The broadening of purchase card use from procurement offices to individual government cardholders in 1994 improved the ability of agencies to quickly and easily acquire items needed to support daily operations and reduced the administrative costs associated with such small purchases. Though government purchase cards were originally reserved for use by procurement personnel, the Federal Acquisition Streamlining Act of 1994 allowed authorized government cardholders to make purchases under the micro-purchase threshold without obtaining competitive quotations if the price to be paid was considered reasonable. Further, the act dictated that cardholders distribute their purchases equitably among qualified suppliers. Moreover, according to the Federal Acquisition Regulation (FAR), these cards are the preferred means to complete purchases under the micro-purchase threshold. According to GSA, from fiscal year 2010 to 2015, cardholders spent a range of about $17 billion to $19.5 billion annually in goods and services using purchase cards. (See figure 1) Although purchase cards may be used as a payment mechanism against contracts, for the agencies in our review, over 97 percent of the purchases in fiscal year 2015 were transactions valued below the micro- purchase threshold. (See table 1) The government’s purchase card program—part of the SmartPay program—is managed by GSA, which currently administers the purchase card contracts with three banks: US Bank, Citibank, and JP Morgan Chase. According to GSA’s SmartPay website, streamlining paper-driven acquisition processes of the past with the use of purchase cards saves the government about $1.7 billion annually (approximately $70 per transaction) in administrative costs. Further, when selecting which bank to use for its purchase card program, an agency can negotiate with its bank the terms for purchase card refunds under the purchase card program’s contract. These refunds are based on speed of payment and volume of transactions and may also result in a cost savings for agencies. The GSA’s SmartPay website indicates that the government has received approximately $3 billion in refunds from purchase card spending since the SmartPay program’s inception in 1998. Purchase card data are available from two sources: the bank servicing the agency as well as a system developed by GSA called the SmartPay Data Warehouse, which was designed to assist with purchase card analysis. According to GSA officials, the Data Warehouse can be used to compile aggregate data from banks for each participating agency and for the government as a whole. The data can be sorted by various fields, such as vendor, agency, and transaction date. Additionally, GSA officials stated that they can sort the data based on an agency’s spend for improving internal management and, in the future, may be used to identify opportunities for savings. Although purchase card data can be used to support spend analysis, agency officials told us that these data are primarily used for internal control purposes, notably to mine the data in order to identify card misuse and potential fraud and abuse. In 2004, GAO found that while agencies had begun to take actions to achieve cost savings through purchase card programs, most had not yet taken full advantage of available opportunities to obtain more favorable prices on the items purchased with cards. For example, we found that agencies had only negotiated discount agreements with a few of the vendors frequently used by cardholders; purchase card training programs lacked practical information to help cardholders take advantage of the discounts that had been negotiated; and there was a lack of management focus on leveraging buying power to achieve cost savings on items purchased. As a result, we found that the government was not taking advantage of opportunities which could have saved taxpayers hundreds of millions of dollars. Officials cited inconsistent vendor reporting of detailed transaction data—referred to as level 3 data, which is necessary for identifying specific items for each transaction—as an impediment to analysis of purchase card spending patterns. However, we found that despite lacking specific data on transactions, agencies could take steps to get better prices such as identifying vendors with high volumes of sales. As a result, we made several recommendations to focus management attention on the cost saving opportunities available for purchase card buys, facilitate cardholder access to discounted prices, and develop mechanisms that provide cardholders with better pricing from major vendors for key commodities, such as agency-wide discount agreements. Over the last decade, OMB has taken additional steps to implement strategic sourcing initiatives meant to increase the value of each dollar spent by government. In 2005, it issued a memorandum implementing strategic sourcing practices across the government. In the same year, OMB, Department of Treasury, and the General Services Administration established the Federal Strategic Sourcing Initiative (FSSI) to identify government-wide opportunities to strategically source commonly purchased products and services and to eliminate duplication of efforts across agencies. Further, in a 2009 update to its purchase card guidance for federal agencies, OMB asked that agencies think more strategically about what they were buying with purchase cards. The guidance required that agencies incorporate purchase card spending into analysis that supports strategic sourcing decisions and recommended that agencies review and analyze patterns of purchase card spending for potential cost- saving opportunities. More