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“Off-White Paper” #8 – The Federal Small Purchase Credit Card

The Federal small purchase Visa card program (or IMPAC, as it was called when Rocky Mountain owned the prgram alone) was started in 1989 as a voluntary program to save the government money by avoiding paper-based procurements for “micropurchases” (anything under $2,500). In the first FY, the program grew to 13,032 cardholders, who used their cards 47,595 time fro a total of $9,088,038 in purchases.

By the end of FY 1998, the prgram grew to 340,000 cardholders, who, on 17,000,000 purchases spent $7.96 billion.

And I predict $12 billion spent on 25 million transactions for FY 1999. Stay tuned and see if I’m right. Again.

The use of the credit card at the Federal level is, shall we say, established.

There are four points that need to be emphasized about this program:

1) It is the fastest growing procurement program in government;

2) It opens the market to new vendors;

3) It has evened out spending over the course of the year;

4) It proves government programs can be successful for the government, for vendors, and for the general public.

Let’s look at these separately.

Point 1: Since 1989, the program has almost doubled in size each year, and shows no sign of letting up. This means that open market sales are outpacing the GSA Schedule in growth, and should continue to do so. There is no need to have low-end, commodity products on any contract when they can be purchased from many vendors at competitive prices.

Point 2: This growth is what opens the market to new vendors. Where previously many business-to-business (B-to-B) vendors avoided the government, they now see a new -huge- market open to them. Many previously believed the myths of the “closed”, inside-the-beltway only companies need apply stuff circulated by those with a vested interest in keeping others out of the market. Especially after 1993 (NPR, FASA, FARA, et al), the Federal makret ahs opened its doors to any legitimate business with products or services the government buys – which is virtually everything!

Point 3: Where previously end-of-FY caused a spending frenzy (and still does with procurement offices), credit card sepending is pretty even throughout the year. There are minor spikes in October (beginning of FY) and September (end of FY), but the y are truly small. This means vendors should work more toward keeping their message in front of targeted audiences throught the year, using a variety of methods: direct mail, space ads, the internet, events, PR, and more, based on the information grazing habits of their target audience.

Point 4: This program is a tremendous success by any meausre. Early on there were many doomsday predictions about government employees and plastic. There have been few problems with the enire program. It saves the governmetn money by avoiding about $54 per pruchase (the cost of paper-based procurement), it gets the vendor paid quickly (without the hassle & delay of invoicing), and citizens at large benefit by the increased efficiency.

All in all, a superb program.

If you would like the year-to-year stats, email me from the “Info” bar on the left side of this page.

Copyright 1998, Amtower & Company