IPPC6

1. THE IMPACT OF CHANGING PATTERNS OF
COMMERCIAL CARD USE BY THE U.S.
GOVERNMENT ON GOVERNMENTAL EFFICIENCY
AND COST SAVINGS
International Public Procurement Conference
Dublin, Ireland
August 2014
Richard Palmer, Mahendra Gupta and Nathan Palmer

2. Agenda
• Background on U.S. Federal government use
of commercial cards.
• The rise of card use and its rationale.
• The recent decline of card use and possible
explanations.
• Trade-offs between efficiency and control.
• Conclusion

3. Background
• Commercial card use began in the 1980s.
• Key benefits:
– Process simplification
– Administrative cost savings
• $70 per transaction
– Reduced cycle time
– Financial incentives
• $300 million in rebates

4. FIGURE 4
U.S. Government Spending on Purchasing, Travel, and Fleet Cards, 2000-2013
$12.3
$13.8
$15.2
$16.4
$17.1
$17.4 $17.8
$18.7
$19.8 $19.5 $19.7 $19.5
$18.5
$16.9
$4.9
$5.5
$6.6 $6.4
$6.9 $6.6
$7.7
$7.3
$8.5 $8.3
$9.0 $9.1
$8.5
$7.0
$0.5 $0.5 $0.5 $0.6 $0.7 $1.0 $1.2 $1.3
$2.5
$1.5 $1.8
$2.2 $2.3 $2.1
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Spending(in$billions)
Purchasing Card Spend
Travel Card Spend
Fleet Card Spend

5. FIGURE 5
Purchasing Card Transactions and Spending Per Transaction by U.S. Government,
1997-2013*
11.3
16.1
19.4
23.5
24.4
25.8
26.5 26.5
25.9 25.3
24.7
25.5
22.4
23.3
22.4
21.4
19.8
$446
$491
$522 $524
$564
$592
$618
$644
$672
$701
$756
$779
$872
$845
$870 $865
$851
$400
$500
$600
$700
$800
$900
$1,000
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
PurchasingCardSpendingPerTransaction
PurchasingCardTransactions(inMillions)
Purchasing card Transac ons
Spending Per Transac on

6. FIGURE 6
Purchasing Cards Distributed to Employees, by U.S. Government, 2000-2013
241
314
381
448
465
396
351
329
316
310
303
288 290
277 281
287
302
200
250
300
350
400
450
500
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
PurchasingCardCardholders(inthousands)

7. FIGURE 9
Card to Employee Ratio with Spend as a Percent of Budget (one year lagged)
1990-2013*
12.16%
7.60%
0.76% 0.76%
0.49%
0.0%
0.3%
0.5%
0.8%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
PurchasingCardSpendingasa%ofBudget
PurchasingCard-to-EmployeeRaito
Puchasing Cards as a Percent of Employees
Purchasing Card Spend as a Percent of Budget

8. FIGURE 10
Total Administrative Transaction Cost Savings and Card Issuer Rebates from
Purchasing Card Spending by U.S. Government, 2000-2013
$1,664
$1,757
$1,846
$1,929
$1,942
$1,906
$1,878
$1,845
$1,905
$1,737
$1,841
$1,758
$1,695
$1,565
$1,500
$1,550
$1,600
$1,650
$1,700
$1,750
$1,800
$1,850
$1,900
$1,950
$2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
U.S.GovernmentPurchasingCardSavings
(in$millions)
Total Savings

9. What’s at Issue
• GAO audit concerns for Military in 2002
• Change in laws regarding supervisory
accountability in 2012
• Problems with how data-mined card use
“problems” are reported in press

10. FIGURE 11
Civilian versus Military Purchasing Card Spending, 2000-2013
$2.8
$4.2
$5.6
$6.8
$7.7
$8.5
$9.2
$9.8
$10.1
$10.5
$10.8
$11.4 $11.3
$11.9 $12.1 $12.0
$11.6
$2.2
$3.7
$4.5
$5.4
$6.1
$6.8
$7.2 $7.3 $7.3 $7.3
$7.9
$8.4 $8.3
$7.7
$7.4
$6.5
$5.3
$0
$2
$4
$6
$8
$10
$12
$14
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Spending(in$billions)
Civilian PurchasingCard Spending
Military Purchasing Card Spending

11. FIGURE 13(a)
Civilian versus Military Number of Purchasing Cards, 2000-2013
150
173 184
213
233
189
199
196
191 188 188
179
183
174 175
184
202
90
141
197
235
207
152
133
126
122
115
109 107 103 106
104
100
80
100
120
140
160
180
200
220
240
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Cardholders(inthousands)
Civilian Purchase Cardholders
Millitary Purchase Cardholders

12. FIGURE 14
Civilian versus Military Purchasing Card Spend as a Percent of Budget, 2000-2013
0.2%
0.3%
0.4%
0.5%
0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
0.4%
0.4% 0.4% 0.4% 0.4%
0.9%
1.4%
1.7% 1.7%
1.9%
1.8%
1.7%
1.5%
1.4%
1.3%
1.4%
1.3%
1.2%
1.1%
1.0%
0.9%
0.8%
0.0%
0.5%
1.0%
1.5%
2.0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Civilian Purchasing Card Spend as a Percent of Budget
Military Purchasing Card Spend as a Percent of Budget

13. TABLE 1
Summary of Differences in Military and Civilian Purchasing Card Statistics 1997-2013

14. Conclusion
• Commercial cards offer significant benefit to government.
– Transparency
– Efficiency
– Savings
– Online compatible
• Civilian card programs may go way of Military unless
leadership communicates trade-offs between efficiency and
control
• Control concerns of other procurement methods are non-
transparent, making comparison difficult.