. 

U. S. Department of Housing and Urban Development

Office of Inspector General for Investigation

Inspections and Evaluations Division

Evaluation of HUD’s Governmentwide Purchase Card Program

June 17, 2011

IED‐11‐003R
ii 

Executive Summary 

The Office of Inspector General (OIG), Inspections and Evaluations Division, conducts 

independent, objective examinations of U.S. Department of Housing and Urban Development 

(HUD) activities, programs, operations, and organizational issues. 

We conducted an evaluation of HUD’s Governmentwide Purchase Card (GPC) Program. Our 

objective was to determine whether purchase card transactions complied with prescribed policies 

and procedures. 

The GPC Program provides for the issuance of commercial purchase cards to eligible personnel 

in Federal agencies under contracts with the General Services Administration. The purpose is to 

minimize paperwork for authorized acquisitions of goods and services below the simplified 

acquisition threshold ($150,000). 

Within HUD, the Office of the Chief Human Capital Officer (OCHCO) administers the program 

and performs monitoring duties for transactions below the micropurchase threshold ($3,000). 

The Office of the Chief Procurement Officer (OCPO) develops policy for the Program and 

monitors transactions above the micropurchase threshold. 

Our review focused on Purchase Charge Card Account transactions that occurred between 

December 1, 2008, and September 30, 2010. We observed the following from our review of 73 

transactions: 

 Cardholders did not always ensure that (1) the availability of funds was properly 

documented, (2) required sources were used, (3) competitive bids were obtained when 

required, (4) purchase orders were used as required, (5) purchase logs were maintained, 

(6) sales tax charges were not paid, (7) purchase logs were reconciled with monthly bank 

statements, and (8) supporting records were retained for a sufficient period. 

 

 Five of seventeen transactions reviewed were split purchases. A split purchase occurs 

when a purchase from a single vendor is broken down into two or more purchases to 

avoid requirements applicable to purchases exceeding the micropurchase threshold or a 

cardholder’s single purchase limit. 

The problems described in this report indicate vulnerability to fraud, waste, and abuse of the 

GPC Program. To improve the effectiveness of the GPC Program, steps must be taken by OCPO 

and OCHCO. These steps include ensuring that (1) purchase card transactions are conducted in 

accordance with applicable laws and regulations, (2) managers and approving officials perform a 

thorough review for potential split purchases, and (3) cardholders are properly trained. 

We provided a draft copy of the report to OCHCO and OCPO on May 25, 2011, and received 

written comments on June 3, 2011 and June 15, 2011 respectively. OCHCO and OCPO agreed 

with our observations and recommendations in the report. The complete text of OCHCO’s and 

OCPO’s response is included in appendixes A and B. 
iii 

Table of Contents

Introduction ......................................................................................................................................4 

Scope and Methodology ..................................................................................................................5 

Observations 

Observation 1: HUD Needs To Improve Its Governmentwide 

Purchase Card Program ....................................................................................7 

Observation 2: Purchase Cardholders Made Split Purchases ...................................................9 

Recommendations ..........................................................................................................................10 

Comments and OIG’s Response ....................................................................................................11 

Appendixes 

Appendix A – HUD Office of Chief Human Capital Officer’s Comments .......................12 

Appendix B – HUD Office of Chief Procurement Officer’s Comments ...........................14 

Appendix C – Roles and Responsibilities in HUD’s Purchase Card Program ..................17 

Appendix D – Procurement Process for HUD’s Governmentwide 

Purchase Card Program... ...........................................................................19 
4 

Introduction 

The Governmentwide Purchase Card (GPC) Program authorizes the issuance of commercial 

purchase cards to eligible personnel in Federal agencies under a contract through the General 

Services Administration (GSA). The cards are issued through major national banks. The 

purpose of the Program is to minimize the paperwork needed to make properly authorized 

purchases of goods and services under the simplified acquisition threshold (SAT) to further the 

Federal agency’s mission. The current SAT is $150,000. In 1998, GSA initiated the SmartPay 

Program to enable Federal agencies to efficiently manage their purchase card programs with 

transaction reporting software and a centralized billing system.

 

At the U.S. Department of Housing and Urban Development (HUD), the Office of the Chief 

Procurement Officer (OCPO) and Office of the Chief Human Capital Officer (OCHCO) are 

primarily responsible for administering and maintaining the Program. 

 HUD’s GPC Program includes four corporate accounts. Our review covered Purchase Charge 

Card Accounts only. Headquarters and field cardholders use these accounts to support routine 

operations. 

