HomeMy WebLinkAbout(0010) IR 20-10433 - Procurement CardsINFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 20-10433
To the Mayor and Members of the City Council June 16, 2020
Page 1 of 3
SUBJECT: UPDATE ON PROCUREMENT CARDS
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This Informal Report is in response to the Audit Committee's request for information.
The procurement card policy was approved by the Mayor and City Council on June 6, 2017, M&C G-19014.
The policy is an Addendum to the City's Financial Policy Statements and is attached.
Purpose
The procurement card program allows designated City of Fort Worth employees the ability to purchase
goods and services that do not require a formal competitive procurement as outlined in the City's Purchasing
Policies. This program is used to procure small -dollar -value goods, services not requiring insurance, one-
time purchases, and approved travel expenses. The cards may be used for annual agreement purchases
where such use has been specifically approved and arranged by the Purchasing Division of the Financial
Management Services Department.
Procurement Card Issue Eligibility
Cards may be issued to permanent, full-time City employees whose duties include procuring goods and
services for their Department. Cards are not issued to temporary, part-time employees, elected officials,
contractors, or sub -contractors.
Procurement Card Use
Each cardholder is given a $3,000 permanent single transaction limit and a $10,000 permanent monthly
limit. Permanent monthly limits may be increased with the approval of the Department Director and the Chief
Procurement Officer upon receipt of reasonable justification for such an increase. Currently, 36 City
employees have a monthly limits greater than $10,000.
The procurement card is not intended to avoid or bypass appropriate purchasing or payment procedures as
outlined in the City of Fort Worth Purchasing Policies. This program complements the existing processes
available and is intended to be a mechanism to procure low dollar items. Vehicle fuel is not a regular
purchase using the procurement card because the city utilizes the Wright Express Card for fuel.
Cards are not for personal use and shall not be used to finance personal expenses, even if the intent is to
reimburse the City. The State of Texas Procurement Laws ensures that acts of this nature can result in fines
or even be cause for criminal action to be taken.
Authority and Security Levels
The following levels have the review and/or approval authority in PeopleSoft FINS, for credit card
transactions:
• Procurement Card Administrator within the Purchasing Division
• Department Directors
• Department Managers/Supervisors
• Procurement Card Department Coordinator
• Cardholder
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 20-10433
To the Mayor and Members of the City Council June 16, 2020
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Page 2 of 3
SUBJECT: UPDATE ON PROCUREMENT CARDS
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Tax Exemption
The City is sales tax-exempt within the State of Texas. Cardholders are responsible for ensuring that
procurement card purchases do not include sales tax, even when traveling within the state. The City is not
exempt from hotel, airline, rental car, and regulatory taxes. If the credit of sales tax is not received from the
vendor within one week, the cardholder may be required to reimburse the City for the sales tax amount.
Information about Card Holders and Volume of Procurement Card Transactions
There are currently 548 employee card holders in the City. The following chart reflects the number of the
procurement cards per department with the distribution of card holders based on being in the field,
administrative or in a departmental warehouse.
Department
Number of
Procurement
Cards
Procurement
Card - Holder
Field
Procurement
Card - Holder
Administrative
Procurement
Card - Holder
Warehouse
Police
129
44
83
2
Parks
89
78
11
Property Management
64
54
10
Water
53
3
27
23
Neighborhood Services
38
32
6
Fire
32
14
13
5
CMO
25
25
Public Events
21
21
TPW
20
15
5
Library
19
19
Human Resources
11
11
IT
10
10*
Development Services
9
9
Aviation
7
7
Code
6
6
City Secretary' Office
4
4
Municipal Court
4
4
Financial Management
Services
3
3
City Attorney's Office
2
2
Economic Development
1
1
Planning & Data
Analytics
1
1
* 3 cards are for specific vendors such as AT&T Business and AT&T Mobility and Verizon
In FY19, departments used their procurement card to make approximately $14 million in purchases which
was a slight reduction from FY18. This expenditure represents 2% of the city's total operating expenditures
in FY19.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 20-10433
To the Mayor and Members of the City Council June 16, 2020
KOPP
Page 3 of 3
SUBJECT: UPDATE ON PROCUREMENT CARDS
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New Procurement Card Policy
The Financial Management Services Department will be drafting Administrative Regulation - Procurement
Card Guidelines to strengthen internal controls, provide further clarification on allowable purchases and
additional compliance review procedures. The new administrative regulation is expected to be finalized
within the next several months.
For questions regarding procurement card information, please contact Cynthia Garcia, Assistant Finance
Director, at 817-392-8525.
David Cooke
City Manager
Attachment
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS
City of Fort Worth
Department of Finance
Procurement Card Policy
I. Authority
FORTWORTH.
