Acquisition Reform: Purchase Card Use Cuts Procurement Costs, Improves Efficiency

pdfGAO/NSIAD-96-138 Aug. 6 (18 pages).

The National Performance Review recommended in 1993 that agencies increase their use of government commercial credit cards--called purchase cards--for small purchases to cut the red tape normally associated with federal procurement. Since then, legislation has eliminated some requirements for purchases of $2,500 or less, called micropurchases. Agencies have found that they can carry out their missions at lower cost by having staff use the purchase cards for simple purchases. Further, agency studies have shown that card use reduces labor and payment-processing costs. In fact, a 1994 interagency study showed that costs had often been cut by more than half; other studies have identified millions in potential savings from card use. Since the cards first became available governmentwide, their use has skyrocketed. Even so, significant room for growth exists: the average purchase card transaction was $375 in fiscal year 1995, well below the micropurchase threshold. Despite the growth in purchase card use, GAO found no evidence of increased abuses. In fact, the electronic data stored on all purchase card transactions permits close monitoring of card use. Officials at most agencies GAO reviewed believe that the Federal Acquisition Regulation, which governs federal procurement, should more clearly address card use. Also, although agencies want to learn from one another's experiences, no mechanism exists for them to communicate with one another and to share their improvements.

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