OCPO is responsible for developing policy for the overall GPC Program. OCHCO administers 

the Program in headquarters and in the field. Cardholders are normally granted authority to 

make purchases at or below the micropurchase threshold, which is currently $3,000 for supplies, 

$2,500 for services, and $2,000 for construction. OCPO can grant cardholders the authority to 

make purchases above these levels. Individual cardholders may be further restricted by single or 

monthly purchase limits on their cards. A “single purchase” limit is a total of those items that 

may be purchased at one time from a particular vendor. A “monthly purchase” limit is the 

maximum total dollar amount the cardholder is authorized to procure each month.1

 

Appendix C shows the difference in the roles and responsibilities of the key players in the GPC 

Program. Appendix D outlines the procurement procedures that should be followed for the GPC 

Program. 

The GPC Program is governed by various provisions of the Federal Acquisition Regulation 

(FAR), Title 48, chapters 1 and 24 (also known as the HUD Acquisition Regulation), 

supplemented by HUD Handbook 2210.3, Procurement Policies and Procedures. HUD 

Handbook 2212.1 REV-2, Government Wide Commercial Credit Card Program, provides 

specific guidance to individual cardholders and approvers. In addition, each new HUD 

cardholder is required by OMB Circular A-123, Attachment B, Revised, dated January 15, 2009 

to receive training concerning his/her duties and responsibilities before initially assuming 

cardholder responsibilities and, at a minimum, every three years thereafter. This OMB document 

prescribes policies and procedures to agencies regarding how to maintain internal controls that 

reduce the risk of fraud, waste, and error in government charge card programs. Each new 

cardholder who is given authority below the micropurchase threshold is also provided with a 

delegation of procurement authority memorandum from OCHCO. Each cardholder given 

 

1

 Draft GPC Guide, OCPO & OBAS [Office of Budget and Administrative Support], dated June 2010, section 

4(a)(6) 
5 

authority above this threshold is provided with a delegation of procurement authority letter from 

OCPO. This memorandum requires that each cardholder follow a specific set of rules and 

procedures provided in an attached document entitled “Purchase Charge Cardholder 

Responsibilities and Procedures.” For example, field cardholders must ensure that an 

Administrative Client Request/Response System (ACRS) request or Requisition for Supplies, 

Equipment, Forms, Publications, and Procurement Services (form HUD-10.4) is prepared and 

signed by the approving official and the individual responsible for verifying the availability of 

funds. Headquarters cardholders must ensure that a form HUD-10.4 is prepared and signed by 

the approving official and the individual responsible for verifying the availability of funds. 

Statistics/Fiscal Purchases 

During the period of our review, HUD spent more than $17.6 million under the program. The 

breakout of purchases above and below the micropurchase threshold is shown below. 

Above MPT* Below MPT Total 

Transactions amount $4,078,843.48 $13,610,507.45 $17,689,350.93 

Number of transactions 288 36,032 36,320 

Number of cardholders 9 2432 243 

Number of approving officials 6 973 97 

* micropurchase threshold 

Scope and Methodology 

We interviewed headquarters and field program coordinators and OCPO staff to gain an 

understanding of the program. We also reviewed the FAR and applicable HUD requirements. 

The evaluation work was performed at HUD’s Washington, DC, headquarters. Supporting 

documents from field offices were provided by mail. The review was limited to transactions 

from headquarters and the field processed through HUD’s Purchase Charge Card Accounts 

between December 1, 2008, and September 30, 2010. 

We selected a total of 73 transactions for review. Fifty six transactions were selected to 

determine whether they complied with applicable requirements. A breakdown of sample 

transactions is shown below. 

 Up to MPT Above MPT 

Total transaction amount $17,334.63 $731,758.78 

Number of transactions 24 32 

Number of cardholders 22 9 

Number of approving officials 20 6 

 

2

 Number includes nine cardholders who made purchases above the micropurchase threshold. 

3

 Number includes six approving officials who also approved purchases above the micropurchase threshold. 
6 

The remaining 17 transactions were judgmentally selected from 818 potentially duplicate and/or 

split transactions that occurred during the period. The criteria used for a duplicate transaction 

was one that consisted of two or more charges in a single day from one vendor. The criteria for 

our selection of split transactions were those that consisted of two or more charges in a single 

day from the same vendor for individual amounts that would exceed the micropurchase threshold 

or the cardholder’s single purchase limit in total. 

