U.S. General Services Administration

David J. Shea, CPCM, PMPDirector, Office of Charge Card Management

JP Morgan Chase User Group MeetingSeptember 25, 2014

Federal Acquisition Service

GSA SmartPay® Program Update

Program OverviewToday’s topics include discussions about major GSA SmartPay® Program areas:

Spending

Compliance and Internal Controls

State Tax Compliance Trends

Training

Regulatory Changes

Additional Topics

2

FY 2013 Spend Summary

3

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Purchase Card Spend Trend

4** Government contract spend pulled from USASpending.gov on 4/22/14

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Month Over Month Spend

5

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Octob

er

Novem

ber

Decem

ber

Januar

y

Febru

ary

Mar

chApril

May

June

July

August

Septe

mber

$-

$500,000,000.00

$1,000,000,000.00

$1,500,000,000.00

$2,000,000,000.00

$2,500,000,000.00

$3,000,000,000.00

FY13

FY14

Calendar Month

Pro

gra

m S

pen

d (

in B

illion

s)

Cumulative FY 2014 YTD Spend

6

Program FY13 FY14Fleet $ 1.8 Billion $ 1.8 BillionPurchase $ 13.3 Billion $ 13.3 Billion Travel (CBA) $ 1.5 Billion $ 1.4 BillionTravel (IBA) $ 4.2 Billion $ 4.2 Billion Grand Total $ 20.8 Billion $ 20.7 Billion

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

FY13 FY14 $16,000,000,000

$17,000,000,000

$18,000,000,000

$19,000,000,000

$20,000,000,000

$21,000,000,000

$22,000,000,000

$20,847,473,080.04

$20,689,217,

479.75

Cumulative Program Spend

Fleet Purchase Travel (CBA) Travel (IBA) $-

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

$14,000,000,000

GSA SmartPay Business Line Spend

FY13FY14

SmartPay Spending TrendsThere are many ways for agencies tomaximize GSA SmartPay Program benefits.

Agencies have the option to engage in a no-cost A/P file review with contractor banks to identify potential opportunities for expanded program use

Savings calculator available at: http://smartpay.gsa.gov/about-gsa-smartpay/program-statistics/savings-calculator

For Travel Cards, comparing voucher amounts to Travel Card transactions may also provide insight into additional compliance opportunities

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Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Spending TrendsMaximizing Program Use

Micro-purchases: Ensure GSA SmartPay solutions are used to the maximum extent for micro-purchases; it is not unusual to see a card-accepting supplier paid many different ways across an organization

Contract Spend: Agencies should find ways to maximize program use, note FAR Part 13.301(b) states that agency procedures should not limit use of the Purchase Card to micro-purchases only

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Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

9

Spending TrendsExploring Further Use of SmartPay Solutions

Evolving Case Study – Utility payments

A/P File Review identified significant spend opportunity

Major challenges exist with both handling paper receivables (invoices) and developing uniform payment strategy for use with ahighly regulated industry

Use of a blended paymentsolution likely

Looking for pilot testopportunities with existing suppliers

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Compliance & Internal Control TrendsThe charge card internal control frameworkcontinues to evolve.

The Government Charge Card Abuse Prevention Act of 2012 (Public Law 112-194)

Office of Management and Budget Memorandum M-13-21, Implementation of the Government Charge Card Abuse Prevention Act of 2012

GSA Smart Bulletin #21

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Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Compliance & Internal Control Trends

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Vast majority of transactions areappropriate

Recurring oversight themes:

o Compliance with training requirements

o Consistency of management follow through

o Retaining adequate file documentation

o Ensuring property accountability

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Compliance & Internal Control TrendsCapabilities and Reports (1 of 3)

Contractor bank Electronic Access Systems can provide standard reports to help managers detect questionable transactions. These reports include:

Account Activity Report Declined Authorizations Report Disputes Report Unusual Spending Activity Report Lost/Stolen Card Report Master File

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Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

13

MCC Description

5933 Pawn Shops

4829 Wire Transfer Money Order

5094 Precious Stones and Metals, Watches and Jewelry

5681 Furriers and Fur Shops

5813 Bars/Taverns/Lounges/Discos

5921 Pkg Stores/Beer/Wine/Liquor

7273 Dating and Escort Services

7995 Betting/Track/Casino/Lotto

9223 Bail and Bond Payments

Compliance & Internal Control TrendsCapabilities and Reports (2 of 3)

The following is a list of common questionable MCC codes.

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

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Compliance & Internal Control TrendsCapabilities and Reports (3 of 3)

The following items are required of executive agencies* under P.L. 112-194: IG Report on Audit Recommendation Implementation Statistical Report - See OMB Circular A-123, Appendix B, Chapter 5.3.1 Narrative Report - See OMB Circular A-123, Appendix B, Chapter 5.3.2 IG Risk Assessments Joint Violations Report (Purchase Card only) - Required for agencies with

$10M or more in annual purchase card (integrated—purchase business line only) spend

**The definition of "executive agency" for purposes of the Charge Card Act is found at 41 U.S.C. 133. Section 2 of the Charge Card Act ("Management of Purchase Cards") does not apply to the Department of Defense (DOD). The Charge Card Act amended I 0 U .S.C. 2784, which provides the requirements for purchase card management for DOD. Section 3 of the Charge Card Act ("Management of Travel Cards" ) and Section 4 of the Charge Card Act ("Management of Centrally Billed Accounts") do apply to DOD.

