NAO: Procurement cards are cost effective but need tighter controls

20 March, 2012

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20 March 2012 | Adam Leach

Government departments should continue using procurement cards but consider measures such as real time monitoring to crack down on the abuse of them.

The Government Procurement Card, published today by the National Audit Office (NAO), concluded that the controls currently in place at the five departments it assessed are generally acceptable. However, it ruled that they should be tightened through various means to stamp out abuse of the scheme.

The report also called for the Cabinet Office to develop a new business case for the value for money offered by the cards, because it is currently based on data from a 1998 KPMG report that put the average saving per transaction at £28. The NAO estimates the current transactional saving is about £5. The drop reflects the general cost of procurement having fallen as a result of technology improvements.

Amyas Morse, head of the NAO, said today: “The government procurement card can be a cost-effective way for central government to buy goods and services. However, the taxpayer needs to have confidence that departmental staff are using it appropriately.”

The NAO said complying with the cross-government policy on procurement cards, developed by the Cabinet Office, should be a minimum requirement. That policy includes what the cards should be used for. Further to that, departments should consider using a range of measures such as withdrawing cards for repeated low-level breaches and blocking categories of spend on individual cards unless required to meet a specific business needs.

It also said transaction approval should be required on all purchases, and called for increasing the use of lodge cards, which enable the purchasing of supplies from a single supplier. In addition, the report recommended increasing the use of real time monitoring to detect suspicious or fraudulent transactions.

Commenting on the report, a Cabinet Office spokesperson, said: “The proper use of these cards can help save the taxpayer money but let’s be absolutely clear: we will not tolerate their abuse.”

The report revealed that the average transaction value on the procurement cards was £184. Margaret Hodge, chairwoman of the committee for public accounts, argued that as a result, the threshold at which transaction are made publically available should be lowered. She said: “When the average transaction value is £184, the initiative to publish transactions over £500 is not enough to protect public money from fraud and misuse.”

 

 





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