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Authority to use Purchase Cards
By Homer on Tuesday, March 25, 2003 - 10:06 am:

I have some general questions about the use of Government issued commercial credit cards, for purchases in excess of the micro-pur;chase limit of $2500.

Use of Government issued commercial purchase cards is governed by FAR 13.301, which states, in part, ". . . Agency procedures should encourage use of the card in greater dollar amounts (i.e., greater than the micro-purchase limit of $2500) by contracting officers to place orders and to pay for purchases. . ."

Purchase cards may be used, generally, up to the simplified acquisition threshold of $100,000.

As I understand it, purchase cards serve as a funding mechanism, not a contracting mechanism. So my question is, for purchases greater than $2500, are only authorized contracting officers entitled to use the cards for purchases? Can this authority be delegated?

By formerfed on Tuesday, March 25, 2003 - 10:20 am:

Sure. That authority can be delegated and many agencies do. Where the problem arises is certain clauses are required above $2,500. Somehow those should be applied in some manner and that's where a type of order is required. There are some pretty creative ways some agencies use to do this. But a program office just cannot call up a vendor and order something verbally when it exceeds $2,500. However a cardholder can place oral orders under GSA Schedules, other type ID/IQ contracts, and BPAs when use of oral orders is authorized and the card is used for payment.

By Homer on Tuesday, March 25, 2003 - 10:41 am:

Thanks, formerfed. You say that "the problem arises is certain clauses are required above $2,500." What clauses? And then, "that's were a type of order is required." I am not sure what you are referring to by "order."

By formerfed on Tuesday, March 25, 2003 - 10:58 am:

As a minimum, the commercial items clauses would generally apply. Take a look at FAR 12.301.

The exact clauses vary depending on the nature and dollar value of what you buy. For example if you buy services covered by the Service Contract Act, a Department of Labor wage determination applies. When an order exceeds the micropurchase threshold of $2,500, the vendor is subject to certain laws and regulations. A purchase order or something similar needs transmitted to the vendor so they agree to abide by the clauses or are bound to them as a condition of acceptance of the order.

You don't run into this situation when its less than $2,500 because the statute establishing the micropurchase authority exempted the various laws and regulations.

By dave on Tuesday, March 25, 2003 - 01:19 pm:

For buys over the micropurchase threshold, we issue a purchase order (OF347) with the applicable clauses. In block 21 of the form where it specifies where to mail invoices we insert "Payment to be made by U. S. Government purchase card".

By Anonymous on Wednesday, March 26, 2003 - 01:59 pm:

What do you do if you have a micro purchase situation, but the vendor(s) won't accept a Government purchase card?

By Anonymous on Wednesday, March 26, 2003 - 03:11 pm:

Look at Daves answer above your question

By Anonymous on Wednesday, March 26, 2003 - 05:12 pm:

Anonymous 3:11 p.m.--

Daves answer is for purchases above the mirco-purchase threshhold. I am trying to determine what's required for a purchase below $2,500.

By dave on Thursday, March 27, 2003 - 06:49 am:

If they don't accept the card, we then issue the standard OF 347 and have invoices submitted to our own payment office, just like a PO issued for $2,501. You just won't have as many applicable clauses, etc.

By Phil C. on Thursday, March 27, 2003 - 08:48 am:

Reply to Anonymous on Wednesday, March 26, 2003 - 01:59 pm:

If the vendor won't accept the PC in a micro-purcase situation, my advice is to find another source. My experience in CONUS, it typically isn't too difficult to find a source who will accept the purchase card. OCONUS is a different matter as the purchase card is not as widely accepted.

Also if micro-purchase and the "only" source available doesn't accept the purchase card, the activity can use an accomdation check (actually written against a purchase card line of accounting) provided the vendor will accept the check (1.25% surcharge by Citibank).

The PC saves time, effort, and money in the procurement, invoice, and payment process if used correctly.

Sorry don't have the FAR/DFARS open in front of me, but in one of those it's prescribed that the PC is mandatory for CONUS micro-purchase unless FLAG/GENERAL/SES officer authorizes otherwise...of course some other requirements/exceptins pertain.

Moreover, for procurements above $2,500 my experience is that we put the Payment by Credit Card Clause (Payment by Third party) into the contract and made payments by purchase card. Sorry can't cite as I don't have the FAR/DFARS available (having trouble accessing farsite).
Again, this saved us time/money in the invoicing/payment process.

By Anonymous on Thursday, March 27, 2003 - 10:33 am:

Further to Phil C:

It is DOD policy, rather than a FAR re4quirement, that use of the PC as a purchase method (as opposed to a payment mechanism only) is mandatory for micropurchases.

Accomodation checks qualify as use of the purchase card for this purpose, provided that the buying activity's purchase card program includes accomodation checks. It is not automaticlly part of all purchase card programs since it involves an additional administrative fee.

With accomodation checks, the purchase card holder literally issues a check to the vendor written against the card account. The vendor deposits/cashes the check. The issuer gets billed for the check amount plus the fee on the monthly card account.

In order to use a traditional purchase order/invoice/DFAS payment of invoice process within DOD for micropurchases, the DOD policy requires that a waiver be granted from the mandatory purhcase card policy. Waiver approvals are limited to Flag or General Officer/SES civilian or Commanding Officer of field activities that do not have a Flag/General Officer or SES.

