GSA

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U.S. General Services Administration
GSA SmartPay Program Update
David J. SheaDirector, GSA SmartPay Visa
Government ForumWashington, DC April 25, 2006
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Together, Weve Come a Long Way
FY05 - 17 billion in spend 26 million
transactions 300 thousand cardholders
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Together, Weve Come a Long Way
FY05 - 7 billion in spend 43 million
transactions 1.9 million cardholders
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Together, Weve Come a Long Way
FY05 - 1 billion in spend 24 million
transactions
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Agencies, Industry and GSA Working Together A
Success Story

• GSA SmartPay provides service to over 350
  federal agencies, organizations, and Native
  American tribal governments
• Over 92 million purchase, travel, and fleet
  transactions processed in FY05 through 2.6
  million cards
• Total program spend of nearly 25 billion in FY05
• Earnings of over 118 million in agency refunds
  in FY05
• Give yourselves a hand!
• Total spend across all business lines from FY99
  to FY05 147 billion

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What this means... Is Mission Support
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Continuous Management Improvement Process

• Delinquency Management
• February 2006 Government-wide IBA delinquency
  rate was 3.26
• 8.2 decrease from one year ago and an 82
  decrease since 2000
• Reduction in number of cards deployed
• 738,621 fewer cards in FY05 than FY00
• 22 fewer cards in FY05 than FY00
• OMB Circular A-123 Appendix B, Improving the
  Management of Government Charge Card Programs,
  was issued 10/1/2005
• Requires agencies to submit charge card
  management plans
• Requires training for all participants and
  refresher training every 3 years
• Requires agencies to implement risk management
  policies and controls
• Requires agencies to maintain and report data and
  performance metrics

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Examples of Oversight Challenges

• Could the following transactions be proper?
• A purchase made at a bar...
• A purchase made at a liquor store...

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Oversight Challenges

• A purchase at a bar...
• This was a legitimate purchase (though made
  through unconventional means) made by an
  individual who needed to rent a horse for a
  funeral. The bar owners brother owned the
  horse.
• A purchase made at a liquor store...
• This was a legitimate purchase made by an Army
  chaplain for sacramental wine.
• Better methods for more readily identifying and
  preventing improper purchases need to be found
  and implemented. This is key to future program
  growth, although the actual rate of card
  fraud/misuse/abuse is very low.

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Future Program Opportunities

• Strategic sourcing
• Similar to what is obtainable with individual
  consumer cards, Government should receive spend
  reports from Industry as a common practice can
  play a role in agency strategic sourcing efforts
• Larger Dollar Value Transactions
• Cardless systems with lower interchange rates
• Micropurchase level may increase
• Need to be sensitive to interchange payment issue
• Data challenges
• Access to Level 3 transaction data is still a
  major challenge for Government. GSA SmartPay
  contractors are required to pass all the data
  they receive from merchants however, the program
  has no privity of contract with merchants.
• Approach towards incentivizing merchants to pass
  Level 3 data while progress has been made --
  needs to be revisited/reinvigorated. May be
  innovative ways to obtain this data.
• Government should have consistent access to
  data-driven business intelligence, meaningfully
  presented

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Future Program Opportunities

• Small business transactions
• Getting industry to provide data/reports on small
  business transactions is still an issue
  (SF-294/295/e-SRS, etc.)
• Industry needs to be more aggressive/innovative
  in driving increased small business merchant
  acceptance
• Small business is critical economic driver
  education about card benefits and costs needs to
  be improved and simplified
• New card products need to challenge the status
  quo
• Debit cards offer lower fraud protection coverage
  and lower or no rebates compared to charge cards.
  Must this be true?
• Prepaid cards may provide a greater degree of
  control over program spending. Do we have a
  training/education issue here?
• Card member benefits that are provided to
  commercial clients should also be available to
  the Government
• We cant we have cards that can turned on/off as
  needed?
• Cant we come up with better alternatives to
  convenience check use?