We conducted the inspection/evaluation in accordance with the Quality Standards for Inspection 

and Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 

 
7 

Observations 

Observation 1: HUD Needs To Improve Its Governmentwide Purchase Card 

Program 

Cardholders did not follow the FAR and HUD requirements governing the use of purchase 

charge cards for 38 of 56 transactions reviewed. Problems noted included (1) availability of 

funds not properly documented, (2) required sources not used, (3) competitive bids not obtained 

when required, (4) purchase orders not used as required, (5) purchase logs not maintained, (6) 

sales tax charges not disputed with vendors, (7) purchase logs not reconciled with monthly bank 

statements, and (8) supporting records not retained for a sufficient period. For a number of 

transactions, multiple problems were noted. 

These problems are attributable, in part, to insufficient reviews of transactions involving 

headquarters cardholders and insufficient training of headquarters cardholders with purchase 

authority exceeding the micropurchase threshold. In addition, HUD permits certain headquarters 

cardholders to make purchases above the micropurchase threshold contrary to the provisions of 

the FAR. 

The Purchase Charge Cardholder Responsibilities and Procedures attached to the delegation of 

authority provides that, before making a purchase, each cardholder must 

 Verify and document the availability of funds. Headquarters cardholders must ensure 

that a form HUD-10.4 is prepared and signed by the approving official and the individual 

responsible for verifying the availability of funds. Field cardholders may use an ACRS 

request or a form HUD-10.4 for these functions. 

 Consider required sources such as Federal Prisons Industries (UNICOR) and National 

Industries of the Blind (NIB), etc. (FAR 8.002 specifies the priorities for use of 

Government supply sources). 

 Obtain at least three competitive bids when he/she receives a request for a purchase 

above the $3,000 micropurchase limit. A purchase order must be issued and for purchases 

above $3,000. 

 Maintain charge card logs which record all purchases made during the billing cycle. 

 Reconcile items purchased shown on monthly statements from the participating bank 

with purchase logs and submit to the approving official within five business days. 

 Retain copies of purchase charge card records for three years including copies of request 

documents, itemized invoices or receiving reports, bank statements, purchase logs, and 

competitive bids when required. 

Handbook 2212.1 REV-2, chapter 3, paragraph 3-4, provides that no Federal or State sales tax 

should be paid. If sales tax is included in the bill amount, the discrepancy must be resolved 

directly with the vendor. 

In addition FAR section 13.301(c), provides that purchase cards may only be used to make 

micropurchases, place a task or delivery order if authorized in the basic contract, or make 

contract payments when the contractor agrees to accept payment by card. Purchases above the 
8 

micropurchase level that do not involve a task order or contract payments must be made using 

simplified acquisition procedures. 

Our review of 56 purchase transactions indicated that cardholders had not 

- Documented the availability of funds by completing form HUD-10.4 or ACRS reports 

signed by an approver and the person responsible for verifying fund availability in 12 

instances. 

- Purchased an item from an available mandatory source in one instance. The cardholder 

did not document the reason why the mandatory source was not used. 

- Performed market research to obtain at least three quotes for purchases above the 

micropurchase threshold in six instances. 

- Maintained a purchase charge card log in at least eight instances. 

 

- Reconciled the monthly bank statement with the purchase log in one instance. 

- Maintained copies of records supporting one purchase transaction for the required three 

years. 

- Resolved a sales tax charge of $255 with the vendor in one instance. 

- Issued a purchase order for transactions above the micropurchase threshold but, instead, 

used the charge card to complete these transactions in 28 instances. Most of these 

purchases were made by five cardholders in headquarters whose single purchase limit 

exceeded the $3,000 micropurchase threshold. The remaining purchases were made by 

cardholders whose single purchase limits were below $3,000 but who were granted 

waivers in individual cases so that they could complete purchases above $3,000. 

In addition, these 28 purchases included two transactions that were initially estimated to 

be below the micropurchase threshold and the cardholders’ card limits. Both transactions 

involved rental of hotel conference rooms for training purposes. In one case, the cost 

estimate was $3,000. In the other, it was slightly under $3,000. Since neither hotel 

provided a firm quote at or below the threshold, the cardholders should have told the 

requestors to submit requisitions to the appropriate purchasing offices. However, in each 

case, the cardholder was granted a one time increase or override of the card limit in order 

to make a payment in excess of $3,000 when the hotel invoice exceeded the original 

estimate. 

