Update on NIH’s Use of the Purchase Card as a Payment Mechanism

over the Micro-Purchase Threshold & Proposed NBS Solution

SAC MeetingPatrice Thompson, OALM/DSAPS

July 23, 2014

• Requirements and Background• Actions taken to date• Proposed process• Next steps• Impact to Community

Agenda

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Type of Purchase Dollar Amount Requirements

Under the MPT (Micro-purchases)

Generally $3,000 and below• $2000 for construction

(Wage Requirements)• $2500 (Service Contracts

Labor Standards)

-May be awarded without competition if price is fair and reasonable

Simplified Acquisition Generally Above $3,000 and up to $150,000

(Can be higher for some types of acquisitions)

-Competition or Sole Source justification-Public posting for purchases over $15,000-Price is fair & reasonable-Contractor must be in SAM and cannot be on excluded party list-Small business considerationFixed by this solution:-Use of appropriate provisions and clauses (manual process)-Reporting to DCIS

Contract Over $150,000 - Above with additional regulations

General Acquisition Requirements

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Federal Acquisition Regulations

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Issue 1FAR 4.6 requires that purchases over the micro-purchase threshold (MPT) be properly reported to DCIS with unique Procurement Instrument Identification (PIID). Allows data to be captured for HHS/NIH small business goals. A means of measuring and assessing the effect of Federal contracting on the Nation's economy and the extent to which small, veteran-owned small, service-disabled veteran-owned small, HUBZone small, small disadvantaged, women-owned small business concerns, and AbilityOne nonprofit agencies operating under the Javits-Wagner-O'Day Act, are sharing in Federal contracts.

Status: There is no current capability within Oracle iProcurement purchase card function to report actions into DCIS without incurring a double obligation. The current systems do not allow a PO or contract to be created and paid by using a purchase card.

Issue 2FAR 13.301 states that agencies should encourage use of the card in greater dollar amounts by COs to 1) place orders and pay for authorized purchases against contracts (under FAR 8), and 2) Place orders and/or make payment under other contractual instruments, with contractor agreement.

Status: Review of purchase card transactions over the MPT shows the purchase card is being used as an ordering mechanism NOT a payment mechanism. The pcard must be used as a payment mechanism against a contractual instrument that has specific terms and conditions which protect NIH.

• 32.1108  Payment by Governmentwide commercial purchase card.

(a)The clause at 52.232-36, Payment by Third Party, governs when a contractor submits a charge against the purchase card for contract payment. The clause provides that the contractor shall make such payment requests by a charge to a Government account with the third party at the time the payment clause(s) of the contract authorizes the contractor to submit a request for payment, and for the amount due in accordance with the terms of the contract.

• HHS Purchase Card Program Guide v. 6.0

The Department requires that all contract actions made with the purchase card over the micro-purchase threshold ($3,000) be reported in the Departmental Contract Information System (DCIS). The DCIS provides a single system capability within HHS that collect, edits and stores information on individual procurement and contracting actions executed by the OPDIVs and other HHS offices. It forms a HHS-wide database of the collected information; forwards selected information about HHS procurement and contracting actions reportable under Public Law 93-400 to the Federal Procurement Data System (FPDS). DCIS also provides readily available HHS specific reports on selected contract actions. Additional information can be found on the DCIS site.

Federal Acquisition Regulations (continued)

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• In FY 2013, 7,562 purchases over MPT were made using the purchase card totaling approximately $60M.

• Acquisition personnel are making 50% of these types of purchases (series 1105 and 1102)

• Nearly 37% of these purchases are being made on the administrative side (series 341 and 301)

Background

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SAC-A: $25,000 warrant SAC-B: $150,000 warrant• CON 237• Advanced Simplified

Acquisition Procedures• Appropriations Law• Simplified Acquisition &

Delegated Procurement• Green Purchase training

• Plus SAC-A training• CON 100• CON 110

• Preliminary findings based on current data indicate:– Roughly 250 NIH purchase cardholders

have warrants and a single purchase limit that allows them to make payments using their purchase card over the MPT

– To obtain a warrant, employees are required to:

1105: Purchasing (41.2%)

341: Administrative Officer (28.2%)

1102: Contracting (9.2%)

301: Misc. Admin (8.4%)

303: Misc. Clerk/Admin (5.0%)

343: Management Analyst (3.8%)

It is estimated that 90% of the warranted

cardholders also have PRISM access.

IC Warranted CardholdersCC 25CIT 3CSR 1FIC 1NCATS 4NCCAM 1NCI 50NEI 4NHGRI 7NHLBI 9NIA 7NIAAA 3NIAID 11NIAMS 5NIBIB 2NICHD 9NIDA 3NIDCD 4NIDCR 5NIDDK 4NIEHS 4NIGMS 3NIMH 6NINDS 14NINR 2NLM 5OD 22ORF 9ORS 24Grand Total 247

Warranted Cardholders at NIH

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There are currently 1500+ cardholders.

In FY14 YTD, as of May there were 4285 purchases

over MPT that were awarded and paid using the purchase card totaling $34M.