The Fort Worth City Council is responsible for legislation, policy formulation, and overall direction
setting of the government. This includes the approval of financial policies which establish and
direct the operations of the City of Fort Worth. The City Manager is responsible for carrying out
the policy directives of the City Council and managing the day-to-day operations of the executive
departments, including the Department of Finance. This policy shall be administered on behalf of
the City Manager by the Chief Financial Officer/Director of Finance.
II. Purpose
The procurement card (PCard) program allows designated City of Fort Worth employees the
ability to purchase goods and services that do not require a formal competitive procurement
as outlined in the City's Purchasing Policies. This program is to be used to procure small -dollar -
value goods, services not requiring insurance, one-time purchases, and approved travel expenses.
Procurement cards may be used for annual agreement purchases where such use has been
specifically approved and arranged by the Purchasing Division of the Financial Management
Services Department.
III. Applicability and Scope
This policy shall apply to all Procurement Cards issued by the City of Fort Worth, under the
budgetary and fiscal control of the City Manager and the City Council.
IV. Glossary — See Definitions related to this policy provided in the appendix.
V. Procurement Card Issue Eligibility
PCards may be issued to permanent, full-time City employees whose duties include procuring
goods and services for their Department. PCards will not be issued to temporary, part-time
employees, elected officials, contractors, orsub-contractors.
VI. Obtaining a PCard
The initial requirements to obtain a PCard under this program include thefollowing:
a. Attendance by the employee, and the employee's supervisor, manager, and Assistant
Director at a PCard training and the Purchasing Policies and Procedures training sponsored
by the Purchasing Division, Financial Management Services Department.
b. Written approval from the specific employee's supervisor, manager, Assistant Director,
and Director.
Effective Date 06/07/2017 M&C G-19014
c. Acknowledgement of the responsibilities and associated accountability under this policy
by those approving the employee to obtain a card.
d. Receipt of all documentation by the PCard Administrator, including:
i. JP Morgan Chase PCard (JPMC) Application
ii. Employee Agreement — Acknowledgement of Responsibilities
iii. Certification of Completion of the PCard Training Class
iv. Certification of Completion of the Purchasing Policy and Procedures Class
v. Copy of City ID AND current driver's license.
e. Documentation outlining the Department's PCard Coordinator. Note: If any
of these items are missing, issuance of the PCard will be delayed
VII. PCard Use
The use of a City of Fort Worth PCard includes the following stipulations:
a. A Cardholder shall not loan their card or card number to anyone, including other
employees, for use.
b. The Cardholder is responsible forthe security of their PCard and any transactions made on
it.
c. The PCard may be used at any non -restricted vendor.
d. PCard numbers must not be submitted through email, text message, or facsimile. PCard
numbers may be send by facsimile to hotels when required for travel arrangements.
PCard numbers may only be provided via a telephone conversation if required.
e. Each Cardholder is given a $3,000 permanent single transaction limit and a $10,000
permanent monthly limit. Permanent monthly limits may be increased with the approval
of the Department Director and the Chief Procurement Officer upon receipt by the
Chief Procurement Officer of reasonable justification for such increase. Increases to the
permanent single transaction limit will not be allowed.
f. The PCard is not intended to avoid or bypass appropriate purchasing or payment
procedures as outlined in the City of Fort Worth Purchasing Policies. This program
complements the existing processes available and is intended to be a mechanism to
procure low dollar items.
g. The PCard is not for personal use and shall not be used to finance personal expenses,
even if the intent is to reimburse the City. The State of Texas Procurement Laws insures
that acts of this nature can result in fines or even be cause for criminal action to be
taken.
h. The City promotes progressive, productive work practices and supports "planning ahead"
to achieve the best possible results. Poor planning does not constitute an emergency
by City policy and/or State law. The PCard should not be used as a substitute for proper
planning.
VIII. Training
Each Cardholder and their respective manager, supervisor, and Assistant Director are required to
complete mandatory training prior to the issuance of a PCard. Each Department where PCards
have been issued must designate a Department PCard Coordinator who will also be required to
complete mandatory training prior to receiving access to PaymentNet and PCard Laserfiche
Forms systems. Class certificates are only good for six (6) months prior to the time of applying
for a new PCard or receiving a renewal PCard.
Effective Date 06/07/2017 M&C G-19014
Each Cardholder, their respective manager, supervisor, Assistant Director, Director and
Department Coordinator shall be required to take on -going training on a biennial basis to maintain
the ability to utilize PCards.
IX. Replacement PCards
In the event of fraudulent or suspicious activity, lost, stolen or damaged cards, the
Cardholder shall first contact JPMorgan Chase Customer Service using the number located on the
back of the card and, secondly, contact the PCard Administrator.
