summary Spend Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes

4. Federal Acquisition Service 4 Purchase Card Spend Trend Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes ** Government contract spend pulled from USASpending.gov on 4/22/14

5. Federal Acquisition Service 5 Cumulative FY 2014 YTD Spend Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Sort by MonthFY13FY14 Fleet$ 1.5 Billion $ 1.4 Billion Purchase $ 10.5 Billion $ 10.1 Billion Travel (CBA)$ 1.1 Billion $ 1 Billion Travel (IBA) $ 3.4 Billion $ 3.1Billion Grand Total $ 16.5 Billion $ 15.7 Billion

6. Federal Acquisition Service 6 Optimizing SmartPay Benefits Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes There are many ways for agencies to maximize GSA SmartPay Program benefits.  Agencies have the option to engage in a no-cost A/P file review with contractor banks to identify potential opportunities for expanded program use  Savings calculator available at: http://smartpay.gsa.gov/about-gsa-smartpay/program- statistics/savings-calculator  For Travel Cards, comparing voucher amounts to Travel Card transactions may also provide insight into additional compliance opportunities

7. Federal Acquisition Service 7 Optimizing SmartPay Benefits Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Maximizing Program Use  Micro-purchases : Ensure GSA SmartPay solutions are used to the maximum extent for micro- purchases; it is not unusual to see a card-accepting supplier paid many different ways across an organization  Contract Spend : Agencies should find ways to maximize program use, note FAR Part 13.301(b) states that agency procedures should not limit use of the Purchase Card to micro-purchases only

8. Federal Acquisition Service 8 Optimizing SmartPay Benefits Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Exploring Further Use of SmartPay Solutions  Evolving Case Study – Utility payments  A/P File Review identified significant spend opportunity  Major challenges exist with both handling paper receivables (invoices) and developing uniform payment strategy for use with a highly regulated industry  Use of a blended payment solution likely  Looking for pilot test opportunities with existing suppliers

9. Federal Acquisition Service 9 Compliance & Internal Control Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes The charge card internal control framework continues to evolve.  The Government Charge Card Abuse Prevention Act of 2012 (Public Law 112-194)  Office of Management and Budget Memorandum M-13-21, Implementation of the Government Charge Card Abuse Prevention Act of 2012  GSA Smart Bulletin #21

10. Federal Acquisition Service 10 Compliance & Internal Control Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes  Vast majority of transactions are appropriate  Recurring oversight themes: o Compliance with training requirements o Consistency of management follow through o Retaining adequate file documentation o Ensuring property accountability

11. Federal Acquisition Service 11 Compliance & Internal Control Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Capabilities and Reports (1 of 3) Contractor bank Electronic Access Systems can provide standard reports to help managers detect questionable transactions. These reports include:  Account Activity Report  Declined Authorizations Report  Disputes Report  Unusual Spending Activity Report  Lost/Stolen Card Report

12. Federal Acquisition Service 12 Compliance & Internal Control Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Capabilities and Reports (2 of 3) The following is a list of common questionable MCC codes. MCCDescription 5933Pawn Shops 4829Wire Transfer Money Order 5094Precious Stones and Metals, Watches and Jewelry 5681Furriers and Fur Shops 5813Bars/Taverns/Lounges/Discos 5921Pkg Stores/Beer/Wine/Liquor 7273Dating and Escort Services 7995Betting/Track/Casino/Lotto 9223Bail and Bond Payments

13. Federal Acquisition Service 13 Compliance & Internal Control Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Capabilities and Reports (3 of 3) The following items are required of executive agencies* under P.L. 112-194:  IG Report on Audit Recommendation Implementation  Statistical Report - See OMB Circular A-123, Appendix B, Chapter 5.3.1  Narrative Report - See OMB Circular A-123, Appendix B, Chapter 5.3.2  IG Risk Assessments  Joint Violations Report (Purchase Card only) - Required for agencies with $10M or more in annual purchase card (integrated—purchase business line only) spend ** The definition of "executive agency" for purposes of the Charge Card Act is found at 41 U.S.C. 133. Section 2 of the Charge Card Act ("Management of Purchase Cards") does not apply to the Department of Defense (DOD). The Charge Card Act amended I 0 U.S.C. 2784, which provides the requirements for purchase card management for DOD. Section 3 of the Charge Card Act ("Management of Travel Cards" ) and Section 4 of the Charge Card Act ("Management of Centrally Billed Accounts") do apply to DOD.

14. Federal Acquisition Service 14 State Tax Compliance Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes OCCM is engaged in a tax recovery pilot.  Tax recovery pilot underway  Retained “share and savings” tax recovery contractor pursuant to IPERA  Focus is on IBA lodging taxes paid in the 11 states which provide an exemption, and on taxes assessed on CBA accounts in all 50 states  Data is validated by GSA, and claim packages are submitted to the appropriate State or vendor

15. Federal Acquisition Service 15 State Tax Compliance Trends Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Pilot Test Lessons Learned  IBA Travel Card tax leakage is minimal and CBA tax leakage observed to be even smaller  Significant administrative effort: some States require invoices, receipts, or proof of payment  State and municipality laws vary; in some cases, recovery must be sought from vendor as opposed to state government  Pilot results appear to validate original hypothesis  It is more efficient to educate cardholders about point of sale exemption policies rather than reclaiming taxes

16. Federal Acquisition Service 16 Training Approaches Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes Achieving Balance Between Virtual/In-person As there are fewer in-person training opportunities, OCCM is transitioning to a training model adopting increased availability of virtual training.  There are currently 4 cardholder and A/OPC training courses available through https://training.smartpay.gsa.gov/  Since October 2012, nearly 300,000 cardholders and A/OPCs have successfully completed training  OCCM is requesting approval for an in-person SmartPay Training forum for 2015 in the Washington, DC metro area

17. Federal Acquisition Service 17 Regulatory Changes Spending Compliance & Internal Controls State Tax Compliance Training Approaches Regulatory Changes FAR Case 2013-005 “Terms of Service and Open-ended Indemnification, and Unenforceability of Unauthorized Obligations.”  Interim rule  Effective June 21, 2013  Amends FAR parts 12, 13, 32, 43, and 52  Inclusion of an open-ended indemnification clause in a EULA, TOS, or other agreement is not binding unless expressly authorized by law  Deals with potential Anti-Deficiency Act concerns  See FAR 13.202 and clause 52.232-39 for more information

18. Federal Acquisition Service 18 Quick Updates  GSA SmartPay 3 planning has begun  Roll-out of agency headquarters access to GSA/OCCM Data Warehouse systems begins summer 2014  In coordination with agencies and OMB, OCCM is developing an initial set of program-wide metrics and reports  OCCM to perform “Do Not Pay” risk analysis against SAM (formerly EPLS) data  OCCM closely monitoring EMV/ Chip and PIN developments; working to all this product to the JPMC contracts

19. Federal Acquisition Service 19 Audience Questions

20. Federal Acquisition Service 20 Thank you for your time and attention! Contact Information David J. Shea, CPCM, PMP david.shea@gsa.gov (703) 605-2867 Please provide your feedback and thoughts on our website, available at http://smartpay.gsa.gov/feedback. Don’t forget to visit the GSA SmartBlog at: https://smartpay.gsa.gov/blogs.