The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said
"The controls currently applied to the use of the Government Procurement Card by civil servants and other public employees are not strict enough to deter and prevent inappropriate use.
The Ministry of Defence is by far the biggest spender, accounting for three-quarters of all expenditure using the cards, but checks only a sample of its transactions. We were told that this sample could be as small as 5%.
The Department for Work and Pensions doesn’t even have receipts for a third of its transactions using these cards.
There may be clear benefits to using the card. Transactions are quicker to process and suppliers are paid more quickly. In principle, departments can exercise greater control over what is being bought and from where. Detailed management information is also generated automatically.
But there are inconsistencies in how the cards are used and controlled across government. Some departments block certain categories of spending; others do not. Some departments allow only permanent members of staff to use the cards; others are happy to hand them over to non-permanent staff. There is not even a central system for collecting and monitoring cases of card fraud and subsequent prosecutions.
We are not convinced that this represents an appropriate use of public funds. We welcome the Cabinet Office’s new central policy but it must be consistently implemented by all government departments.
The policy could go further. Departments could check 100 per cent of transactions; restrict the use of the cards to permanent staff; and ban the use of the cards for certain items, such as alcohol. All of these options should be given serious consideration.
We are pleased that the Cabinet Office has promised to produce an up-to-date business case demonstrating how cost-effective these cards are compared to other payment methods."
Margaret Hodge was speaking as the Committee published its 1st Report of this Session which, on the basis of evidence from the Cabinet Office and the Ministry of Defence, examined central government’s use of the Government Procurement Card.
The Government Procurement Card (GPC) was introduced in 1997 as a convenient and cost-effective way for government bodies to make low-value purchases. A GPC is a payment card which individuals can use to purchase goods and services; the supplier is paid immediately and the balance is paid in full each month by departments. There may be clear benefits to using the GPC, but departments must maintain strong controls over its use to reduce the risk of inappropriate use or fraud, and any subsequent reputational damage.
Transactions using the cards are quicker to process than other methods of procurement, and suppliers are paid more quickly. Use of the cards can also enable departments to have greater control by limiting what individuals can purchase and the suppliers they can use, and providing detailed management information on transactions.
However, inappropriate or fraudulent use of the card brings significant risks, both to value-for-money and to government’s reputation. The strength of the controls in place varies significantly between departments. This is particularly evident in the Ministry of Defence, which is the biggest spender, and accounts for around three-quarters of total GPC expenditure, but which limits checks to only a sample of its transactions. One third of DWP transactions checked by DWP did not have receipts.
All 17 central government departments operate their own card programmes, setting their own policies and controls designed to ensure staff use cards appropriately. However, the Cabinet Office has overall responsibility for setting out Government policies on the use of the Government Procurement Card. The Cabinet Office recently created a GPC Steering Group, to shape how cards should be used, and to share best practice. The Steering Group introduced a central GPC policy in November 2011, setting out a minimum standard across government.
The central policy should consider going further, for example by specifying: 100% transaction checking, blocking categories of expenditure by default, banning use of the card for certain items (such as alcohol) and ensuring that all cardholders are permanent staff members. However, the initial challenge will be for the GPC Steering Group to ensure that the policy as it stands is being implemented, and to hold departments to account where there are found to be gaps in the design and implementation of controls. Departments themselves need to improve upon these minimum standards.
It has been fourteen years since the benefits of using the Government Procurement Card were quantified. As procurement processes have advanced substantially, the estimated difference in cost of using a card over other methods has reduced. The Cabinet Office has now committed to refreshing the business case, which should help departments to make the right decisions about when using the cards is the most cost-effective way of buying goods and services.