Federal Marketplace

aburman@govexec.com

ound up the usual suspects."
"Which ones?"
"Balutis at Commerce and Alston at GSA."
"What's the charge?"
"Trying to make the government more efficient. And succeeding."

What do Alan Balutis, deputy chief information officer at the Commerce Department, and Carolyn Alston, deputy assistant commissioner of the Federal Supply Service, have in common? They are the proud catalysts behind the federal charge card program. That's the $12 billion (going on $18 billion) Smart Pay program. It allows government contracting and program officials to use charge cards to buy a variety of commodities and services, as well as to pay for travel expenses and gasoline.

In the mid-1980s, Balutis coordinated a Commerce Department effort to expand a small pilot project on the use of charge cards at the National Oceanic and Atmospheric Administration. Commerce established a bank card center in Kansas City, Mo., and sparked interest in the program at more than 30 other agencies. In 1988, Alston spearheaded GSA's effort to turn the Commerce pilot into one of the most successful innovations in government.

Bureaucracies, by nature, promote and value anonymity. So many players influence outcomes, and years often pass before a good idea takes hold. By that time, beginnings are fuzzy and those central to the initiative are often long gone or forgotten. Most people who have had lengthy stints in government have memories of that project, policy or piece of legislation that, but for them, might not have made a difference. They can recall the naysayers and other challenges they had to overcome.

Alston recalls the notion that handing federal officials purchase cards and letting them buy what they needed invited all kinds of "fraud waste and abuse." The prevailing wisdom at the time did not encourage taking advantage of what was being done in the commercial world. It was "almost a complete reverse" of the situation today, she says.

Stacking Up Savings

Meeting needs while saving time, paper and money is what Smart Pay is all about. The benefits are not only real, but measurable. Since 1989, the federal purchase card program's growth has averaged more than 75 percent annually, according to the President's fiscal 2000 budget proposal. This year, 60 percent of purchases under $2,500 will be made with charge cards, and the percentage is projected to rise to 80 percent by 2000.

What are the benefits? The Agriculture Department's costs per transaction have dropped from $77 per paper purchase order to $17 per electronic transaction, a decrease of almost 80 percent. The agency stands to save $29.5 million annually as a result of its award-winning program. And these savings say nothing about the convenience of getting something easily and when you need it.

Susan Poetz and Joseph Taylor recently described Agriculture's purchase card experience at a World Research Group conference in Las Vegas on best procurement practices. Poetz is program manager of Agriculture's procurement and modernization team, and Taylor is a team member. Through the team's reengineering efforts, the agency roughly quadrupled its purchase card usage from 1994 to 1998. The results:

• Cardholders increased from 5,300 to 18,000.
• Dollars spent with cards grew from $46 million to $200 million.
• Annual card transactions rose from 196,000 to 770,000. (That level is projected to increase to more than 1.3 million in 1999.)

Most purchases at Agriculture remain under the $2,500 micropurchase threshold, as in the rest of government. Purchasers generally use the card for computers, fax machines, copiers and the like. However, as part of its efforts to expand service, Agriculture now allows holders to rent office space and pay for meetings and conference rooms, storage and vehicle repairs and maintenance with the card. The agency permits those with contracting authority to spend hundreds of thousands of dollars for goods and services with the card.

Eyes on the Buyers

What you can't use the card for are Christmas presents at Toys R Us. To help you stay on the straight and narrow, an automatic monitoring system will alert your program coordinator if you are using the card for anything other than government purchases.A similar alert will occur if you make multiple purchases from the same vendor on the same day. And with a daily online reconciliation system, there is no 30-day wait before someone notices a problem. As an additional check, every 100th transaction is scanned to test for abuse.

Poetz acknowledges the difficulties of going through the reengineering process at Agriculture, but she says "the biggest benefit is getting cards into program people's hands so they can perform the mission they're required to do." That's a result both Balutis and Alston would applaud as well.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington.