The Army was the government's largest charge card user in fiscal 1997, buying more than $1 billion in goods and services with the cards, service officials announced last week.
More than 49,000 Army civilians and soldiers put 2.4 million purchases on plastic. That equated to 89 percent of Army purchases under $2,500, just one percent short of the Defense Department's fiscal 2000 goal of using charge cards for 90 percent of micropurchases.
"The Army is really leading the charge for the whole federal government," said Dr. Kenneth Oscar, the Army's acting assistant secretary for research, development and acquisition.
The government uses the International Merchant Purchase Authorization Card (IMPAC), a Visa card made available through a General Services Administration contract with Rocky Mountain Bank. While many Americans get themselves into debt by charging purchases left and right, the more the Army and other agencies use the IMPAC, the more they cut their procurement costs.
For example, the average purchase used to cost the Army $131.62 to complete and took more than six hours to process. If an Army employee wanted to buy something as simple as office stationery, he or she would have to go through an 18-step approval process. Using the IMPAC brings the number of steps down to eight. Now the average purchase costs $39.03 to complete and two hours to process.
To cut costs further, the Army is changing the way it accounts for purchases. As a result, the service will need 600 fewer vendor payment technicians at the Defense Finance and Accounting Service to process its transactions. (DFAS charges the Army $25 to process each transaction.) The change is expected to save the Army $40 million a year, service officials said.
Ernest Gregory, deputy assistant secretary of the Army for financial operations, said the improvements required a team of procurement, logistics and resource management specialists to work together.
"You don't change a process unless you change every step of the process from cradle to grave," Gregory said.
Not every Army installation has made it easy for their employees to use the purchase card, Army officials concede. Some approving officials still require numerous steps before a small purchase is authorized.
"There's always going to be resistance to change," Gregory said. "We're very anxious to find places where there are impediments."
One reason field offices may still be imposing barriers to charge card usage is concern for fraud. But Army officials said the charge card program actually reduces the chances of abuse. The contract with Rocky Mountain Bank has fraud protection written into it, and an authorization system makes it easier to spot fraud. Less than 1 percent of Army fraud cases involve charge cards.
The Army accounts for 22 percent of all charge card purchases in the federal government, followed by the Department of Veterans Affairs, with 13 percent.
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