By Guy Timberlake, The American
Small Business Coalition (Published June 5, 2006)
Especially for the newcomer, Micropurchase acquisitions and the
GSA SmartPay program are a dynamic duo for companies pursuing business
opportunities with the federal government.
Lengthy payment cycles are often a major concern for many newcomers
and some experienced companies pursuing business opportunities with
federal agencies. There can be situations where payments are delayed,
but that ought not to dissuade companies from pursuing the substantial
amount of potential business where payments can be made in as little
as 48 hours of the request.
Welcome to the GSA SmartPay Program
Launched in 1989, the government purchase card program was designed
to expedite the acquisition of supplies and services, streamline
payment procedures and to reduce administrative costs associated
with traditional paper-based payment methods. The General Services
Administration consolidated the government purchase, fleet and travel
charge card programs into the SmartPay Program in 1998. Today, there
are just under 300,000 cards issued to federal employees purchasing
more than $24 billion in goods and services through the program.
A March 2004 report by the General Accounting Office (now known
as the Government Accountability Office) opens by saying “The
introduction of government purchase cards fundamentally changed
the way agencies make small, routine purchases of goods and services.
The vast majority of purchase card transactions are “micropurchases,”
purchases in amounts not greater than $2,500. Purchase-card use
has increased significantly over the past decade—from less
than $1 billion in fiscal year 1994 to more than $16 billion in
fiscal year 2003.”
Here are some historical numbers. The Federal Procurement Data
System (www.fpds.gov) reports that the Department of Health and
Human Services (DHHS) uses the government purchase card to pay for
more than 29,000 transactions totaling more than $7.8 billion during
FY2004. Of those purchases, the National Institutes of Health (NIH)
alone did more than 12,000 valued at more than $4 billion.
The government benefits, too. GSA reported more than 26.5 million
purchase transactions in FY2004 with an estimated administrative
savings of $53.77 per transaction when compared to traditional paper-based
purchasing. The estimated annual administrative savings with the
card totaled over $1.4 billion.
Micropurchases Lead the Way
According to the GSA as of March 2006, federal agencies have procured
more than $5 billion in goods and services since October 2005. More
than half of those purchases were at or below the $2,500 micropurchase
threshold (for the Department of Homeland Security, the threshold
is $7,500). This level can change according to circumstances; during
the recovery efforts for hurricane Katrina, some federal agencies
enacted procedures that raised their micropurchase limit to $250,000.
The program essentially shifts authority for small purchases from
procurement offices to individual cardholders, which allows federal
agencies to dramatically improve their ability to acquire items
needed for day-to-day operations and reduce associated administrative
costs. The popular program also is promoted in the guide for federal
acquisitions: the Federal Acquisition Regulation (FAR) has designated
the government purchase card as the preferred method of making micropurchases.
For many agencies, micropurchases represent more than half of their
annual purchase card spending. Although the FAR does not require
agencies to set-aside micropurchases for small businesses, they
often represent low-risk opportunities for agencies to diversify
their vendor base. This doesn’t mean that the government is
handing out micropurchase orders to whomever comes along, but if
you consider the risk associated with a prospective or newer customer
awarding a micropurchase requirement to you versus a larger one,
it’s more likely that you’ll have a better shot of getting
your “first opportunity” in the form of a micropurchase
or series of micropurchases.
Finding the Opportunities
Participating in industry groups and educational seminars is a great
way to learn about the program and can lead to increased business,
both for smaller opportunities and for the larger, program-related
opportunities.
Related information about procedures, contacts and statistics is
available from resources such as the GSA Web site, the Federal Procurement
Data System and the other government sites. Procurement Technical
Assistance Centers and Small Business Development Centers are additional
information sources.
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