The Procurment Executives Council (PEC) is planning to approach the next Administrator, Office of Federal Procurement Policy, with a proposal to raise the government credit card threshold from $2,500 to $10,000. PEC justifies this proposal, in part, by stating that the individuals who handle these small purchases will be able to work on more complex procurements. Here are two questions.

1. From an internal control standpoint, is it a good idea for non-procurement types to be acquring items of this value?

2. Will the contracting staff that currently handle the $2,500 to $10,000 value purchases have a reasonable transition to the more complex procurements?

By Kennedy How on Friday, March 02, 2001 - 12:44 pm:

Bob,

Our activity already has (or, at least, used to have) one of those offices that did the micro purchases. Before, all of us 1102s had a mix, but with the emphasis on ALT reduction, and reductions in cycle times, these really small transactions which should only take a few days took way longer, because the larger, more visible and more closely scrutinized deals had the priority. It came down to "I'll get to it when I can.".

So, we now have/had a small group of 1102s who do this sort of thing. As a part of it, they can do Credit Card purchases. We don't have any non-procurement types doing this sort of purchase. We've also had battles over creating non-1102 ordering officers to buy stuff on IDIQ contracts.

We have not implemented any wide range of credit card purchases, because of administrative reasons. The experience we have with reconciliations is very poor.

Finally, regarding transitions from one type of purchasing to another, there is the familiarity factor. I remember when I first started, after a couple-three years, and people got reassigned, there were those who couldn't do an IFB; all they've ever done are RFPs or admin work on systems contracts via Contract Mods. It took some serious handholding by 1102 interns to get them back up to speed.

Kennedy

By Anonymous on Friday, March 02, 2001 - 12:56 pm:

I see no problem with non-procurement types handing these kinds of purchases, provided (and there's always a "provided" with me) they undergo simplified acquisition training and adhere to all procurement rules. Furthermore, their purchases are reviewed on a post-award basis, or a sample is at least. We procurement types don't add value to customers for these actions. Rather, we do the opposite - adds delays and administrative expense. If program offices undergo training, abide by the procurement rules such as competition over $2,500, etc., let them do it. Often, procurement doesn't know who potential sources are, don't know even what the nature of the action is, can't answer vendor questions, etc, and all this means more work for everyone involved. Bottom line is let them do it and make the limit $25,000 instead of $10,000.

By Robert Jackson on Saturday, March 03, 2001 - 08:33 pm:

It would be simpler for the non-procurement personnel to handle a P-card with a larger threshold than 2,500.00. The state and local government should raise the threshold to a higher amount. For example, if a division such as Motor Equipment has a P-card with the threshold being 2,500 this does not eliminate processing an APO because they have reached the threshold of their P-card. This division process APOs for 3.85. This is ridiculous. Yes, the P-card threshold should be raised from 2,500 to at least 25,000. The formal bid threshold should be raised from 30,000 to 50,000. Construction projects under or even 35,000, contractors are not bidding because its not enough money to go through the channels of State or Fed. Maybe small business, but some States do not set-aside for Small businesses.

By AJ on Monday, March 05, 2001 - 11:14 am:

Is there any talk about raising the micro-purchase threshold to $10,000? It seems at one time there was such a proposal.

Some warranted COs already use the P-card for actions in excess of $2,500 and sometimes even in excess of $25,000. Is that improper?

By Anonymous on Monday, March 05, 2001 - 12:59 pm:

Bob
Warranted KOs have always had authority greater than 2500K. Since it is not mentioned I assume you mean non warranted card holders?

By bob antonio on Monday, March 05, 2001 - 01:38 pm:

Yes, it is for non-contracting types.