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Future Program Opportunities

• Security
• In cards offered to individuals, industry offers
  features such as virtual account numbers and
  system-generated e-mails for defined events, such
  as receipt of a payment, spending reaching a
  certain pre-defined level, etc. Why dont we
  have these features? Imagine a world where, for
  example, a supervisor receives an e-mail whenever
  one of his/her employees transacts business on a
  card.
• Similar to consumer cards, industry should be
  able to provide Government cardholders with
  timely warnings of potentially high risk
  transactions
• Sensitive government data (including employee
  data) must be protected from improper disclosure
  at all levels prime and subcontractor
• Card information shall not be shared by open
  e-mail
• Misuse/abuse/fraud
• While there is a some commonality to industry and
  governments definition/ understanding of fraud,
  a common definition of it, as well as of misuse
  and abuse, needs to be implemented
• Government is getting better at detecting fraud
  but greater collaboration with industry to
  understand purchasing policies and provide
  innovative tools and approaches is key to
  sustaining gains

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Future Program Opportunities

• Tax recovery
• Federal Government transactions made on centrally
  billed accounts (CBAs) should not be taxed
• Taxes assessed on CBA transactions should be 100
  recoverable
• Tax levy issue remains a concern
• A/OPC staffing challenges
• Need to reduce time necessary to effectively
  manage the program
• Many A/OPCs perform this work as a collateral
  duty
• Need to develop better, more innovative practices
  and tools
• Can automation/better policies/better training
  help?
• International challenges
• Industry needs to assist the government in better
  aligning with chip card technology that is
  required to support transactions in some
  countries
• Industry should provide better customer service
  support for foreign transactions government
  mission is increasingly global
• Need to get a better handle on costs of
  international transactions

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Future Program Opportunities

• Program Concerns Commercial world in tension
  with Government needs
• Transparent rebate calculations
• The formula that banks use to calculate rebates
  on charge card transactions is not transparent
• Rebate calculations depend on several factors
  which are not clearly defined and vary from bank
  to bank
• Cancelled cards
• Transactions can still be passed through
  cancelled charge cards for months after the card
  has been cancelled
• When do we put the fork in a dead card?
• Dispute process
• Government is required to dispute a transaction
  within a relatively short window (60 days from
  transaction date)
• The dispute process is currently structured with
  a relative bias to the merchant

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Transition
FY05
FY07
FY08
FY06
FY09
Fall 2004
Spring 2005
Fall 2005
Fall 2006
Fall 2007
Fall 2008
Spring 2006
Spring 2007
Spring 2008
Acquisition Planning Phase

• Future program requirements
• Request for Information
• Press release
• Acquisition strategy
• Source Selection Plan

Acquisition Management Phase

• Draft Request for Proposals
• Request for Proposals
• Contract award/s

Transition Planning Phase
Transition Management Phase
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Transition
FY06
FY08
FY09
FY07
Spring 2006
Fall 2006
Fall 2007
Fall 2008
Spring 2007
Spring 2008
Spring 2009
Fall 2005

• We simply cannot have what happened during the
  first transition happen again
• Financial interface challenges
• Card distribution issues
• Later, crispy cards from mail irradiation
• The GSA SmartPay program office will
• Work closely with agencies and banks to
  facilitate a smooth transition
• Develop transition planning tools for agency use
• Plan and prepare for the transition to minimize
  impact on cardholders
• Large amount of agency and bank involvement
  required

Now
AwardContracts
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Transition
FY06
FY08
FY09
FY07
Fall 2005
Spring 2006
Fall 2006
Fall 2007
Fall 2008
Spring 2007
Spring 2008
Spring 2009
Now
AwardContracts

• A/OPCs need to make sure their cardholders
• Ensure that all transactions with their current
  bank are reconciled subscriptions are stopped
  under prior accounts
• Fill out a new card application
• Activate a new card
• Destroy their old card and ensure no new
  transactions continue to be made on it Complete
  any new training
• Contact the A/OPC if they have any issues or
  questions

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Questions?
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