GSA SMARTPAY CONFERENCE DoD Charge Cards

1. GSA SMARTPAY CONFERENCE DoD Charge Cards 19 August 2003

2. Ms. LeAntha SumpterDirector, Purchase Card Joint Program Management Office Mr. Steven JohnsonTravel Card Program Management Office

3. Task Force/MID 904 Actions • DoD Charge Card Task Force • Established by USD ( C) – March 2002 • Made Recommendations to Improve Oversight and Strengthen the Department’s Charge Card Program • Management Initiative Decision (MID) 904 established to track implementation of recommendations

4. Summary of MID 904 Actions Purchase Card: • Completed: 14 • Green: 0 • Yellow: 1 • Subtotal: 15 Travel Card: • Completed: 8 • Green: 5 • Yellow: 4 • Subtotal: 17 Common: • Completed: 3 • Green: 2 • Yellow: 6 • Subtotal: 11 Key: Green: Plan and Schedule Developed Yellow: Plan Developed; Schedule TBD

5. Common ItemsPurchase & Travel

6. Completed MID 904 Actions Common Items CO-01 Deputy Secretary of Defense Issued Guidance on Charge Cards CO-06 Report Charge Card Data to OMB CO-09 Reduce Number of Charge Cards to under 1.5 Million Accounts

7. On-track MID 904 Actions Common Items CO-02 Issue DoD Directive on Charge Cards CO-11 Report Status of MID 904 Actions

8. Creditworthiness Issues Yellow • Requirement:Statutory requirement to evaluate the creditworthiness of an individual prior to issuance of a purchase or travel charge card • Conflicting Statutes: • Mandatory use of Travel Card - Travel & Transportation Reform Act • Individual consent for credit check - Fair Credit Reporting Act • Obtaining Social Security Numbers for Purchase Cards - Privacy Act • Creditworthiness requirement - FY03 Defense Appropriation Act CO-7

9. C Creditworthiness Issues • Pending Legislation: House Appropriations Bill – No Language Senate Appropriations Bill – Extends requirement to FY04 FY 2004 Senate Authorization Bill – Travel Card Only FY 2004 House Authorization Bill - No Language Defense Transformation Bill – Bargaining procedures • On-going Efforts: Jun 03 – Director of Defense Procurement and Acquisition Policy met with OMB Implementation Policy – Travel Card – credit check minimum score and self-certification form Purchase Card – envisioned as part of paperless authorization/authentication process CO-7

10. Disciplinary and Administrative Actions Yellow Disciplinary Guidelines: • 21 Apr 03 – Civilian Personnel Policy Memo • 10 Jun 03 – Military Personnel Policy Memo Tracking and Reporting Personnel Actions: • OMB Reporting Requirement • 23 Jun – OUSD(P&R) Memo • Civilian Personnel Systems Enhancement Completed • Military Personnel Systems – Enhancements Possible • Evaluate Results of Data Mining Pilot (Source for Non-Fraud Actions) Next Steps: • OUSD(C), OUSD(P&R), OUSD(AT&L) Finalize Data Collection Requirements CO-5, CO-8, CO-10

11. Develop Methods to Control Charge Cards upon Departure Purchase and Travel Card • 23 Jun – OUSD(P&R) Memo Travel Card • Interim Process in Use - DMDC matching lists over 6,500 accounts closed by APCs since January Long-Term • Determine Appropriate System to Use • Resolve Method of Identification for Purchase Cardholders • Develop Alternative Solution for Authorization to Enable CAC Card Yellow CO-3

12. Data Mining Strategy Yellow Data Sources: • E-Mall; GSA Advantage; Warfighter.net; CCR/BPN; Banks/TSYS; Purchase Logs; UPC/UID; Providers of Level 3 Data Purchase Card Automated Reconciliation Transaction Tool (PCARTT) • Jun 03 – Pilot Completed • Oct/Dec 03 – Phase II • Mar 04 – IOC Lessons Learned: • Criteria • Buy-In • Document the Process • System Flexibility • Data Purity Travel Card Program in FY04 CO-4

13. Purchase Card Issues

14. Completed MID 904 Actions Purchase Card PC-01 DoD Concept of Operations (CONOPS) Published PC-03 Span of Control Policy Issued PC-04 Training Material for PC Officials Developed PC-05 List of Recommended Skills and Grade Published in DoD CONOPS PC-06 Strengthened Pecuniary Liability Procedures in Regulations PC-07 Additional Methods to Prosecute Fraud Identified PC-08 Strengthened Compliance Language in Regulations PC-09 Coordination of Cases of Abuse with Investigative Agencies and Security Managers/Supervisors Required PC-10 DoD CONOPS - Skills and Duties be noted in job descriptions/Standards PC-11 Requirement Established for GPC Training Data Base PC-12 Mandatory Review of Approving Officials Non-GPC Workload Required PC-13 Strategic Sourcing Strategy Developed PC-14 Standard Review Checklists Developed & Published in CONOPS PC-15 Standard A/OPC Oversight Requirements Established

15. Accelerate Implementation ofElectronic Certification Yellow Key Events: • USD(C)/USD(AT&L) Memo Mandated Electronic Certification by December 2002 • DoD Master Implementation Schedule in April 2003 Waiver Criteria and Approval Process: • Develop Business Case Analysis: • Define Current Certification Process • Address Internal Controls • Illustrate Timely, Accurate Certification • Provide Implementation Schedule • Signed out by Component Acquisition Executives with FM Coordination • Approved by OSD DDP with USD(C) Coordination PC-2