Above the micropurchase threshold, simplified acquistion procedures must be followed but the purchase card may be used as the paymant mechanism (not the purchase method) if provided for in the purchase order in lieu of the traditional invoicing process. Within DOD the micropurchase threshold can be increased to various levels within/outside the continental United States (CONUS) under certain circumstances -- officially declared contingency operations, in defense of terrorism, etc. Details should be checked in FAR/DFARS and policy memos and require varying levels of authorization.

By Anon2U on Thursday, March 27, 2003 - 02:08 pm:

The usual reason that you cannot find another vendor is because you are procuring the expertise of a certain individual who is usually retired and either teaching or consulting on a part time basis. He has no credit card capability but the accomadation check option is something that each procurement office should try to establish I think.

By snyder on Thursday, March 27, 2003 - 02:11 pm:

whoa, wait a minute. Return to formerfed, 3/25 10:20. Stated that authority over $2,500 can be delegated.

My understanding is that only warranted CO's can use the government credit cards for actions in excess of $2,500 due to the various competition, set-aside, and other requirements of FAR 13. Delegating to non-warranted personnel isn't appropriate. What am I missing?

By Anon2U on Thursday, March 27, 2003 - 02:16 pm:

At my agency they get a warrant that says they are authorized for credit card purchases up to the their limit. This is after they have additional Contract Specialist training to learn the basics.

By formerfed on Thursday, March 27, 2003 - 02:50 pm:


Anon2U has it right on the nose. The places I know that do it require poetntail cardholders to attend 40 hours of training. The card holders have to do everything the FAR requires. An 1102 in the procurement office reviews their actions in a post-award manner to ensure compliance with the regulations.

By Phil C. on Friday, March 28, 2003 - 02:58 am:

Regarding the $25,000 PC authority, yes, the cardholder must be appointed via the SF-1402 warrant. For DoN cardholders, DoN policy is that completion of CON 101, or CON 202, or NAVSUP sponsored SAP class is required for a cardholder to be eligible for PC authority above $2,500. Also DoN policy is that cardholders regardless of authority level obtain refresher PC training every 2 years.

The small business set aside does not apply for PC open market purchases above $2,500, as that authority (>$2,500) can only be used by a cardholder located OCONUS soliciting quotes from vendors located OCONUS. Thus, we donít have FAR 19 to consider if we remain in the OCONUS environment. Of course, the other requirements of DFARS 213.301(2)(i) must be met to purchase open market with the PC above $2,500.

For PC purchases under $2,500 the rules are simple, get one quote and if the cardholder determines the price is fair and reasonable, providing purchasing that item isnít prohibited, make the buy. The F&R determination does not have to be documented.

For PC purchases from $2,500 to $25,000 the cardholder must solicit three quotes, and document the basis for determining the awarded price as being fair and reasonable.

The only other requirement for every purchase is to screen mandatory sources of supply/service as required by FAR 8. Typically, JWOD is the only mandatory source that the typical cardholder might purchase from.

There is oversight and review that is supposed to be performed on a transaction, monthly, semi-annual, and annual basis by other PC members/players in the cardholder hierarchy.

I think the real beauty of the PC is the payment method up to $9.9 million for invoices on purchase orders/contracts. Eliminates a bunch of expense and manhours to process through DFAS.

By snyder on Friday, March 28, 2003 - 09:57 am:

Thanks for some clarification.

Are these people who obtain the 40 hours of training classified as 1102 or 1105s? I can't imagine employees in other technical positions wanting or willing to take on the responsibility and workload, especially the documentation required, associated with processing actions over $2,500. Maybe thats just me.

Using the credit card as a payment mechanism is excellent, both very efficient and cost effective. We should do more of it.

By formerfed on Friday, March 28, 2003 - 10:57 am:


No, these people aren't 1102's in most cases. They generally are administrative people in program offices such as analysts or support staff. The reason such technical positions take on that workload and responsibility is it's the quickest and most efficient manner in most cases to get what the program needs. Often the programs are physically removed from the procurement office. Instead of preparing requisitions and transmitting them to their procurement shop for action, which takes XXX days/weeks/months (I'll let you fill that part in), the program controls their own destiny and orders what is needed themselves. In some cases, the technical staff person wants the duties. More often than not, a progarm manager sees the benefits and directs it.

By kathy salas on Thursday, May 08, 2003 - 09:32 am:

Wage Grade workers at a Repair Depot are balking at being Government Purchase Card holders because they say its "administrative" in nature and should be done by GS workers. Also, they do not want the added responsibilities of being a cardholder.

I see in the FAR, as supplemented, that responsibilities for micro-purchase should be delegated to the lowest level possible, but is it written anywhere that acquisition offices (contracting directorates, etc.) will not process micro-purchase requests? (I've reviewed the Army SOP on GPC.) Or is it up to each individual contracting office to establish an internal policy stating that due to the benefits of the micro purchase card system, they will no longer process micro purchase requests?

Request any assistance from the acquisition community.

Thank you.

By Anonymous on Thursday, May 08, 2003 - 11:39 am:

Its a Command decision......contract offices merely facilitate

By Anonymous on Monday, May 12, 2003 - 03:32 pm:

Within DOD there is an applicable DOD financial policy which requires all purchases at or below the micro-purchase level be made as purchase card transactions. A contracting office may not process a requisition below the micro-purchase threshold as a traditional purchase action (i.e., purchase order) unless the requiring activity has obtained a waiver from this policy. Waivers must be approved at flag officer/SES level except, for field activities without a flag/SES, the Commanding Officer may approve the waiver.