By C Mercy on Monday, March 05, 2001 - 02:15 pm:

There have been three problems with the micro-purchase program. First use of mandatory sources. Time and time again this edict is often ignored. Nothing kills me more than to see the government buy and warehouse stuff and then go out and buy it again . Secondly, reporting items acquired, maintaining property lists. And third, the effect on small business. Raising the limits is okay if we either eliminate the mandatory source requirement......or really enforce it. And if items acquired that are required to be on property logs are so listed. Thirdly ,we go back to small purchase-small business mandates. Otherwise I think we should leave it alone.

By Anonymous on Monday, March 05, 2001 - 02:42 pm:

AJ and Anon of 11:14,

Technically, open market (non-GSA or other delivery order type arrangement) purchases over the micro-purchase threshold, require a PO to include required clauses. The Purchase Card can be used as a means of payment, but not ordering.

Since just about everything purchased through this qualifies as "commercial", only a few clauses apply. But they should be communicated to the vendor in some manner.

This means some type of transmittal needs to take place on orders over $2,500 in addition to just giving an oral notification and the cardholder info.

By Zelda Anon on Tuesday, March 06, 2001 - 11:15 am:

I just have some random thoughts on the subject. -- Technically FAR Part 12 Commercial Items is not applicable to the acquisition of commercial items using the Governmentwide commercial purchase card (FAR 12.102(d)(4)). So what clauses do you use? Well.... for purchases under the simplified acquisition threshold there are the clauses listed at 13.005. To Bob's question ... Is a good idea for non-procurement types to be acquiring items of this value? Remember when there used to be 1105 Purchasing Agents? Do they still exist? I'm not so sure that giving non-procurement types (those without the training and of course those wonderful educational standards CO's supposedly need to do their jobs) a higher level of buying power is a good idea. Regarding Robert's view that the thresholds be increased to $25,000 or more - well then you are talking about adhering to a lot of different requirements - synopsizing for one. In my contracting office, the CO's have purchase card authority up to $100,000 per transaction. We are encouraged to use the card for every non-complex acquisition and this includes new orders. I'm not sure that's the intent of the FAR when at 13.301 (c) it says the Governmentwide commercial purchase card may be used for micropurchases, placing task orders or delivery orders against already existing contracts, agreements or BPA's, and to make payments (that vague isn't it). Where's the streamlining in using a credit card over $25,000 when you have to go through every acquisition step except issuing a written order?

By formerfed on Tuesday, March 06, 2001 - 12:56 pm:

Exactly. That's the point, except your last sentence should be $2,500 instead of $25,000. Even if you issue a PO in conjunction with the Purchase Card, the vendor likely has performed by the time the order reaches them.

By Scott on Thursday, March 08, 2001 - 11:37 am:

Zelda:

The streamlining with bill payment falls on the accounting side of the house...make one payment to the credit card company or make 40 payments to the different vendors. It can amount to good saving's in money and FTE's.

By Kennedy How on Thursday, March 08, 2001 - 12:06 pm:

Scott,

We've found that to not be the case, from the standpoint of accounting for all of the items listed on a monthly statement. This is more of a problem with accounting systems within the Government, I think, but I know that the statements we get aren't detailed enough to track back to a specific obligation. The office that is using a CC to do purchasing has at least one, maybe two people specifically tasked to reconcile records. This has to do with apportioning funding to the right customer.

Our office has investigated the issue of statements, with our activity being the merchant card accepting authority, and we've run into the same statement billing problems. It's difficult to charge our reimbursable accounts the right amount of money if the statement doesn't tell you who's being charged.

Kennedy

By curious on Thursday, March 08, 2001 - 02:30 pm:

Question: are credit card purchases reported to the FPDS at all, either via use of the SF-281 or equivalent for <$25k actions or the SF-279 or equivalent?

I've heard contradictory information that GSA tracks all these actions and I've also heard there is no tracking.

Can anyone provide enlightenment on this?

By bob antonio on Thursday, March 08, 2001 - 04:05 pm:

curious:

GSA collects it and I believe it is placed in the annual FPDS report. I think I used that for this table.

http://www.wifcon.com/fedstatsall.htm

By curious on Thursday, March 08, 2001 - 04:36 pm:

Thank you. I have looked at the table you linked me to. Does GSA break down the data so that it reflects the socio-economic acheivements of each Department? And then, is such data combined with the Departments SF-281 & SF279 data so there is a full picture somewhere?

