What is the GSA SmartPay

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What is the GSA SmartPay

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Title: What is the GSA SmartPay


1
What is the GSA SmartPay 2 Purchase Card
Program?
Elizabeth Skolnik Camesha Everett Office of
Charge Card ManagementGeneral Services
Administration
June 2009
2
Value to the Customer
  • Learn about the GSA SmartPay purchase charge
    card program
  • Learn about relevant legislation and regulations
  • Understand specific roles and responsibilities
  • Learn about fraud and misuse of charge cards,
    indicators, and preventative measures
  • Learn and share best practices of charge card
    program management

3
Agenda
  • GSA SmartPay Program Overview
  • Introducing GSA SmartPay 2
  • Purchase Charge Card Overview
  • Legislation, Regulations, and Oversight
  • Roles and Responsibilities
  • Purchase Charge Card Misuse/Abuse and Fraud
  • Best Practices for Managing Your Purchase Charge
    Card Program

4
GSA SmartPay Program Overview
  • GSA SmartPay, established in 1998, is the
    largest government charge card program in the
    world
  • The GSA SmartPay program enables over 350
    Federal agencies, organizations, and Native
    American tribal governments to obtain charge card
    products and services through Master Contracts
    that GSA has currently established with three
    banks JP Morgan Chase, U.S.Bank, and Citibank.
  • Agencies issue task orders against these existing
    Master Contracts to obtain charge card products
    and services

5
Evolution of the GSA SmartPay Program
Epoch 1
Epoch 2
Epoch 3
  • 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
  • Cards evolve as strategic
  • business tool
  • Strategic sourcing leveraging buying power of
    the government to achieve savings and best value
    procurement
  • New products and services greater business
    intelligence
  • Enhanced security

6
Program Stakeholders
  • Agencies/organizations
  • Use charge card products and services to support
    their missions and operations
  • GSA Office of Charge Card Management (OCCM)
  • Provide overall program management and advocacy
  • Banks (Bank of America, Citibank, JPMorgan Chase,
    Mellon Bank, and US Bank)
  • Provide charge card products and services through
    GSA Master Contracts
  • Associations (MasterCard and VISA)
  • Partner with the banks to issue GSA SmartPay
    charge cards
  • Office of Management and Budget (OMB)
  • Perform oversight of the government-wide charge
    card program

7
Business Lines
  • Purchase Cards
  • Use to purchase supplies and services in support
    of agency/organization missions and operations
  • Travel Cards
  • Cover travel and travel-related expenses
  • Only GSA SmartPay 2 cardholders can access the
    City Pair Program
  • Fleet Cards
  • Use to purchase government vehicle fuel and
    maintenance services
  • Issued to vehicles, rather than individuals
  • Integrated Cards
  • Offers functionality of two or more of the three
    business lines

8
Charge Card Benefits
  • Administrative savings and efficiency
  • In FY08 agencies/organizations reported 1.72
    billion in savings, up from 1.67 billion in FY07
  • Travel cards provide access to the City Pair
    program
  • 72 average discount off comparable commercial
    fares
  • Rebates based on dollar volume and payment
    performance
  • Electronic transaction data, enabling better
    reporting and ability to detect waste, abuse, and
    fraud
  • Currently working to obtain Point-of-Sale
    discounts from various vendors and merchants
  • GSA SmartPay provides program-wide
    representation on regulations and issues
    impacting the program

9
Tax Exemption
  • Government purchases are tax exempt, although
    some merchants may still apply taxes to the
    purchases
  • Each state has different policies and procedures
    around the tax exemption of purchases made with
    GSA SmartPay cards
  • The GSA SmartPay website provides information on
    each states requirements often cardholders will
    need to print a tax exemption certificate to
    give to the merchant
  • Visit the GSA SmartPay website and click on tax
    information
  • The Office of Charge Card Management (OCCM) has
    requested updated information from states for GSA
    SmartPay 2 this information is posted to the
    website
  • Tax exemption and recovery plans and processes
    are an important part of managing your charge
    card program.
  • For tax questions contact Camesha Everett at
    camesha.everett_at_gsa.gov.

10
Introducing GSA SmartPay 2
  • On November 30, 2008 agencies/organizations
    transitioned to the new GSA SmartPay 2 charge
    card and began processing transactions through
    one of the GSA SmartPay 2 banks
  • Citibank
  • JPMorgan Chase
  • US Bank
  • All major customers, with the exception of DHS
    travel and purchase, transitioned successfully to
    GSA SmartPay 2 on or before November 30, 2008
    DHS travel and purchase will transition on
    February 28, 2009 (DHS fleet has already
    transitioned)

11
GSA SmartPay 2 Enhanced Products and Services
  • Contactless cards faster transactions, the card
    does not leave the hand of the cardholder
  • Pre-paid (stored value) cards capability to
    load and reload cards with specific dollar
    values cards can be issued with required value
    on short notice
  • Cardless accounts provides established
    vendor-specific charge accounts without physical
    cards
  • Convenience checks improved ability to issue
    and reconcile checks online such as
  • Electronic transaction records that must include
    merchant name
  • Online imaging of cleared checks

12
GSA SmartPay 2 New Products and Services
Continued
  • Increased security requirements increased
    emphasis on security of both personally
    identifiable information (PII) and procurement
    data to minimize risk to individual cardholders
    and to agencies
  • Detailed minimum security standards including
    FISMA and Payment Card Industry (PCI) security
    standards
  • GSA has conducted bank security system reviews
    and determined that bank Electronic Access
    Systems (EAS) are Certified and Accredited (CA),
    and are Section 508 compliant
  • Increased data requirements more focus on Level
    3 data, which provides better insight into the
    program for agencies/organizations and GSA
    SmartPay

13
GSA SmartPay 2 New Products and Services
Continued
  • Improved Program Technology
  • Increased capability of bank EAS systems to
    provide flexibility in reporting and account
    management, including the ability to
  • Generate ad hoc reports
  • Change category block templates (e.g., MCC
    blocking)
  • Dispute transactions electronically
  • Enable A/OPCs to turn cards on and off
  • Data mining tools provided by associations such
    as MasterCards Expert Monitoring System (EMS)
    and VISAs Intellilink offer additional insight
    into card program data and trends
  • Transaction monitoring to detect misuse, fraud,
    waste, and abuse (e.g., email alert service)

14
GSA SmartPay 2 Purchase Card
Purchase
15
Purchase Charge Card Overview
  • The purchase card program provides cards to
    federal employees to make official government
    purchases for supplies, goods, and services under
    the micropurchase threshold of 3,000
  • The purchase charge card is both a procurement
    and payment mechanism for micropurchases
  • For purchases above the micropurchase threshold,
    the purchase card may be used as an ordering and
    payment mechanism, not a contracting mechanism
  • The following items may not be purchased with the
    purchase card, as per the GSA SmartPay 2 Master
    Contracts
  • Long-term rental or leasing of land or buildings
  • Travel or travel-related expenses
  • Cash advances

16
Purchase Charge Card Overview (continued)
  • All purchase card accounts are Centrally Billed
    Accounts (CBA), and the liability for
    transactions made by authorized cardholders is
    borne by the government
  • Use of the card by a person other than the
    cardholder, who does not have actual, implied, or
    apparent authority for such use, is not the
    liability of the government
  • If the card is used by an authorized cardholder
    to make an unauthorized purchase, the government
    is liable for payment and the agency/organization
    is responsible for taking appropriate action
    against the cardholder

17
Purchase Charge Card Program Performance FY08
  • In FY 2008 purchase charge cards
  • Generated over 19.8 billion in spend up from
    18.7 in FY07
  • Processed 25.4 million transactions
  • Were utilized by 276,000 cardholders
  • Annual spend volume has almost doubled since FY98
    (approximately 10 billion to 19.8 billion in
    FY08)
  • The government saves on processing costs and
    generates revenue through volume refunds
  • Productivity refunds based on the timeliness
    and/or frequency of payments to the bank (faster
    payments higher refunds)
  • Sales refunds based on the dollar or spend
    volume during a specified time period
  • Corrective refunds payments made to the
    agency/organization to correct improper or
    erroneous payments on an invoice

18
Convenience Checks
  • Convenience Checks provide increased flexibility
    to acquire supplies and services, when the
    purchase card is not accepted
  • These transactions are similar to purchase card
    transactions in that they are listed as line
    items in the monthly statement and invoice
  • A/OPCs are responsible for the implementation of
    the appropriate internal controls and oversight
    of convenience check activity
  • There is no authorization process for convenience
    checks agencies/organizations may have a dollar
    limit printed on the check, but there is no
    automated process to pre-approve the amount of
    the purchase

19
Relevant Statutes and Legislation
  • American Recovery and Reinvestment Act of 2009
  • Enacted in February 2009 the bill includes a
    section on the Tax Increase Prevention and
    Reconciliation Act of 2005 (TIPRA). The bill
    delays the withholding of tax on government
    contractors until December 31, 2011. This is a
    one-year delay from the original date.
  • P.L. 109-222 Tax Increase Prevention and
    Reconciliation Act of 2005 (TIPRA)
  • Section 511 mandates a three percent tax
    withholding on all payments made to government
    contractors.
  • Given commercial charge card payment model,
    concerned withholding cannot be accomplished in a
    sensible manner.
  • GSA/OCCM is participating in OMB/OFFM Section 511
    working group.
  • FAR Case 2006-026 Government-wide Commercial
    Purchase Card Restriction for Treasury Offset
    Program Debts
  • The Office of Charge Card Management provided
    comments to the FAR Secretariat comment period
    closed February 29, 2008.
  • Proposed rule would prohibit use of purchase card
    as a payment tool under contracts held by vendors
    with a Federal debt until such time as the debt
    is resolved. In the meantime, contract payments
    would be processed using a method subject to
    levy.
  • S. 789 Credit Card Abuse Prevention Act of 2007
  • OCCM has provided multiple sets of comments to
    OMB and Hill staff.
  • Latest draft of legislation is an improvement.

