Changes to purchase cards can save agencies money

Monday - 4/18/2011, 3:36pm EDT

Steve Kelman, former OFPP Administrator

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Your agency could save a lot of money with improvements in the purchase card program. Former OFPP Administrator Steve Kelman will tell you how.

In the 1990s the procurement world was turned on its head after the General Services Administration introduced the government credit card - known as a purchase card. In the days before the card, every purchase, even small ones on the order of $25, had to go through an agency's contracting shop. Costing time and money.

But that purchase card has one major drawback - Agencies who purchase at local retail stores must pay the same retail prices as the public.

Kelman writes in Federal Computer Week:

GSA, which manages the program, is now taking an excellent initiative based on the philosophy "if you can't beat them, join them." Given that government customers are likely to continue using local stores, GSA has begun to move aggressively to provide purchase card users automatic discounted prices when using retail outlets that already have prenegotiated contracts or GSA schedules, whether or not the buyer even knows such contracts or discounts exist. So, for example, under the set of 16 blanket purchase agreements GSA has recently negotiated for office supplies, a government credit card holder will automatically get the discounted negotiated price on any item on the blanket purchase agreement at the retail outlets of any of the contract holders.

GSA has also negotiated with Home Depot and Lowe's to give customers using the card GSA schedule prices (which are negotiated as discounts from retail) when they purchase in those stores. This program is being expanded to retail chains specializing in photographic and audio-visual equipment and supplies, which are often used by government customers purchasing such items.