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Recovery cards

by Celeste Mackenzie

The use of acquisition cards or corporate credit in the government procurement process continued to grow during the last fiscal year, both in terms of volume of sales and cards issued. Online federal government purchasing began in April, and several provinces also allow e-purchases.

At the federal level, more than 32,000 cards were in use (up 4,000 from the previous year), according to Roch Huppé, senior analyst with the Financial Management Policy Division of the Comptrollership Branch at Treasury Board Secretariat (TBS). TBS figures showed that a total of $515,000 million in sales were realized with both the Citibank VISA and National Bank MasterCard. At the same time, $1,442 million of a potential $2,546 million was recuperated in rebates for prompt payment, as compared to just under one million out of a $2,068 million potential last year. A Request for Proposal (RFP) for a new contract to begin in 2002 has been issued on MERX.

Also known as P-cards, these cards were introduced into the federal public service in 1991-92. They allow for efficiencies in the ordering and payment processes, and in tracking and reporting of low value expenditures. At all levels of government, Level II reporting (information about each purchase, including quantity, price, and tax), seems to be the norm: it's one step up from the Level I that comes with consumer credit cards that reports only the total price of any given purchase. Level III, which includes information such as product codes, is usually unavailable due to a lack of point-of-sale terminal software.

Huppé notes few problems with the cards. "I can't say we've had any major issues, " he says. "In a user survey last year, the opinions were very positive; the only issue that may have come up was if you found a vendor that doesn't accept the cards. But that is really a rare problem." Of the two cards the federal government uses, VISA is more accepted in the west, and MasterCard is stronger in the east. "Service is pretty much the same," Huppé says.

The card suppliers collect statistics concerning fraudulent use of the cards. The Auditor General (AG) reported in 1999 that improvements had been made since a 1997 audit, but no further follow-up has since been conducted nor is it planned for the near future, according to Johanne McDuff, the AG's communications director.

The federal government and Ontario also use the ARI fleet card, administered separately as is generally the case at other levels of government. The ARI cards are assigned to vehicles rather than individuals. Travel cards are also almost always managed separately across the country, with American Express being the most popular.

Most of the provinces have come on the acquisition card bandwagon, with the exceptions being Newfoundland and Labrador and Prince Edward Island. Phil O'Neill, PEI's procurement services manager, says his province decided not to use the cards until a solution is found that reduces the labour-intensive process of reconciling posting card transactions to different accounts in the province's financial system. Larry Cahill, director of purchasing in St. John's, also has concerns about the substitution of one set of administrative tasks with another. "We looked at this in 1995, and we're taking a look at it again right now. If we decide to go ahead, we'll have an RFP out for the new fiscal year," he says, adding that the province does use fleet and travel cards.

Other provinces report improvements in reporting procedures, including the ability to view statements online via extranet sites, and programs that make reporting expenses compatible with government public accounts. For example, Saskatchewan's Chris Martin, senior analyst in the Comptroller's Division, Department of Finance, reports that rather than re-entering purchase details into the province's records, a new spreadsheet form with all government department purchases means only one line of information need be entered into a supplier's schedule of payment accounts. "Up until CIBC VISA introduced the feature this year, the time-saving benefits of the card were minimal," he says.

The CIBC VISA card is also used by Manitoba and the Northwest Territories. Following a year-and-half-long pilot project in the latter jurisdiction, , Royal Bank VISA became the chosen card provider. According to Assistant Comptroller General John Carter, although some changes will be needed to things like software codes and fields, the pilot project was very successful. He notes, "If anything, the response of the vendors was 'What took you so long?'"

In Ontario, 14,000 CIBC VISA cards were used for $100 million dollars in sales last year, says Tony Pierro, director, Business Improvement Branch, Shared Services Bureau. While he notes that some managers would like more detailed information about purchases, he says a big plus is that information about spending per vendor is more readily available. "The information becomes intelligence which allows us to negotiate better contracts," he explains.

Finally, at the municipal level, Toronto intends to implement the cards by year-end once wrinkles caused by amalgamation have been ironed out. "We've had to work on the replacement of the seven different purchasing systems into one, amalgamation of staff, and development of new procedures, which have caused some delays" states Lou Pagano, Director of Purchasing and Materials Management.

Meanwhile, Winnipeg has been using CIBC VISA purchase cards since 1996, initially as a way to speed up payment, according to Tony Rozziere, supervisor of Commodity, Tax and Transportation for the city. There, the same card is used for travel as well. "There's no point having more cards in people's pockets," Rozziere argues, adding that Internet purchases have been allowed since the card's inception.

Rozziere reports no major misuse of the card, but acknowledges accidents do occur. "Employees have caught themselves using their corporate VISA card which looks just like their personal VISA card. Disciplinary action, including dismissal, is contemplated when the cards are actually abused, but that would be foolish to try given the controls that are in place," he says.

Celeste Mackenzie is an Ottawa-based freelance journalist who has contributed, among other media, to The Toronto Star, CBC Radio and The Kingston Whig-Standard. Previously, she was a communications officer with the United Nations Mission in Guatemala.



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