OCHCO has not performed a review of headquarters transactions since 2008. Handbook 2212.1 

Rev-2, chapter 5, paragraph 5-6 requires that evaluations of the Department’s Governmentwide 

Card program be performed in Headquarters and the field. An OCHCO representative told us 

that OCHCO lacked the resources to perform purchase card audits. We also noted that four of 
9 

five cardholders in headquarters with single purchase limits above $3,000 had not yet completed 

required contracting training Federal Acquisition Certification in Contracting (FAC-C) is 

required for employees issued new Contracting Officer warrants after 2006. This certification 

has minimum requirements for education, including 24 business credits from an accredited 

institution, and for additional contracting training. One of the five Headquarters cardholders with 

purchase authority above the micropurchase threshold had been issued a new warrant after 

December 31, 2006. The other four cardholders, who had warrants issued before this date, had 

to complete the training requirements only. February 2011 memorandums from OCPO addressed 

to the five Headquarters cardholders required all five to complete the training and/or educational 

requirements of the FAC-C program by September 30, 2011. Only one of the five had completed 

the applicable requirements at the time of our review. Further, OCHCO permitted all five 

cardholders to make purchases above the micropurchase threshold contrary to the FAR, which 

requires the use of simplified acquisition procedures for these transactions. 

Observation 2: Purchase Cardholders Made Split Purchases 

Purchase cardholders split purchases contrary to requirements for five of 17 transactions 

reviewed. As a result, HUD may not have obtained the most competitive prices for the items 

purchased. Also, vulnerability to fraud and abuse in the cardholder program was increased. 

HUD Handbook 2212.1, chapter 3, paragraph 3-4, prohibits cardholders from splitting purchases 

to stay within the single purchase spending limit. Provisions of the FAR at subpart 13.003(c)(2) 

prohibit breaking down purchases merely to avoid a requirement that applies to purchases 

exceeding the $3,000 micropurchase threshold. The five transactions consisted of purchases of 

information technology (IT) equipment, file cabinets, and storage boxes in August, September, 

and November 2009, respectively, and of ceremony items (awards, plaques) and copier toner in 

March and July 2010, respectively. The IT equipment acquisition was split into three separate 

charges that if combined, would have exceeded the cardholder’s single purchase limit. The 

transactions for file cabinets and storage boxes consisted of orders made over several days in 

amounts slightly below the micropurchase threshold. The charges for storage boxes were each 

$2,999. The total purchase amount for the ceremony items was slightly above the micropurchase 

threshold but was evenly divided into two separate charges. The toner purchase was split into 

two charges. Each charge was for a different color toner in an amount slightly below the 

micropurchase threshold. 

 

An OCHCO representative agreed that the acquisition of file cabinets met the criteria for a split 

purchase.  Cardholders responsible for the other four transactions either provided no explanation 

or claimed that the decision on the quantity and timing of items purchased was based on the 

needs of the office and not on a desire to avoid exceeding the micropurchase threshold. 

Permitting cardholders to split purchases increases HUD’s vulnerability to fraud and waste 

because purchases made below the micropurchase threshold are subject to different controls than 

purchases above the threshold. For example, purchases made below the threshold do not require 

that a purchase order be issued. In addition, because cardholders are not required to obtain 

competitive quotes for purchases below the micro purchase threshold, the Government may not 

have benefited from the lower prices that competitive quotes could have provided. 
10 

Recommendations 

We recommend that OCHCO and OCPO 

1. Reemphasize to all cardholders and approving officials that they must comply with 

requirements applicable to purchase cards including the requirements to complete forms 

HUD 10.4 and ACRS requests, maintain purchase logs, use mandatory sources when 

possible, dispute State sales tax charges, and maintain supporting documentation on file 

for all transactions. 

2. Resume audits of purchase card transactions made by cardholders on a regular basis in 

accordance with HUD policies. 

3. Require the cardholder and approver responsible for the sales tax charge of $255 to 

obtain a credit in that amount from the vendor. Also, ensure that purchase cardholders 

verify whether or not sales taxes have been charged. Sales taxes that have been charged 

must be immediately disputed. 

4. Require all cardholders with single purchase limits above $3,000 to complete 

contracting training if they have not yet done so. 

5. Instruct all cardholders with single purchase limits above $3,000 that purchase 

transactions above the micropurchase level that do not involve either a task order or 

contract payments must be carried out using simplified acquisition procedures in 

accordance with the FAR. An alternative would be to reduce all cardholders’ single 

purchase limits to $3,000. 

6. Reemphasize to all cardholders that they must not intentionally separate purchases in 

order to avoid exceeding micropurchase thresholds or single purchase limits. 

