For example, in 2012 we found that selected agencies were  only leveraging a fraction of their buying power through contracts as a  result of strategic sourcing analysis. Four Agencies Took Steps to Identify Cost Savings through Analysis of Purchase Card Data; Two Agencies Could Do More

All of the agencies in our review incorporated purchase card data into  aggregate spend analysis to support strategic sourcing initiatives as  required by OMB; however, many officials pointed to data challenges,  such as a lack of specificity, that make it difficult to conduct more detailed  analysis. Moreover, two of these four  agencies identified opportunities for savings through such analysis,  demonstrating that savings can be found. Further, Energy did not perform agency-wide analysis of  purchase card data. Without more focused efforts on this type of analysis,  these agencies may be missing opportunities to find cost savings with  purchase card buys. The OMB guidance also states that agency purchase card program  coordinators should further conduct a more specific analysis of purchase  card data, reviewing spending patterns and levels—independent of the  aggregate agency spend analysis—to identify opportunities for savings  through negotiation of discounts, improvements to the buying process,  and increased volume purchases. Despite Challenges, Most Agencies Performed Specific Analysis of Purchase Card Data, With Some Positive Outcomes

Despite concerns with the data, four agencies in our review—DHS, EPA,  VA, and Interior—took additional steps to analyze purchase card  spending patterns as recommended by OMB guidance. However, other components of DOD, such as the Air Force and Navy, did  not report any purchase card spend analysis activity. Federal  internal control standards state that management should internally  communicate the necessary information to achieve the entity’s  objectives. Without communication of any local efforts taking  place, agencies may be missing opportunities to leverage the buying  power when using purchase cards. To ensure that good practices are shared within agencies, we  recommend that the Secretaries of Defense, Veterans Affairs, the Interior,  Homeland Security, and Energy, and the Environmental Protection  Agency develop guidance that encourages local officials to examine  purchase card spend patterns to identify opportunities to obtain savings  and to share information on such efforts. DOD, VA, DHS, and Energy concurred with our  recommendations and Interior partially concurred. The Office  of Management will also update the VA’s purchase card policy to  encourage agency officials to analyze purchase card spending patterns  for cost-saving opportunities and share the results of these analyses. A-123 Appendix B  requires agencies to incorporate purchase card spending data into overall  spend analysis to support strategic sourcing initiatives and recommends  that agencies analyze purchase card spending patterns and levels to  identify opportunities for negotiation of discounts and increased savings  based on volume. In response to a congressional committee request, we  assessed the extent to which selected (1) agencies analyze purchase  card data to identify opportunities to leverage buying power agency-wide  and (2) local purchase cardholders take advantage of opportunities to  achieve cost savings when using purchase cards. We met with General Service Administration  (GSA) officials who manage the SmartPay purchase card program as well  as officials from the Office of Management and Budget responsible for  issuing government-wide guidance on managing purchase card programs  to gain insight into what purchase card transaction data are available to  individual agencies and the requirements placed upon these agencies to  analyze purchase card spending. The Environmental Protection Agency (EPA) and Department of  Energy (Energy), each having spent less than $100 million. To examine the extent to which cardholders seek opportunities to achieve  cost savings when making purchases, we collected purchase card  documentation and conducted interviews with 20 purchase cardholders  from DOD and VA. We selected cardholders from these two agencies  because DOD and VA have the highest amount of purchase card  spending, representing nearly 78 percent of total government purchase  card spending in fiscal year 2014.
Why GAO Did This Study

The purchase card program was designed to streamline relatively small dollar value acquisitions of goods and services. In fiscal year 2015, the government spent approximately $19 billion using purchase cards.
GAO was asked to review whether agencies are effectively leveraging their buying power when using purchase cards. This report assesses the extent to which selected (1) agencies analyze purchase card data to identify opportunities to leverage buying power agency-wide and (2) purchase cardholders seek opportunities to achieve cost savings when using purchase cards.
GAO analyzed data from the three banks that work with the six selected agencies—selected in part on varying levels of purchase card spend volume—to manage their purchase card programs. GAO evaluated policies, reviewed strategic sourcing efforts related to purchase cards, and interviewed officials. GAO also interviewed officials from the General Services Administration who manage the government's purchase card contracts, and interviewed selected cardholders at the two agencies with the highest purchase card spend.

What GAO Found

The agencies in GAO's review—the Departments of Defense (DOD), Veterans Affairs (VA), the Interior (Interior), Homeland Security, and Energy (Energy), and the Environmental Protection Agency (EPA)—have made varied use of purchase card data, and additional opportunities exist to negotiate discounts and leverage buying power. As the chart below shows, spending with government purchase cards represents billions of dollars each year.
The Office of Management and Budget (OMB) guidance that prescribes policies for agencies on how to manage their purchase card programs (1) requires agency officials to incorporate purchase card data into strategic sourcing analysis and (2) recommends that agencies review and analyze purchase card spending patterns for opportunities to negotiate discounts, improve buying processes, and leverage buying power. All the agencies in GAO's review incorporated purchase card data into overall spend analysis to support strategic sourcing efforts as required by OMB, but officials noted challenges that impede review of purchase card data. For example, purchase card data do not always include enough specificity to identify particular commodities to target for savings. Despite these challenges, four of the six agencies GAO reviewed took additional steps to independently analyze purchase card spending patterns as recommended by OMB. Two agencies—EPA and Interior—identified opportunities for savings through such analysis, demonstrating that savings can be found. However, Energy and certain DOD components, such as the Air Force and Navy, did not perform analysis of purchase card spending. Without more focused efforts, these agencies may be missing opportunities to find cost savings.
GAO also found instances where regional VA offices were successful in identifying opportunities for local or agency-wide savings on items procured with purchase cards. For example, one office recognized an opportunity for savings when purchasing wheelchair ramps for disabled veterans, resulting in savings of $1.1 million and faster delivery. Federal internal controls state that management should communicate the necessary information to achieve objectives. Given the examples GAO found, developing guidance and sharing information may help agencies identify opportunities to leverage buying power with purchase cards.

What GAO Recommends

GAO recommends that Energy analyze purchase card data and DOD ensure its components do the same. GAO also recommends that each agency develop guidance to encourage local officials to examine purchase card spend patterns and share this information. Four agencies concurred, Interior partially concurred, and EPA did not comment.