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Seeing beyond $3K when it comes to GSA SmartPay Purchase Card

Posted By Guy Timberlake, The American Small Business Coalition, LLC, Monday, October 15, 2012
Updated: Monday, October 15, 2012

Google Alerts notified me my name was referenced on GovLoop by some friends and other folks I know having a discussion about the practicality and impact of raising the micropurchase limit that is currently $3,000.

The initial post read:

The micropurchase threshold (GPC limit) of $3,000 is simply too small. A large number of purchases are slightly over $3,000 and they require a substantial investment of paperwork. By increasing the micropurchase threshold to $5,000 or even $10,000, a large amount of unnecessary contracting overhead can be eliminated, dramatically streamlining small government acquisitions. 

It's a valid question deserving of the conversations that have occurred and likely will continue to occur, but there appears to be confusion by some about the difference between the GSA SmartPay Purchase Card and how it can be used, and the relationship between the purchase card and Micropurchase Program.
First,the GSA SmartPay Purchase Card is one of four "credit card like" payment mechanisms used by government agencies and their designees, to effect payment for the purchase of goods and services (NOTE: The Purchase Card is not a credit card, but an alternative method for effecting Electronic Funds Transfer (EFT), the primary payment method for the Government). In addition to the Purchase Card, there is the Fleet Card, Travel Card and a hybrid of all three. Total spending through the SmartPay/SmartPay 2 program for FY11 was $30.8B.
But for this discussion, we are focused on the Purchase Card.
In FY11, there were 278,081 purchase cards in circulation accounting for 21.3 million transactions valued at $19 billion dollars. Current totals for FY12 (as of August 2012) show $16,217,691,115 in spending from 288,139 cardholders.
A number of purchase cardholders are not procurement representatives which is part of the basis for the Micropurchase Program. The Government determined (years ago) based on the rules in play, the burden associated with processing a $2500 purchase was the same/similar level of effort to process one for $25,000 or $2.5 million. So the Government streamlined the acquisition rules and introduced a new payment method. Anyone else remember the IMPAC card?
Micropurchase is the easiest way for anyone in government to make a purchase of goods and/or services based on the current stated limit of up to $3000 per action. These purchases are typically made by government workers who are not part of their agency's procurement organization. For Micropurchases, the SmartPay Card serves as the required payment mechanism AND contract mechanism.
Purchases on the SmartPay Card can exceed the Micropurchase Threshold based on the authority of the cardholder. A SmartPay payment for an NIH purchase earlier in FY12 in support of a very large Oracle 11i implementation was made in the amount of $938,000.
It is most likely that increasing the Micropurchase Threshold would require substantive changes to the FAR because the impact on cardholder purchase authority would be a factor as well changing the threshold for Simplified Acquisitions (current threshold is $3K to $150K), the next easiest purchase method for government agencies.
My primary point, however, is that it seems many who participated in the conversation seemed to be of the opinion the purchase card limit (overall) was $3K. Government agencies make purchases on a regular basis, where the purchase card is used as the payment mechanism. If you take into account the Federal Procurement Data System (Next Generation) does not track micropurchases, but has recorded  over $4 billion dollars in payments issued where SmartPay was the payment method during FY12.
For example, a simple search for FY12 purchases less than or equal to $25,000 where the payment method was SmartPay, presents total spending of more than $160 million dollars. This does not include Micropurchases and does not include DoD FY12 totals which won't be known until the end of the calendar year due to OPSEC rules.
Finally, there are exceptions to the Micropurchase Threshold. During Katrina, government workers on the ground exercised the option of using their purchase cards for disaster support , with limits raised to $1 million dollars for that incident.


The Chief Visionary


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Tags:  gsa smartpay  micropurchase  simplified acquisition 

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