7. Ensure that managers and approving officials comply with Federal and departmental 

polices to incorporate a thorough review for split purchases when approving and 

monitoring purchase card transactions. Cardholders who have carried out split 

purchases should have their purchase card responsibilities discontinued if they carry out 

additional split purchases. 

 
11 

Comments and OIG Response 

We provided a draft copy of the report to HUD’s Office of Chief Human Capital Officer 

(OCHCO) and Office of Chief Procurement Officer (OCPO) on May 25, 2011. The OCHCO’s 

response was received on June 3, 2011 (Appendix A). The OCPO’s response was received on 

June 15, 2011 (Appendix B). The OCHCO and OCPO agreed with our observations and 

concurred with our seven recommendations. We recognized OCHCO’s and OCPO’s effort to 

improve the operations of the Governmentwide Purchase Card Program. However, the 

recommendations remain open pending verification of corrective actions. OIG will follow up 

with the OCHCO and OCPO to determine the status of the corrective actions taken 

 
12 

Appendix A – HUD Office of the Chief Human Capital Officer’s Comments 
13 
14 

Appendix B – HUD Office of the Chief Procurement Officer’s Comments 
15 
16 
17 

Appendix C – Roles and Responsibilities in HUD’s Governmentwide Purchase Card 

 Program 

Division Responsibilities 

GSA  Governmentwide administration and monitoring of the GSA SmartPay 

Program 

OCPO – 

Policy, 

Systems & 

Oversight 

Division 

 Develops policy for HUD’s GPC Program 

 Grants authority to cardholders to make purchases above the micropurchase threshold (MPT)4

 Audits transactions above the MPT 

OCHCO  Administers the purchase card program in headquarters and the field 

 Audits transactions below the MPT 

 Prepares GPC reports for the Office of Management and Budget 

 Serves as a liaison between the cardholder and servicing bank 

 Issues cards to designated/authorized cardholders

Office of 

Accounting 

 Serves as a liaison between the program finance office and the 

agency/organization program coordinators (A/OPC)

 Verifies availability of funds 

 Downloads and pays invoices from the servicing bank in compliance 

with the Prompt Payment Act

Servicing 

bank - 

Citibank 

 Awarded a SmartPay contract with HUD to run from November 30, 

2008, to November 29, 2012

A/OPC  Maintains up-to-date information on the cardholders 

 Participates in training conferences and trains cardholders 

 Ensures that cardholders use the cards correctly 

 Monitors account activity and manages delinquencies 

 Ensures that appropriate steps are taken to mitigate suspension and 

cancellation actions 

Approving 

official 

 Designates and monitors cardholder in a specific organizational unit 

 Reviews the appropriateness of each purchase by cardholders 

 Reviews monthly billing statements 

 

 

4

 The current MPT is $3,000 for supplies, $2,500 for services, and $2,000 for construction. The FAR, subpart 2.101, 

https://www.acquisition.gov/far/current/html/Subpart%202_1.html#wp1145507 
18 

Appendix C – Continued 

Division Responsibilities 

Cardholder  Secures the card 

 Maintains a purchase log 

 Uses the card only to make informed buys of approved supplies and 

services 

 Ensures availability of funds before purchase 

 Is aware of reasonable prices offered in the marketplace 

 Observes all dollar limits on purchases 

 Reconciles and documents transactions 

 Uses the card ethically 

 Complies with the Federal Acquisition Regulation and HUD’s policies, 

procedures, and regulations governing the purchase card program 

 
19 

Appendix D – Procurement Process for HUD’s Governmentwide Purchase Card Program 

Amount Process 

Up to MPT  Determine eligibility for purchase 

 Obtain approval through requisition documents 

 Verify funding availability 

 Research vendor for purchase (required source or other) 

 Make purchase without sales tax or surcharge 

 Arrange for delivery; billing should occur upon shipment 

 Register purchase in log 

 Receive products/services 

 Receive and reconcile monthly bank statement 

 Maintain supporting documentation for purchase 

 Submit support to approving official for review/approval 

 Send bank statement with attached support to Office of Chief 

Financial Officer 

Above MPT 

and up to SAT 

 Follow the procedures above 

 Have OCPO approval to make purchases as a contractor 

 Follow the five phases of the contracting process (planning, 

solicitation, evaluation, award, post award) 

 Use purchase order 

 Enter transaction into the Federal Procurement Data System - Next 

Generation (HUD’s small purchase system) 

 Publicize solicitation for bids 

 Set aside purchases for small businesses if two small businesses 

meet purchase requirements 

 May obtain competition from other businesses if two small 

businesses do not meet criteria