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GSA SmartPay Training

Lesson 3 of 14

Purchase Program Overview

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What is the GSA SmartPay Program?

The GSA SmartPay Program is the largest government charge card and related payment solutions program in the world. The Program has more than three million Purchase, Travel, Fleet, and Integrated accounts and supports more than 560 agencies/organizations. Since the award of the inaugural GSA SmartPay Master Contract in 1998, the GSA SmartPay Program has provided convenient, efficient, and effective payment solutions for the Federal Government, Tribes and Tribal Organizations with a comprehensive portfolio of payment solutions including Purchase, Travel, Fleet, and Integrated charge card services.

Specific to purchase, the GSA SmartPay program:

  • Provides commercial payment solutions and associated services in support of official government purchases;
  • Streamlines ordering, payment and procurement procedures;
  • Reduces administrative costs under the simplified acquisition threshold;
  • Improves government operations by simplifying the financial process; and
  • Allows a platform to improve government operations and accountability.

Through a master contract with multiple banks, the GSA SmartPay program enables agencies/ organizations across the Federal Government to obtain payment solutions to support mission needs. The GSA SmartPay Master Contract, administered by GSA, is a fixed price, indefinite delivery/ indefinite quantity (ID/IQ) type contract. The maximum base period for the initial order is four years with three, three-year options.

To participate in the program, Agencies/ Organizations issue a task order under the GSA SmartPay Master Contract and award their program to one of the GSA SmartPay contractor banks (Citibank or U.S. Bank). Your agency/organization receives accounts and related services through the task order with the contractor bank selected. The task order enables your agency/organization to directly work with one of the two GSA SmartPay contractor banks that provide purchase account services. Through the task order, A/OPCs set up accounts for account holders, manage accounts using the bank’s Electronic Access System (EAS), and resolve issues or questions by working directly with a bank representative.

To become a GSA SmartPay Purchase Account holder, your personal credit history is not a criterion for receiving a purchase account. In addition, use of the purchase account will not affect your personal credit history. Any government employee authorized to use the GSA SmartPay program who has a responsibility to make purchases and completes the necessary training is eligible to become an account holder. Account holders are either appointed by their Agency/Organization Program Coordinator (A/OPC) or designated by an Approving Official (AO).

What are the Benefits to using the GSA SmartPay Master Contract for obtaining payment services?

The GSA SmartPay Program has continued to grow through increased adoption as agencies/organizations realize benefits afforded under the program.

Utilizing the GSA SmartPay Master Contract means

  • A faster contract acquisition process and reduced risk of protest, as compared with a full and open competitive procurement
  • Favorable negotiating platform and contract terms
  • Awards to contractor banks based on a competitive bidding process
  • Established relationships with contract banks
  • A broad range of flexible products and services for agencies/organizations as well as, the flexibility to add products and services
  • Ongoing support for your agency/organizations

Other Benefits include:

  • Universal Acceptance: Because GSA SmartPay accounts are either VISA or MasterCard brands, they can be used at any merchant that already accepts these types of payment.
  • Refunds: Agencies receive monetary payments provided by the contractor based on the dollar or spend volume during a specified time period, which result in millions of dollars back per year for the agency.
  • Electronic Access to Data: The GSA SmartPay contractor banks all provide an Electronic Access Systems (EAS), which provides account access and a variety of reports for A/OPCs to assist in the effective management of the program.

Specific to the GSA SmartPay Purchase Account

Use of the purchase account benefits the Government in many ways:

  • The GSA SmartPay accounts save the Government time, money and resources.
  • The GSA SmartPay purchase program provides the Government with financial and cash management control over low dollar value high volume procurements and can serve as a payment tool for larger transactions consistent with agency policy.
  • The Government saves money by making only one payment to the contractor bank rather than thousands of payments to individual merchants.
  • The Government improves the use of its resources by freeing up contracting personnel so they are able to focus on more complex activities that derive greater benefit from their expertise.
  • Merchants throughout the world accept the GSA SmartPay purchase account because they are familiar with commercial credit cards and they understand how to accept them.

As an account holder, you will have the flexibility to decide what to purchase, when to buy it, and from whom. You will also be able to monitor funds yourself.

The GSA SmartPay Account also benefits merchants because they are paid quickly for the supplies and services they provide.

What is a GSA SmartPay Purchase Account?

A purchase account is a type of payment solution, issued by a GSA SmartPay contractor bank, and used to pay for supplies or services procured at the direction of a Federal agency/ organization under official purchase authority. Purchase accounts may be established through any payment solution listed in the GSA SmartPay master contract.

The GSA SmartPay purchase program is the preferred method of payment for federal employees to make official Government purchases for supplies, goods, and services under the micro-purchase threshold.

  • The GSA SmartPay purchase accounts are both a procurement and payment mechanism for micro-purchases.
  • For purchases above the micro-purchase threshold, the GSA SmartPay purchase account may be used as an ordering and payment mechanism, but not a contracting mechanism.

Account holders can purchase any commercially available supply or service within their spending limits and not prohibited by either federal or agency-specific procurement regulations.

Purchases that are STRICTLY PROHIBITED include:

  • Long-term rental or lease of land or buildings
  • Travel or travel-related expenses (not including conference rooms, meeting spaces, and local transportation services)
  • Cash advances (unless permitted by your agency/ organization)

What is a Centrally Billed Account vs an Individually Billed Account?  Why is it important to know the difference?

Because the agency is invoiced for purchases and payments are made directly to the contractor banks by the Federal Government, all purchase accounts are considered Centrally Billed Accounts (CBAs). In contrast, Individually Billed Accounts (IBAs) are invoiced directly to the account holder and payment is the responsibility of the account holder, who is then reimbursed by the agency/ organization.

The distinction between CBA and IBA is important when determining state tax exemption. All GSA SmartPay CBAs should be exempt from state taxes. In addition, with a CBA, the Federal Government accepts liability for charges made by an authorized account holder, but is not liable for any unauthorized use. Unauthorized use means the use of an account by a person, other than the account holder, who does not have actual, implied or apparent authority for such use and from which the account holder receives no benefit. When the CBA has been used by an authorized account holder to make an unauthorized purchase, the Government is liable for the charge and the agency is responsible for taking appropriate action against the account holder.

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