It seems in some cases there is a disconnect. Departments may individually report a decrease in total $$ when in actuality, there is no such decrease, just that the credit card purchases are reported elsewhere, and lacking that info, there isn't a clear picture of each Departments socioeconomic achievements.

Mr. Kelman, in the 9/11/2000 issue of Federal Computer Week, emphatically states (6th paragraph) that FPDS data doesn't include credit card transactions.

Thats why I'm on this mission - to make sure, somewhere, it all comes together.

By bob antonio on Thursday, March 08, 2001 - 07:58 pm:

Since GSA awards the contracts for the credit cards, they collect the usage information. The credit card information is missing from the SF 281 and SF 279 data. FPDS is missing this part of the purchasing. However, I am quite sure they have a separate page in the annual report where they show the information that GSA collects. This information is distinct from the 279 and 281 data.

Knowing this, I took that data and added it back to the agencies I could identify from the GSA provided data to try to give a full picture of federal purchasing.

Since GSA collects information on usage of the cards, its appears to be theoretically possible for GSA to request additional reporting information from the issuer of the cards to show where the transaction was completed. Depending on the reporting information available on credit card transactions, GSA might be able to match that data with SBA lists to identify socio-economic data.

By Anonymous on Friday, March 09, 2001 - 07:46 am:

Bob,

I don't think GSA can do that easily. They are at the mercy of the banks in terms of reporting. The Purchase Card program doesn't really get much more information from the banks than we all do with our individual credit card statements. In turn, the bank data is only as complete or as good as what the merchants report to them.

By bob antonio on Friday, March 09, 2001 - 07:57 am:

Anon:

Yes, that is what I suspect. Every time I look at a credit card stub, I see something a bit different. However, my card company lists the places where I completed a transaction. If they do it for me, GSA may be able to add it in as an evaluation factor in a future procurement. As more and more is acquired through the purchase cards, overall contracting statistics will be more distorted.

There is already concern that small businesses are losing out in current contracting because of consolidated procurements. It will not take much for Congress to enact another small business program to make up for what they perceive as reduced business to small business. If that law is based on innacurate information, we may have more paperwork with no real results.

I think this will have to be dealt with in some way.

By Anonymous on Friday, March 09, 2001 - 08:22 am:

Although I looked into this years ago it is my recollection that the reason the IMPAC card data was not collected by users was because several Federal agencies were capturing the data at their finance offices.By data I mean socio economic data

By curious on Friday, March 09, 2001 - 09:01 am:

This is a fairly big issue as I believe there is significant data inaccuracy in FPDS. I've heard some agencies report credit card actions, others do not.

I do believe the use of the credit card is, as one of the Anon's mentioned earlier in this thread, a method of payment, not a method of procurement. All of the procurement requirements, set-aside, competition, fair & reasonable price determination, clauses, etc, are still required.

Thus, it follows, reporting should be no different, ie: SF281 or SF279 as appropriate.

GSA can & should certainly track overall usage of the card, volume of transactions, average $ per action, etc. However, each Agency/Department should still, in my opinion, do the reporting to ensure it is captured, tracked, and incorporated into the FPDS.

By curious2 on Friday, March 09, 2001 - 09:21 am:

Here is something of interest. OFPP Memo to Procurement Executives re: Changes to the FPDS Reporting Manual on Purchase Card Transactions.

http://purchasecard.sarda.army.mil//FPDS.html

I don't think it has been superceded. It clearly states that OFPP is cognizant that there is no reporting consistency - and OFPP clearly decided not to provide any clarifying guidance.

If there is no consistency, can there be any measure of accuracy?

There is a huge volume of credit card actions, both # of actions and associated $$ governmentwide. Not accounting for them is a disservice in many ways.

