Lesson 5: Making Purchases
What can I buy using my GSA SmartPay® Purchase card/account?
It is important to understand the limits on purchase card/account use and to manage your purchases against those limits.
You are allowed to purchase any commercially available supply or service not prohibited by either federal government or agency-specific procurement regulations. To find out your agency specific procurement requirements regarding purchase amounts, receipt documentation and approvals contact your A/OPC or contracting officer. An approval may be required prior to purchase and may be needed in conjunction with a subsequent review of the purchase activity. If a purchase appears questionable, consult your A/OPC or contracting office.
What are the required sources of supply?
Use of the GSA SmartPay Purchase card/account should be consistent with established guidelines for required sources of supply and acquisition procedures, such as those applicable to micro-purchases or to acquisitions below the simplified acquisition threshold. Procurements paid for with the GSA SmartPay Purchase card/account are subject to the acquisition rules established in the FAR, as well as your agency/organization policies and procedures.
The Federal Acquisition Streamlining Act did not abolish the priorities for use of the government supply sources as stated in FAR Part 8 (Required Sources of Supplies and Services). Micro-purchases are not exempt from the sources of supply and services requirement.
The following information from FAR Part 8 lists the priorities for use of government supply sources:
Except as required by FAR 8.003, or as otherwise provided by law, agencies shall satisfy requirements for supplies and services from or through the sources and publications listed below in descending order of priority.
- Existing inventories.
- Excess from other agencies.
- Federal Prison Industries, Inc.
- Supplies which are on the Procurement List maintained by the Committee for Purchase From People Who Are Blind or Severely Disabled.
- Wholesale supply sources, such as stock programs of the GSA, the Defense Logistics Agency, the Department of Veterans Affairs and military inventory control points.
- Services that are on the Procurement List maintained by the Committee for Purchase From People Who Are Blind or Severely Disabled
Sources other than those listed above may be used as prescribed in the Code of Federal Regulations (specifically 41 CFR 101-26.301) and in an unusual and compelling urgency as prescribed in FAR 6.302-2 and in 41 CFR 101-25.101-5.
The statutory obligation for government agencies to satisfy their requirements for supplies or services available from the Committee for Purchase From People Who Are Blind or Severely Disabled also applies when contractors purchase the supplies or services for government use.
Agencies shall satisfy requirements for the following supplies or services from or through specified sources, as applicable:
- Public utility services.
- Printing and related supplies.
- Leased motor vehicles.
- Strategic and critical materials (like metals and ores) from inventories exceeding Defense National Stockpile requirements.
If an agency is unable to satisfy requirements for supplies and services from the required sources of supply, agencies are encouraged to consider satisfying requirements from or through the following non-mandatory sources:
- Federal Supply Schedules (FSS).
- Governmentwide acquisition contracts.
- Multi-agency contracts.
- Any other procurement instruments intended for use by multiple agencies, including blanket purchase agreements (BPAs) under FSS contracts (e.g. Federal Strategic Sourcing Initiative (FSSI) agreements).
- Agencies are encouraged to consider Federal Prison Industries, Inc., as well as the sources listed under “Supplies” above.
- Commercial sources (including educational and nonprofit institutions) in the open market.
When satisfying requirements from non-mandatory sources, give consideration to small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including 8(a) participants) and women-owned small business concerns.
GSA Advantage! is an online shopping mall with thousands of commercial products and services including JWOD/NIB/NISH and UNICOR products, designed to link GSA schedule products and services, stock items, catalog descriptions, current pricing and delivery information in a single location to make ordering easier for you. To place an order, you can use your GSA SmartPay Purchase card/account.
Is it necessary to distribute purchases amongst merchants? For example, if I am not required to get quotations, can I always buy from the same source?
Federal Acquisition Regulation (FAR) Part 13.203(a)(1) recommends that micro-purchases be equitably distributed among qualified merchants to the extent practicable.
What are Point-of-Sale (POS) discounts?