FY13 Awards & PaymentsPaid via Purchase Card over $3K

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ICTotal trans over $3K

Sum of Total Transaction Amount

CC 1632 $16,030,636.01CIT 119 $642,293.84CSR 57 $436,230.21FIC 21 $109,749.45NCCAM 12 $72,802.53NCCATS 253 $2,350,291.33NCI 930 $6,845,721.57NEI 249 $2,013,888.57NHGRI 299 $2,304,151.16NHLBI 508 $4,077,534.38NIA 26 $225,077.02NIAAA 221 $1,656,122.17NIAID 110 $706,736.33NIAMS 153 $1,151,799.15NIBIB 109 $1,118,696.64NICHD 21 $112,122.82NIDA 85 $525,613.58NIDCD 167 $1,211,764.64NIDCR 180 $1,294,884.37NIDDK 302 $2,003,180.19NIEHS 104 $690,751.22NIGMS 33 $211,943.60NIMH 304 $2,052,396.18NINDS 373 $2,747,256.91NINR 46 $426,250.26NLM 145 $1,314,516.01OD 304 $2,489,529.75ORF 184 $1,735,308.64ORS 615 $4,312,659.53Grand Total 7562 $60,869,908.06

1. Proper acquisition policy and procedure be applied to each buy

2. Issuance and signature on a proper written instrument with clauses

3. *Reporting via DCIS by generating the required PIID (system process)

4. Use of the purchase card to make payment against the contractual instrument

*Because of timing constraints, phase 1 will be implemented July 2014 (now scheduled for early Aug) and will focus on #3. Additional phases will address some of the manual processes.

Solution Requirements:

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• NBS worked with OALM to look at possible solutions/Impact on Community.

• Presented to SAMPC and OM in May to discuss proposed solution. Decided to develop NIH system solution in Oracle for making awards and payments over MPT using the purchase card. Allows NIH to be compliant and continue use of purchase card as payment mechanism. Agreed to proceed in order to implement by late July 2014 (now postponed to early Aug).

• Since then, NBS began working on the project and collaborating with OALM on solution and implementation schedule, met with HHS/DCIS team to ensure solution would address requirements and established weekly team meetings

Summary of Actions taken to Date

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• OALM/NBS holding regular IC working group sessions to review issues, create a simplified process for PO forms and distribution of terms & conditions.

• Due to timing constraints, solution will be implemented in phases.• Presentations made to IC Coordinators, SAMPC, EOs, and NBS Change

Advocates.• Initial communication sent to cardholder community with general

information on the upcoming changes. • User Acceptance Testing (UAT) held July 16th. UAT Testers include NCI, ORS,

NIAID, NHLBI, and NHGRI• Proposed Go live functionality available to the community on August 11

(previously July 28)

Summary (continued)

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Next Steps• More detailed communication will be sent for warranted cardholders and CAOs

who are directly impacted by this system change.• Training on DCIS and system changes will be scheduled late July and early August

for warranted cardholders and CAOs. • NBS will provide step by step navigational documentation.• After system solution implemented, working group will look at simplifying the

manual process to include leveraging Document Generation System (DGS) clauses/forms; using a standard form across NIH; providing proper job aids; training; ensuring separation of duties; etc.

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Phase I (Aug 2014)

•DCIS reporting as POs•PIID generation•Capture referenced PIID for internal reporting purposes

•Link to DGS to generate terms and conditions

•Manual process for creating purchase order

Fall 2014

•Simplified Acquisition Refresher Training for warranted cardholders and CAOs

•Standard checklist•Standard forms for purchase orders (SF30 or SF1449)

•OALM/NBS to review process and streamline where feasible.

•Continue to work with NBS for future enhancements.

Phase II/Long Term

•PO generation with terms and conditions in Oracle

•Referenced PIID validation and reporting

•Modification to AMBIS/POTS•Enhanced Oracle or PRISM solution for award and payment integration in one acquisition system

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Acquisitio

n Planning

• Develop Acquisition Strategy/Purchase Request• Solicitation• Evaluation

Award

• Issue Signed Award• PCard Log• Finalize DCIS

Post Awar

d

• Receive, Inspect, and Accept Goods or Services• Issue payment by PCard

General Acquisition Flow

Purchase Care Logs Over 3K and DCIS Reporting Proposed Process

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• All cardholders and CAOs will see updated screen; however, will only access certain fields for purchases over MPT.

• DCIS entry will add additional time to each order. • Data being reported to DCIS will be reported as a purchase order. • Users will need to ensure vendors are in SAM prior to log creation. If

vendor is not in SAM (e.g. foreign merchants), NBS is still solutioning. Currently will be handled on an exception basis thru NBS Help Desk tickets.

• Maybe some additional manual efforts required for AMBIS/POTS users.• Manual process still needed for some portions of the acquisition process

such as developing the purchase order; generating terms and conditions; sending information to vendor; separation of duties, etc. Next phase will look at how to streamline and address compliance.

• Concern expressed from IC Coordinators that many of these orders may shift to the COAC.

Impacts – Immediate and Potential

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• Not a simple process initially• Duplication of work – manually having to create a purchase

order even though some of the info was already entered online.

• Timing of implementation• Refresher training needed as well as systems training• Modifications currently an issue but NBS is working on this• Vendors not in SAM (e.g. foreign merchants) will be handled

on exception basis.• Some IC Coordinators believe orders may shift to COAC as a

result. If so, workload on COAC will be an issue. • PMAPS for some purchasing agents have processing time

metrics. May need to be adjusted.

Concerns

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Questions?

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