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

State Tax Compliance TrendsOCCM is engaged in a tax recovery pilot.

Tax recovery pilot underway

Retained “share and savings” tax recovery contractor pursuant to IPERIA

Focus is on IBA lodging taxes paid in 11 States which provide exemption, and taxes assessed on CBA accounts

Validating data andsubmitting requests

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Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

State Tax Compliance TrendsPilot Test Lessons Learned

IBA Travel Card tax leakage is minimal

Significant administrative effort required

CBA tax leakage observed to be even smaller than IBA Travel

State laws vary; in some cases, recovery must be sought from vendor as opposed to governmental entities

Pilot results appear to validate original hypothesis

Tax compliance messaging/training for Purchase and Travel cards is key, versus reclamation

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Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Training TrendsMovement into the Virtual

As there are fewer in-person training opportunities, OCCM is transitioning to a training model adopting increased availability of virtual training.

There are currently 4 cardholder and A/OPC training courses available through https://training.smartpay.gsa.gov/

Since October 2012, nearly 300,000 cardholders and A/OPCs have successfully completed training

For the 2014 SmartPay VirtualConference, 3,161participantsregistered with 2,322 attendingresulting in a 73% attendancerate

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Spending

Compliance & Internal Controls

State Tax Compliance

TrainingRegulatory Changes

Training TrendsCertified Card Manager Training

The Charge Card Manager Certification is available through a combination of a course learning track and management experience. This will help ensure card managers have fundamental training and experience needed to manage a card program.

Curriculum includes six mandatory courses and six electives that can be taken either in-person, virtually, or from the course content store

A/OPCs must have a minimum of six months of contiguous, “hands-on” experience managing a card program

Certified A/OPCs must comply with maintenance training requirements as described in OMB Circular A-123, Appendix B

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Spending

Compliance & Internal Controls

State Tax Compliance

TrainingRegulatory Changes

19

Regulatory ChangesFAR Case 2013-005

“Terms of Service and Open-ended Indemnification, and Unenforceability of Unauthorized Obligations.”

Interim rule Effective June 21, 2013 Amends FAR parts 12, 13, 32, 43, and 52 Inclusion of an open-ended indemnification clause in a EULA, TOS, or other

agreement is not binding unless expressly authorized by law Deals with potential Anti-Deficiency Act concerns See FAR 13.202 and clause 52.232-39 for more information

Spending

Compliance & Internal Controls

State Tax Compliance

Training

Regulatory Changes

Additional Topics

Treasury Financial Manual UpdateTreasury Financial Management announcement A-2014-04 lowers the maximum dollar amount allowed for intergovernmental Purchase Card transactions (one agency buying from another).

The new policy will be effective June 1, 2015 Limit is lowered from $49,999.99 to $24,999.99 Clarification on split purchases:

o An amount exceeding the maximum dollar amount may not be split into two or more payment transactions in the same day by using one or multiple cards

o An amount owed that exceeds the maximum dollar amount may not be split into two or more transactions over multiple days by using one or more cards

Limit does not affect transactions with commercial vendors

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Status of Chip and PIN (EMV) in the Program EMV cards available from two of the three GSA SmartPay

contractor banks Working to include EMV third contract Industry liability shift for “standard” point-of-sales terminals is

October 2015 Approximately 400 cards already deployed (generally Travel

Cards) At present there is a per card cost to initially issue EMV offers promise of greater security for card-present purchases EMV cards possess both chip and mag stripe: industry capability

to process EMV uncertain

Data Warehouse UpdateOCCM continues to develop the GSA SmartPay Data Warehouse to provide a government-wide view of charge card spend and data.

Currently operating under initial operating capacity; OCCM to develop enhanced dashboards and reports

Raw data reports can be generated and exported to common formats quickly

Capabilities will support executive and other data requests The Data Warehouse is not intended to replace bank electronic

access systems OCCM is in the process of providing Data Warehouse access to a

limited number of agencies

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Charge Card Performance Measures (1 of 2)OCCM briefed draft GSA SmartPay Program-wide metrics to the Data Management Working Group on July 10, 2014.

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Charge Card Performance Measures (2 of 2)

Audience Questions

Thank you for your time and attention!

Contact InformationDavid J. Shea, CPCM, PMP

david.shea@gsa.gov(703) 605-2867

Please provide your feedback and thoughts on our website, available at http://smartpay.gsa.gov/feedback. Don’t forget to visit the GSA SmartBlog at: https://smartpay.gsa.gov/blogs.