Lesson 1: Purchase Program Overview
What is the GSA SmartPay® program?
Established in 1998, the GSA SmartPay program is the world’s largest government charge card and commercial payment solutions program, providing services to more than 560 federal agencies/organizations and Native American tribal governments with 6.5 million total accounts. GSA SmartPay payment solutions enable authorized government employees to make purchases on behalf of the federal government in support of their agency’s mission. The GSA SmartPay program includes the following business lines:
- GSA SmartPay Purchase.
- GSA SmartPay Travel.
- GSA SmartPay Fleet.
- GSA SmartPay Tax Advantage Travel.
- GSA SmartPay Integrated.
Through the 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 Master Contract, administered by GSA, is a fixed price, indefinite delivery, indefinite quantity (IDIQ) contract. The maximum base period for the initial order is four years with three, three-year options.
Agencies/organizations issue a task order under the GSA SmartPay 3 Master Contract to one of the GSA SmartPay contractor banks – Citibank or U.S. Bank. Then, the awarded bank provides payment solutions to the agency.
Through the task order, your agency/organization program coordinator (A/OPC) sets up accounts for the card/account holders, manages the accounts using the bank’s Electronic Access System (EAS), and resolves issues or questions by working directly with a bank representative.
An employee’s personal credit history is not among the criteria for receiving a GSA SmartPay Purchase card/account. In addition, use of the purchase card/account will not affect an employee’s personal credit history. Any government employee authorized to use the GSA SmartPay program, has a responsibility to make purchases, and completes the necessary training is eligible to become an card/account holder. Card/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 contractor 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/organization.
What are some of the overall benefits to using the GSA SmartPay program?
Cost Savings Realized
Customers have the opportunity to realize administrative cost savings through payment efficiencies. In FY22 alone, the estimated administrative savings for the purchase card was $1.34 billion per year ($70 per transaction) when used in place of a written purchase order. In addition, agencies pay no direct fees to use GSA SmartPay solutions.
Agencies have the opportunity to earn refunds based on the dollar volume of transactions and the speed of payment.
Safety and Transparency
The GSA SmartPay program provides secure solutions for efficient payment transactions. Customers also have access to tools that provide increased transparency to spend and performance data.
Electronic Access to Data
Through the GSA SmartPay contractor bank’s electronic access system (EAS), account managers and card/account holders have immediate access to complete transaction-level data, helping to mitigate fraud, waste and abuse.
Through the use of commercial payment infrastructure, customers are able to use GSA SmartPay solutions anywhere in the world where merchants accept cards.
Identification for Discount Programs
GSA SmartPay payment solutions provide other less tangible benefits including travel insurance and eliminating the need for imprest funds or petty cash at the agency.
What is a GSA SmartPay Purchase card/account?
A purchase card/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.
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 (MPT).
For micro-purchases, the GSA SmartPay Purchase card/account may be used as a procurement, ordering and payment mechanism.
For purchases above the MPT, the GSA SmartPay Purchase card/account may be used as an ordering and payment mechanism, but cannot be used as a procurement mechanism.
Card/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.
What are some specific benefits associated with use of the GSA SmartPay Purchase card/account?
Use of the purchase card/account benefits the government in many ways, including:
- Saves the government time, money and resources.
- 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.
- Saves the government money by making only one payment to the contractor bank rather than thousands of payments to individual merchants.
- Improves use of the government’s resources by freeing up contracting personnel so they are able to focus on more complex activities that derive greater benefit from their expertise.
- Provides access to merchants throughout the world who are familiar with commercial credit cards and know how to accept them.
- Provides flexibility to card/account holders, allowing them to decide what to purchase, when and from whom to purchase and the ability to monitor funds themselves.
- Allows merchants to be paid quickly for the provided supplies and services.
What is a Centrally Billed Account (CBA) and an Individually Billed Account (IBA) and why is it important to know the difference?
- Agency is invoiced for purchases.
- Payments are made directly to the contractor banks by the federal government.
- Examples include purchase, fleet and some travel cards/accounts.
- Card/account holder is invoiced directly.
- Payment is the responsibility of the card/account holder, who is then reimbursed by the agency/organization.
- Most common travel cards/accounts.
Tax exemption and liability differ depending on the card/account type.
- All GSA SmartPay CBAs should be exempt from state taxes.
- Federal government travelers using the GSA SmartPay IBAs may be exempt from state taxes in select states.
- Agencies/organizations accept liability for CBA transactions.
- Full liability for IBA transactions rests with the individual card/account holder.
How do I recognize GSA SmartPay Purchase cards/accounts?
Purchase cards/accounts may have two different designs:
GSA SmartPay Purchase Account Prefixes