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Understanding the GSA SmartPay Best-in-Class Contract Designation and Spend Under Management

In Fall 2016, the GSA SmartPay® 2 and GSA SmartPay 3 (awarded August 2017) master contracts were designated as the first Professional Services Category Best-in-Class (BIC) contracts. The BIC designation identifies contracts that meet rigorous category management performance criteria as defined by Office of Management and Budget (OMB) guidance. These contracts are ‘good-for-government’ purchasing solutions which should be used by all agencies to help agencies manage their spend more efficiently and meet the goals of category management to buy smarter and more like a single enterprise.

The following provides answers to frequently asked questions concerning how the GSA Smartpay BIC designations help agencies meet their Spend Under Management (SUM) goals.

 

What is SUM?

Generally speaking, spend under management or SUM is the percentage of an organization’s spend that is actively managed according to category management principles—or smart decision-making where agencies buy the same kinds of goods and services through best value solutions. Increasing SUM will eliminate redundancies, increase efficiency, and deliver more value and savings.

Within the context of the government-wide category management initiative, OMB defines SUM as spend on contracts that meet defined criteria for management and data-sharing maturity. OMB uses the following tiered rating scale to evaluate agency spend:

  • Tier 3, Best-in-Class (BIC) Solutions – Dollars obligated on Best-in-Class contracts.
  • Tier 2, Multi-Agency Solutions – Dollars obligated on multi-agency contracts that satisfy rigorous standards set for leadership, strategy, data, tools, and metrics.
  • Tier 1, Mandatory-Use Agency-Wide Solutions – Dollars obligated on agency-wide contracts with mandatory-use or mandatory-consideration policies, along with standards set for data-sharing and other criteria.
  • Tier 0, Spend NOT Aligned to Category Management Principles – Dollars obligated on contracts that do not fit into one of the three tiers above. Agencies should analyze Tier 0 spend to find opportunities for shifting to higher-tier solutions.

 

How does using GSA SmartPay 2 and, in the future, GSA SmartPay 3, payment solutions contribute to helping agencies meet their SUM and Best-in Class targets?

 

GSA SmartPay 2 and GSA SmartPay 3 are considered BIC solutions and while they do not directly impact an agency’s SUM target, as acquisition vehicles, they can help agencies increase efficiencies, make smarter buying decisions, and eliminate redundancies through targeted use of the payment solutions on other Best-in-Class contracts.   

Specifically, agencies can earn SUM credit by using GSA SmartPay payment solutions to PAY for the addressable spend through one of the 30 Best-in-Class solutions. For example, if you purchase laptop computers from the IT Schedule 70 or Army Chess contracts with your GSA Smartpay purchase card, you have brought spend under management because these are BIC contracts. It is not the use of the GSA Smartpay payment solution that allows you to earn credit for SUM, rather it is the use of a BIC contract as a source for your laptops that help you meet this goal.

Using a GSA SmartPay payment solution on BIC purchases is the easiest way to earn SUM credit, but agencies can also add to their SUM goals by using the GSA SmartPay payment solutions on purchases under any Tier 1 or 2 solution.

 

 

Why were GSA SmartPay 2 & 3 designed a Best-in-Class solutions?

 

The Best-In-Class designation recognizes the GSA SmartPay 2 & GSA SmartPay 3 master contract solutions as ‘good-for-government’ payment solutions that help agencies manage their spend more efficiently and meet the goals of category management to buy smarter and more like a single enterprise.

 

What are the benefits of using GSA SmartPay payment solutions?  

Some of the benefits for customers using GSA SmartPay solutions as a method of payment for government procurement include:

  • Small Business Utilization Goals: GSA SmartPay allows customers to access solutions, enabling approximately $5 billion in small business spend annually.  
  • Cost Savings Realized: Customers have the opportunity to realize administrative cost savings through payment efficiencies.  The estimated administrative savings for the purchase card alone is $1.7 billion per year ($70 per transaction) when used in place of a written purchase order.  Agencies also pay no direct fees and features include automated account reconciliation, spend audits, and data mining options, which are compliant with P.L. 112-194 data mining requirements.
  • Agency Refunds:  Agencies have the opportunity to earn refunds based on the dollar volume of transactions and the speed of payment.  Since the program’s inception in 1998, customers have earned more than $3 billion in net refunds for mission support.  In Fiscal Year 2017 along, net government refunds totaled $298 million.
  • Safety and Transparency: The GSA SmartPay Program provides secure solutions for efficient payment transactions.  Customers also have access to tools that promote increased transparency through access to spend and performance data.
  • Electronic Access to Data: Through GSA SmartPay contractor bank online systems, account managers and account holders have immediate access to complete transaction-level data, helping to mitigate fraud, waste, and abuse.
  • Worldwide Acceptance: Through the use of commercial payment infrastructure, customers are able to use GSA SmartPay solutions anywhere in the world where merchants accept cards.
  • Identification for Discount Programs:  GSA SmartPay solutions provide automatic point-of-sale recognition for many GSA discount programs, including Federal Strategic Sourcing Initiative programs, the GSA City Pair Program, and more.  
  • Other Benefits: GSA SmartPay payment solutions provide other less tangible benefits including travel insurance and eliminating the need for imprest funds or petty cash at the agency.

 

What about the GSA SmartPay refunds? Do they count toward SUM?

 

The GSA SmartPay refunds amount to significant savings for the federal government and, as such, contribute to the savings key performance indicator for category management. However, the refunds are NOT included as part of the SUM measures.

 

 

Where can I find more information on GSA SmartPay, SUM and Best-in-Class contracts?

 

  • A complete list of Best-in-Class contracts can be found in the Acquisition Gateway. Note, you must be a registered user to access the Acquisition Gateway. For details on accessing the Acquisition Gateway see GSA.gov.
  • To learn more about how is your agency doing in managing spend explore the Spend Analysis Dashboard
  • Learn more about GSA SmartPay

 

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