By formerfed on Friday, March 09, 2001 - 09:47 am:

The answer for OFPP is not as easy as you might think. The inconsistency among agncies results from many factors - problems through financial systems interfaces, procurement automation where identity of the vendor varies (name of bank vs name of merchant), differences in using the purchase card as maens of ordering vs maens of payment, etc. The cost to modify the different automated procurement systems to handle this one issue alone is very large.

Despite the huge volume of transactions accomplished done with the Purchase Card, the associated dollar value is not that big. It certainly would be nice to know in precise terms how much business goes to different socio-economic categories, but at what cost? Another question is will having precise data change anything?

One thing to consider is having a study done based on sampling. Perhaps OFPP, SBA, or GAO could do that.

By curious on Friday, March 09, 2001 - 10:04 am:

formerfed - you state that "The cost to modify the different automated procurement systems to handle this one issue alone is very large." However, if credit card actions are treated/counted the same as non-credit card actions (which they are, only the payment process is different), there is no system modification necessary. The merchant identified should be the contractor, not the bank, but I know where you are coming from.

I believe the $$ amount might be more significant than most people think, although I agree it is not huge. But if the threshold is raised to the $10k, it will grow by leaps and bounds.

I know we've had warranted CO's use the card often on actions over $25k. That adds up.

OFPP should look into this.

Thanks for everyone's input

By carol elliott on Friday, March 09, 2001 - 06:04 pm:

We may need to be more specific when talking about purchases made by credit cards. For purchases that fall within the $2,500 micro-purchase limit there is no requirement to track socio-economic categories. Credit card purchases that are also micro-purchases represent a different procurement method, not just a different payment method.

A couple of years ago when GSA issued new purchase card contracts, I attended a briefing where the credit card company explained all of the wonderful information they could track for the Government and the number of useful reports that could provide that consolidated this information.

The credit card companies currently identify companies not only by name, but by the type of merchandise they sell. Using the merchandise codes, it is possible to restrict the type of items purchased by restricting the type of merchants that can accept the card. I asked if there were any plans to also identify companies by socio-economic categories. My recollection was that the subject had come up in discussions with GSA, but GSA was not pushing it. Obviously the banks are not putting resources into this if GSA is not requiring it.

Yes, credit cards are used by many offices for purchases over the micro-purchase limit. In these instances the use of the credit card is strictly for ease of payment. These type of credit card actions should be counted the same as non-credit card actions toward meeting small business goals.


Bob, Is is clear whether the PEC is considering raising the micro-purchase limit to $10,000 or just allowing purchases up to $10,000 to be made by non-contracting types?

If the micro-purchase limit goes up to $10,000 then it may have an impact on small businesses. If the purchases aren't considered micro-purchases then they would still have to be set aside for small businesses. Tracking these purchases might be harder, but that would have to be considered as agencies implement the changes.

By bob antonio on Tuesday, March 13, 2001 - 12:00 pm:

Carol:

That is a good point about the $2,500 amount. I will go back and try to find the source. If I can find it, I will clarify it.

By Anonymous on Monday, March 26, 2001 - 04:04 pm:

How about the impact of the SCA in buys over $2500. How do we do that with a Purchase Card?

By carol elliott on Monday, March 26, 2001 - 04:50 pm:

Usually the credit card purchases are for supplies, so SCA isn't an issue. I can't speak for other offices, but at ours there is no real difference in purchases over $2500. We provide the vendor with a fax copy of the standard terms and conditions including any clauses required for buys under the SAT. Since this is pre-printed boilerplate, it takes little effort. The major difference is that vendors charge the credit card rather than mailing an invoice.

If SCA applies to the work being purchased, the use of a credit card for payment doesn't change anything.

By curious on Tuesday, March 27, 2001 - 08:06 am:

I believe this is the clarifying guidance everyone needs to be aware of:

http://www.usbr.gov/aamsden/et/0004A1.html