The Army charged up a storm in fiscal 1997, buying over $1 billion in goods and services with credit cards, Army officials announced this 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 credit 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 federal 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 take over 6 hours to process. If an Army employee wanted to buy something as simple as office stationery, he 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 2 hours to process.
To cut costs further, the Army is changing its accounting procedures. The Defense Finance and Accounting Service (DFAS) charges the Army $25 to process each transaction. By revamping the way it accounts for purchases, the Army will need 600 fewer vendor payment technicians at DFAS to process Army transactions. The estimated savings will be around $40 million a year, Army officials said.
Ernest Gregory, the Army's deputy assistant secretary for financial operations, said the improvements have 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 speed is concern for fraud. But Army officials said the credit card program actually reduces the chances for abuse. The contract with Rocky Mountain Bank has fraud protection written into it, and the authorization system makes it easier to spot fraud. Less than 1 percent of Army fraud cases involve credit cards.
The Army accounts for 22 percent of all credit card purchases in the federal government, followed by the Veterans Affairs Department with 13 percent.
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