POS is the point where a transaction is finalized or the moment where a customer tenders payment in exchange for goods and services. Certain merchants offer automatic discounts when you use the purchase card/account to make purchases. These merchants have the ability to recognize the GSA SmartPay Purchase card/account based on the account number and apply a discount at the time of the sale.
What is Section 889 and how does it apply to purchases?
Section 889 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019 (P.L. 115-232 [PDF, 789 pages]) and the Federal Acquisition Regulation (FAR) Case 2018-017 prohibit the purchase of covered telecommunications equipment and services from vendors who sell products containing spyware. These devices could pose a threat to U.S. security by spying on or disrupting communications within the U.S. Therefore, purchase card/account holders should follow their agency’s policy regarding Section 889 compliance.
What are convenience checks?
Some agencies allow for the use of convenience checks.
Convenience checks are:
- A contractor-provided instrument that is written, dated and signed against an account within established dollar limits.
- Intended only for the use with merchants that do not accept the GSA SmartPay Purchase card/account.
- A payment method of last resort, only when no reasonable alternative merchant is available who accepts the GSA SmartPay Purchase card/account.
If your agency/organization determines a need for convenience checks, your contractor bank will provide a supply of checks to the designated card/account holder drawn on the card/account holder’s purchase card/account. The checks will be processed as they are presented for payment.
Convenience checks are multi-copied (one copy for the card/account holder’s records and the original copy for the merchant). Due to the increased potential of fraud and abuse, specialized training on convenience checks is required prior to being authorized to write checks. If any misuse or abuse is discovered, the employee will lose convenience check and purchase card/account privileges. That employee will then be referred for disciplinary action in accordance with agency procedure.
Convenience checks may not be written for purchases above the maximum dollar limit established by your agency. In addition, convenience checks may not be written to:
- Vendors who accept the GSA SmartPay Purchase card/account.
- Vendor transactions already under another method of acquisition (purchase orders, contracts, etc.).
- Employee reimbursements.
- Cash advances.
- Salary payments, cash awards or any transaction processed through the payroll system.
- Travel-related transportation tickets.
- Meals or lodging related to employee travel except as related to emergency incident response.
- Other restrictions as determined by agency policy.
Checks must be used in sequential order. Each convenience check must be entered in a check register or log for tracking purposes. The following information must be written on each check:
- Date the check is being issued.
- The name of the payee.
- Amount of the check.
- An original signature.
When a convenience check is used to purchase services, the Internal Revenue Service (IRS) requires the collection of that information, so that it can be reported as income to the IRS. If a person is “engaged in a trade or business and, in the course of that trade or business, pays any person $600 or more of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits and income during a calendar year, [IRS] Code Section 6041 generally requires them to file an information return with the IRS and to furnish an information statement to the payee.”
The IRS states that agencies may rely on the merchant category code (MCC) in determining whether a transaction is subject to Form 1099 reporting. Failure to file a correct information return Form 1099 by the due date may result in a penalty imposed by the IRS.
What are Government-to-Government transactions?
Government-to-government transactions are payments between different agencies (inter-governmental) or payments within the same agency (intra-governmental). In most instances, these transactions are classified under Merchant Category Code 9399, Miscellaneous Government Services.
Effective October 1, 2022, the general limit on charge card payments within the same agency (intra-governmental) is set at $9,999.99. The general limit on charge card payments between different federal agencies (inter-governmental) remains $24,999.99. The government’s card acceptance policies can be found in Treasury Financial Manual (TFM) Vol. I, Part 5, Chapter 7000. It also addresses limitations on credit card transactions.
A few notes to keep in mind:
- Customers cannot divide an inter-governmental transaction into smaller pieces to evade this limit. For example, a buyer cannot make two purchases of $15,000 to avoid the $24,999.99 limit.
- Customers cannot divide an intra-governmental transaction into smaller pieces to evade this limit. For example, a buyer cannot make two purchases of $6,000 to avoid the $9,999.99 limit.
- Treasury retains the option to change limits. One goal is to reduce the fees the government pays when it accepts the purchase card/account for large transactions.