recently, OMB announced the government’s intent to use a category management approach and GSA issued guidance in May 2015 to provide agencies with consistent standards for its implementation. Category management calls for lead agencies to analyze acquisition approaches for particular groups of goods or services to further reduce duplication of acquisition efforts among agencies and help ensure that agencies receive uniform, competitive pricing. However, this guidance on category management does not address agencies’ review of purchase card transaction patterns. Although the federal government has taken these steps to enhance strategic sourcing of goods and services, GAO has reported multiple times on the shortcomings of implementing such initiatives by federal agencies. For example, in 2012 we found that selected agencies were only leveraging a fraction of their buying power through contracts as a result of strategic sourcing analysis. While leading private sector companies reported strategically managing as much as 90 percent of their spending, we found that agencies responsible for the majority of government procurement spending reported managing less than 5 percent of their spending through strategically sourced contracts. Further, we found that FSSI contracts had low levels of use and that commodities and services purchased the most by the government were not available through FSSI. We made several recommendations to DOD, VA, and OMB to improve department and government-wide strategic sourcing efforts. While DOD has taken steps to evaluate resources devoted to strategic sourcing, it has not yet completed steps to identify and evaluate the best way to strategically source its highest spending categories. VA implemented both of its recommendations by taking steps to evaluate ways to strategically source high spending goods and services and by establishing strategic sourcing goals and metrics. OMB has not yet fully addressed recommendations to provide federal agencies with metrics to measure progress toward strategic sourcing goals nor to require an assessment of whether more top spend products and services should be considered for strategic sourcing. All of the agencies in our review incorporated purchase card data into aggregate spend analysis to support strategic sourcing initiatives as required by OMB; however, many officials pointed to data challenges, such as a lack of specificity, that make it difficult to conduct more detailed analysis. Despite these challenges, four of the six agencies took additional steps to conduct specific analysis of purchase card spending patterns as recommended by OMB guidance. Moreover, two of these four agencies identified opportunities for savings through such analysis, demonstrating that savings can be found. However, while some DOD components analyzed purchase card data, certain components of DOD did not. Further, Energy did not perform agency-wide analysis of purchase card data. Without more focused efforts on this type of analysis, these agencies may be missing opportunities to find cost savings with purchase card buys. The January 2009 OMB Circular A-123, Appendix B, stipulates that to support strategic sourcing initiatives underway at agencies, purchase card data must be incorporated into spend analysis along with contract and delivery order data. All six of the agencies selected for our review incorporated purchase card spend data into their annual or quarterly aggregate spend analysis to support strategic sourcing initiatives. Our prior work defines spend analysis as providing knowledge about how much is being spent for which products and services, who the buyers are, who the suppliers are, and where the opportunities are for leveraged buying and other tactics to save money and improve performance. From this analysis, organizations can evaluate and prioritize commodities to create a list of top products or services to target for strategic sourcing. This list typically includes the products or services on which most of the organization’s spending is focused. Although agencies we reviewed incorporated purchase card data into their aggregate spend analysis, some officials stated that its inclusion had little impact on results due to its relatively small dollar value. The OMB guidance also states that agency purchase card program coordinators should further conduct a more specific analysis of purchase card data, reviewing spending patterns and levels—independent of the aggregate agency spend analysis—to identify opportunities for savings through negotiation of discounts, improvements to the buying process, and increased volume purchases. Officials at most of the selected agencies, however, raised concerns about the costs and benefits of using resources to analyze purchase card spending because it represents a small part of overall spending. The six agencies’ average purchase card spend ranged from about 2 percent to 17 percent of total spend for fiscal year 2015 (see table 2). Furthermore, officials also stated that the value of extensive analysis is questionable, as individual purchase card transactions are low-cost and, therefore, considered low risk. For example, Interior officials told us that, in general, the cost of doing analysis on such a small portion of overall spending tends to outweigh benefits if it does not lead to a cost-saving contract. DOD officials told us they do not focus on purchase card spend, using resources to focus on higher dollar value spending instead. Moreover, although purchase card data are readily available, agency officials cited several challenges as obstacles to analyzing the data separately.