GSA administers the purchase card program governmentwide. An estimated 4 million U.S. merchants accept MasterCard, Visa, or both, and at least 2.1 million of these merchants did business with the government in fiscal year 2001.Because the banks that issue purchase cards do not have access to data on all of the merchants accepting the cards, MasterCard and Visa collected this information on the banks’ behalf, contracting in one case with Austin- Tetra, a private firm, to assist in the task. However, this information is not useful because the data collected were inconsistent and incomplete, making them unreliable. Therefore, at this time, no meaningful conclusions can be drawn about where purchase card dollars are spent or the effect on small businesses of the government use of purchase cards. Drawing on lessons learned in its first attempt at a governmentwide socioeconomic data report, GSA is continuing to work with SBA, DOD, and the private sector to improve the reliability of the data for subsequent reports. However, in its initial data collection effort, GSA did not precisely define the information it was requesting or clearly specify the criteria to be used by the banks and associations as they categorized merchants. Therefore, businesses requiring certification, such as HUBZone and small disadvantaged businesses, are easier to categorize than businesses for which registration is voluntary, such as woman-owned small businesses. The data exchanged during transactions generally focus on information needed to ensure that the merchant is paid and the cardholder’s account is charged. Conclusions

Although the government likely will never be able to capture complete socioeconomic information on 100 percent of purchase card merchants, the available data can be strengthened to provide more accurate and consistent information that would provide decisionmakers a clearer picture of the extent to which small businesses are receiving federal money through the purchase card program. Identify the information that federal agencies, especially the General Services Administration (GSA) and the Department of Defense (DOD), have collected for fiscal year 2001 on the socioeconomic status of purchase card merchants and the sources of such information. To assess GSA’s governmentwide efforts to collect data on the socioeconomic status of merchants, we reviewed (1) data reported to GSA by the banks and payment card associations for fiscal year 2001, (2) data provided to GSA for their internal purchase card program from Visa, and (3) MasterCard’s merchant file. To identify the challenges to the collection and reporting of socioeconomic data on merchants, we interviewed government officials from GSA’s purchase card program, SBA, DOD, and the Office of Federal Procurement Policy.
Why GAO Did This Study

Government purchase cards have streamlined the process of acquiring goods and services by allowing employees to purchase directly from merchants rather than going through the regular procurement process. The government spent $13.8 billion using purchase cards in fiscal year 2001. However, the government does not know how purchase card spending impacts small businesses and other socioeconomic categories, such as woman-owned small businesses, and small disadvantaged businesses. Because of these uncertainties, the General Services Administration (GSA), which administers the purchase card program, has begun to collect socioeconomic data on merchants doing business with the federal government through purchase cards. This report assesses GSA's efforts and identifies the challenges to collecting and reporting this data.

What GAO Found

GSA's effort to collect socioeconomic data in fiscal year 2001 was ineffective because of incomplete, inconsistent, and, therefore, unreliable data gathered by banks and payment card associations on behalf of GSA. The data were inconsistent primarily because GSA did not precisely define criteria for the information it was seeking from the banks. Therefore, no meaningful conclusions can be drawn at this time about where agencies spend purchase card dollars or the effect of purchase cards on small businesses. Nevertheless, GSA has been working with the Small Business Administration, the Department of Defense, and the private sector to develop strategies to improve the data's reliability. By building on the lessons learned in its initial attempt to collect the data, GSA hopes to produce more reliable socioeconomic data for future fiscal years. We identified several challenges that prevent GSA from gathering data on 100 percent of the merchants doing business with the federal government. These challenges stem from the nature of the purchase card transaction processing system, which focuses on the data needed to ensure that the merchant is paid and the cardholder's account is charged. It is not designed to collect socioeconomic data for the government. Despite the challenges that prevent the collection of socioeconomic data on all purchase card merchants, well-defined criteria and consistent use of available data sources would provide decisionmakers with a clearer picture of the extent to which small businesses are receiving federal dollars through purchase cards.