20
Public Laws and Regulations for Purchase Cards
  • Office of Management and Budget (OMB) Circular
    A-123, Appendix B
  • Establishes standard minimum requirements and
    best practices for improving the management of
    government charge card programs
  • For more information, visit http//www.whitehouse
    .gov/omb/circulars/a123/a123_appendix_b.pdf
  • Federal Acquisition Regulations (FAR)
    http//www.acquisition.gov/far/
  • Agency/organization-specific policies and
    established procedures

21
Responsibilities of the A/OPC
  • Agency/Organization Program Coordinators (A/OPCs)
    are primarily responsible for overseeing the
    agencys/organizations purchase charge card
    program in support of its mission and operations
  • A/OPCs work with the Office of Charge Card
    Management (OCCM), GSA SmartPay banks,
    cardholders, and agency/organization management
  • A/OPC responsibilities are outlined in the GSA
    SmartPay Master Contract and will vary among
    agencies/organizations
  • Level 1 A/OPCs are the highest ranking A/OPC
    within the agency/organization and the primary
    agency/organization point of contact with OCCM

22
Responsibilities of the A/OPC (continued)
  • A/OPC responsibilities may include tasks such as
  • Promoting appropriate use of purchase charge card
    by cardholders
  • Ensuring cardholders receive appropriate training
  • Monitoring account activity and managing
    delinquencies
  • Taking appropriate action regarding charge card
    fraud, misuse or abuse
  • Working with the bank to ensure agency and
    cardholder needs are met
  • Resolving any technical and operational problems
    between the bank and the cardholder as necessary
  • Managing agency/organization post-transition
    challenges or issues with the new GSA SmartPay 2

23
Responsibilities of Cardholders
  • Use of the charge card appropriately, in
    accordance with agency/organization policy, laws,
    and governmental regulations
  • Keep up to date with required training, including
    refresher training
  • Look out for communications from A/OPCs and take
    appropriate action

24
Responsibilities of Approving Officials (AO)
  • Approving Officials are responsible for
  • Ensuring that all purchases made by the
    cardholder are appropriate and charges are
    accurate
  • Resolve all questionable purchases with the
    cardholder
  • Certifying the monthly invoice resulting from the
    purchases of the cardholders within his/her
    account structure
  • Verifying receipt of the purchase

25
What is Purchase Card Misuse/Abuse and Fraud?
  • The use of a purchase card for anything other
    than official federal government goods and
    services is considered to be misuse/abuse of the
    card, and depending on the facts, may involve
    fraud
  • Common examples of misuse/abuse include
  • Personal use or unauthorized purchases
  • Use for or by someone other than the cardholder
  • Purchases from an unauthorized merchant

26
Non-Cardholder Fraud
  • Non-cardholder fraud involves use of the card or
    cardholder data by an unauthorized person
  • High-risk situations for non-cardholder fraud
    include
  • The card was never received
  • The card was lost
  • The card was stolen
  • Altered or counterfeit cards
  • Account takeover

27
Possible Indicators of Misuse/Abuse or Fraud
  • Merchant Category Code (MCC) appears to be
    outside the cardholders general area of
    responsibility
  • The account has been closed due to fraud and a
    new card has been reissued
  • The cardholder frequently disputes transactions
  • The cardholder has had multiple authorizations
    declined
  • The cardholder makes transactions on non-work
    days
  • The cardholder consistently hits his/her monthly
    limit
  • The merchant address appears to be a home address

28
Possible Indicators of Misuse/Abuse or Fraud
(continued)
  • The cardholder has several transactions with the
    same merchant within a short period of time
    (e.g., 48 hours), and the transactions total more
    than 3,000 (micropurchase threshold)
  • The cardholder is unable to provide proof of
    purchases such as receipts
  • The cardholder has multiple transactions of even
    dollar limits (e.g., 20, 100)
  • The cardholder repeatedly does business with the
    same merchants (minimal rotation of sources)

29
Addressing Misuse/Abuse and Fraud
  • A/OPCs have the responsibility to report any
    suspected or actual fraud to the appropriate
    authorities within the government
  • If fraud is suspected of a cardholder, merchant,
    or other third party, A/OPCs may file a complaint
    with the agencys Inspector General for
    investigation
  • Many agencies/organizations provide a fraud
    hotline number for reporting misuse/abuse and
    fraud