16. Travel Card Issues

17. Completed MID 904 Actions Travel Card TC-1 Management metrics - delinquencies and cardholders TC-3 Reduction of cards - Approximately 600K TC-4 Review definition of frequent traveler TC-8 Exemption for en-route (Deployment) travel TC-10 Notify security managers of card fraud TC-12 Awareness of training resources TC-13 Infrequent traveler definition – Confirmed 1 or 2X Exempt TC-15 Evaluate feasibility/cost to track reimbursements (Interest Due)

18. On-track MID 904 Actions Travel Card TC-2 Split Disbursement Mandatory Military/Default Civilian TC-6 Travel Voucher Process Review TC-7 Evaluate Alternatives to the Travel Card TC-14 Comprehensive Training – Std. DoD Training from DoN TC-16 APC Roles, Span, Training, Performance Other Actions: Monthly report on charges against blocked merchant codes Review of duplicate accounts and SSN mismatches GAO and DoDIG review of CBAs Review of CBA limits and procedures Identification of future requirements and capabilities

19. Travel Card Actions Yellow GSA Notice: TC-5 Expand Salary Offset – Civilian Retirees File matching 85 potential cases since FY99 restriction FMR Changes: TC-11 Strengthen Compliance Language FMR changes TC-17 Terminating Access to EAGLS FMR change Other Actions: TC-9 Control Mechanisms in DTS Interface with Activation/deactivation BoA & future Balance information release

20. Travel Card Performance Individually Billed Accounts - Percent of Dollars Delinquent % of Dollars Delinquent

21. Travel Card Performance Centrally Billed Accounts - Percent of Dollars Delinquent % of Dollars Delinquent

22. Purchase Card Performance Purchases $Millions FY 02 - $6.757B FY 03 - $5.022B 3rd Qtr FY 02 FY 03

23. Purchase Card Performance Transactions Thousands FY 02 – 10.98 M FY 03 – 7.76 M 3rd Qtr FY 02 FY 03

24. Purchase Card Performance Percentage of Maximum Rebate Earned FY 02 - $35.8M FY 03 - $29.1M 3rd Qtr Potential Rebates FY 02 - $60.1M FY 03 - $44.8M FY 03 FY 02

25. New Initiatives

26. June 19-20 Best Practices Presentations • Defense Medical Logistics Standard Support (DMLSS) • DoD EMALL • Air Force Advantage Pilot • Air Force Purchase Log • Army Materiel Command Purchase Card Management System (PCMS) • Defense Travel System • Purchase Card Automated Review Transaction Tool (PCARTT) Pilot • PowerTrack Transportation • NIMA Results: • “Reconciliation” Is Broader Than Just Financial Reconciliation • DoD Is Redundantly Trying to Solve the Same Problems

27. Purchase Card Feedback Cycle Card Authorization, Issuance, and Maintenance Controls Improved Controls Data Mining • Property • Logistics • Demand Data • Transportation Purchasing Items Purchased Usage data & Issues Strategic Sourcing Payment Costs and Budget Validation

28. Redesigned Charge Card CapabilityProject Phases Phase I Requirements Definition (July 2003) • Deployed Data Mining Pilot as Rapid Prototype • Define and Segment Capabilities Required • Baseline Existing Capabilities (In Process) • Develop Gap Analysis and Identify Feasibility Pilots • Define Interoperability Constraints • Develop Notional Business Case for Concept of Operations • Review and Leverage BMSI Architecture Phase II Explore Alternative Capability and Implementation Solutions (October 2003) • Develop/Deploy Pilots to Determine Feasibility of Specific Segment Solutions • Explore Commercial Solutions • Develop Business Cases where Appropriate • Identify Outsourcing Opportunities

29. Redesigned Charge Card CapabilityProject Phases Phase III Determine Architecture (March 2004) • Assess Pilot Capabilities, Commercial Solutions, Outsourcing • Develop Integration Strategy Phase IV Implement – Deploy and Operational Capability (October 2006)

30. Operational Challenges • PC-PMO Focus • Electronic Processing of Rejects • DFAS • Bank • Acceptance of Credits to Accounting Systems • DFAS

31. Operational Challenges • Processing Contract Payment thru EDI • OSD(C) • GPC Contract Payments (e.g., Large Ticket Items) • Banks • Visa/MasterCard • Property Receipt, Unique Identification and Transportation

32. Next Steps Work with Business Enterprise Architecture to - • Refine Capability Requirements • Address Operational Challenges and Schedule • Develop Timeline for Pilots • Refine Performance Measures • Continue Meeting as a Working Group (Virtually When Possible) • Develop DoD Organization Self-Certification Checklist for Program Internal Controls Establish Joint Implementation Requirements Board • Evolved from Charge Card IPT

33. Joint Implementation Requirements BoardNotional Structure for Discussion Senior Focus Group Charge Card IPT / Joint Implementation Requirements Board Meet Quarterly Data Mining Transaction Analysis Co-Chaired by DoD TC PMO + DoD PC PMO Group Managementis part of job duties Participants: PowerTrack DTS Services Property Trans-portation Financial Manage-ment Card Maint-enance Travel DTS Future Participants: Air Fleet Transportation Other Federal Agencies Fraud Focus Group Members: DMDC IG DCIS DFAS-IR Bank Advisory Group Members: GSA Banks Bank Associations Meet Twice Per Year Service Metrics Integrated Data Environment

34. This is Your Chance! As we work toward the next generation charge card functionality, what functions currently performed by A/OPCs do you recommend for possible outsourcing? What functions should be retained? Are there new functions that should be added?What do you believe could be done to improve the Purchase Card Program now and in the future?

35. This is Your Chance! Questions?