30
Consequences of Misuse/Abuse and Fraud
  • Reprimand
  • Counseling
  • Cancellation of card
  • Notation in employee performance evaluation
  • Suspension of employment
  • Termination of employment
  • Criminal prosecution

31
General Charge Card Program Management Best
Practices
  • Engage management at the highest levels
  • Train A/OPCs and cardholders
  • Review credit limits and lower as appropriate
  • Use the banks Electronic Access System (EAS),
    data mining tools, and/or agency/organization
    technology to run reports for reviewing
    questionable transactions and monitor charge card
    spending

32
General Charge Card Program Management Best
Practices (continued)
  • Provide the GSA SmartPay card-sized booklet,
    Helpful Hints for Purchase Card Use, with each
    cardholder application
  • Publish frequently asked questions (FAQs) related
    to the purchase card on your agencys/organization
    s website
  • Create a monthly newsletter to reinforce
    agency/organization charge card policies and
    procedures
  • Eliminate manually performing data analysis by
    developing ad hoc reports that can be generated
    as needed
  • Perform an annual review of all issued cards to
    determine if each cardholder meets the criteria
    for continued participation in the federal
    government purchase charge card program

33
Best Practices for Convenience Checks
  • The number of convenience check accounts and the
    number of checks on hand should be limited to
    reduce risk
  • Checks should be secured at all times
  • Before a check is issued, every reasonable effort
    should be made to use the purchase card
  • Cardholders should record the date, check number,
    payee and amount of each check in their files

34
Best Practices for Preventing Misuse/Abuse and
Fraud
  • Set reasonable spend limits
  • Restrict use through MCC Blocks
  • Deactivate cards as appropriate
  • Review cardholder activity through reports
    generated from bank Electronic Access Systems

35
Set Reasonable Spend Limits
  • Monthly credit limits should correspond to
    historical spend patterns and the requirements of
    the job
  • Limits may be raised easily to accommodate
    special circumstances
  • Higher credit limits increase risk of fraud and
    misuse/abuse

Restrict Use Through MCC Blocks
  • Block certain merchant category codes (MCC) to
    prevent unauthorized use
  • Remember MCC blocks are NOT foolproof! Work
    with merchants/contractors to correct inaccurate
    MCCs

36
Deactivation
  • Deactivate purchase charge cards when not in
    frequent use by cardholders
  • A/OPCs may quickly deactivate/reactivate cards
    electronically or through the banks customer
    service
  • If a card is deactivated, authorizations will be
    declined at the point of sale
  • Notify cardholder of deactivation, and
    communicate procedures to re-activate (e.g., who
    to call, when to call)
  • Be wary of automatic billing (e.g. magazine
    subscriptions) and forced transactions (e.g.
    vendor manually charges card)
  • Close purchase charge card accounts for
    employees/cardholders who leave the agency

37
Cardholder Activity Review
  • Segregate questionable transactions
  • Look for patterns of suspicious behavior
  • Decline transactions could indicate misuse
  • Review questionable transactions through
    Exception Reports

38
Training Best Practices
  • Provide a comprehensive face-to-face cardholder
    training as orientation for new cardholders
  • Address standards of conduct/ethics and clearly
    state consequences for misuse
  • Discuss agency/organization policy
  • Ensure cardholders and A/OPCs fulfill the
    required refresher training requirements at a
    minimum every three years, or more frequently as
    per agency/organization policy
  • Ensure that training is easily accessible

39
Training Resources
  • Purchase-specific GSA SmartPay online training
  • Cardholders Charting the Course
    (http//fss.gsa.gov/webtraining/trainingdocs/smart
    paytraining/index.cfm)
  • A/OPCs (http//apps.fss.gsa.gov/webtraining/train
    ingdocs/aopctraining/index.cfm)
  • Agency/organization-provided training
  • Bank-provided training
  • GSA SmartPay Annual Training Conference
  • Materials (available online, and hard copies may
    be ordered by visiting http//apps.fss.gsa.gov/cml
    s)
  • Blueprint for Success A Guide for Purchase Card
    Oversight
  • Mini card-sized brochure Helpful Hints for
    Purchase Card Use

40
Questions?
  • Elizabeth Skolnik
  • Elizabeth.skolnik_at_gsa.gov
  • (703) 605-5736
  • Camesha Everett
  • camesha.everett_at_gsa.gov
  • (703) 605-2799
  • You will find a wealth of contract and program
    information, training, publications, the GSA
    SmartPay 2 Master Contract, and points of
    contact at our website
  • www.gsa.gov/gsasmartpay
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