X. PCard Cancellation and Cardholder Transfers
PCard Cancellation: Department Coordinators, Department Directors, Managers/Supervisors
and/or Cardholders shall notifythe PCard Administrator when a Cardholder is leaving employment
with the City. Failure to return the PCard within five
(5) days of separation to the PCard Administrator will result in a fifty dollar ($50) fine against
the next or last Cardholder's paycheck.
Cardholder Transfers: The PCard Administrator receives a weekly employee file that includes
departmental transfers and will review for PCard holders. Employees that have a current PCard
will be notified by email, along with their current coordinator, that the card will be suspended
within 24hrs of the email until an updated Cardholder Agreement from the new
department/manager has been received by the PCard Administrator. Once the updated
agreement has been received, PaymentNet will be changed to reflect the new default FID
information provided and an email sent to the cardholder, new coordinator and manager that the
card is active and may be used again. If an updated Cardholder Agreement is not received within
30 days of the transfer, the card will be canceled and the employee will have to reapply for a
PCard.
XI. Receipts
Cardholders shall retain and submit receipts to Department PCard Coordinators for each
transaction in PaymentNet, including credit receipts. All receipts must meet the following five (5)
criteria:
a. Amount of purchase must match the amount reported in PaymentNet
b. Itemization of the goods and/or services purchased (including restaurant receipts)
c. Date of purchase
d. Type of payment must show credit card or a variation
e. Vendor's name must match the vendor's name in PaymentNet
XII. Tax Exemption
The City is sales tax-exempt within the State of Texas. Cardholders must ensure PCard purchases do not
include sales tax, even when traveling within the state. The City is not exempt from Hotel, Airline, Rental Car,
and Regulatory taxes. If a credit of sales tax is not received from the vendor within one week, the Cardholder
will be required to reimburse the City for the sales tax amount.
Effective Date 06/07/2017 M&C G-19014
XIII. Travel
A Cardholder may use their PCard for business travel related expenses adhering to all other
policies and procedures relating to official City travel. On -site or online webinars and training
follow the same policies as local travel under existing policies and procedures. Cardholders may
not charge meals or incidentals related to travel on the PCard.
XIV. Car Washes. Fuel and Business Meals
Commercial car washes shall not be used by PCard holders; the James Avenue or other City car
wash facility shall be used. Departments may request a waiver of this policy through a
memorandum from the Department Director requesting approval of the waiver from the Chief
Procurement Officer and the Property Management Department Director. This memo shall
include an economic cost consideration, adequate analysis proving the additional cost to use the
City facility or facilities and list specific PCard holders to receive the waiver.
Fuel Purchases are only allowed on the PCard for rental vehicles while traveling. Use of the PCard
for fuel of a City Owned or personal vehicle is prohibited.
Cardholders on official business attending a local luncheon or dinner meeting may use their
PCards. The meal must be an integral part of the meeting, and the meeting must involve the
discussion or promotion of official City business. Business meals shall be non- reoccurring in nature,
unless it is an official job duty of the Cardholder. The exact purpose of the meeting and those
who attended must be documented with the transaction in PaymentNet and on the receipt.
XV. Technology Purchases
All technology -related equipment as stated on the City of Fort Worth Technology Purchase
Approval Policy must be approved by the Information Technology Solutions (ITS) Department
before making purchases. Cardholders must receive electronically written approval from ITS prior
to making a purchase and such approval must accompany the receipt for proper documentation
and auditing
XVI. Annual Agreements
Cardholders should seek guidance from their Department Coordinators, Fiscal Coordinators, and the
Purchasing Division regarding Annual Agreement vendors.
a. Annual Agreement list: A report of all active Annual Agreements is available each Monday
morning in BuySpeed Online (BSO). Cardholders may contact their BuySpeed Online
coordinator, the PCard Administrator or visit the City PCard location on the intranet to locate
agreements.
b. PCard Accepted Annual Agreements: The City has several Annual Agreement contracts with
vendors that accept the PCard as payment for a purchase. Cardholders
Effective Date 06/07/2017 M&C G-19014
may request a temporary increase to their single transaction limit for a purchase made with a
PCard Accepted Annual Agreement vendor. PCard accepted annual agreements are identified
in the BuySpeed Online (BSO) purchasing system by the payment term "Ghost".
c. Non-PCard Annual Agreements: If the City of Fort Worth has an Annual Agreement (Blanket
PO) with a vendor, that does not allow payment using the PCard as a form of payment, the
Cardholder cannot use the PCard to make a purchase. For clarification on Annual Agreements,
please refer to the Purchasing Policy for guidelines and process.
d. No Annual Agreement: If an annual agreement is not in place for the requested goods and/or
services, the Cardholder may work with a vendor to purchase the items needed in alignment
with the City's Purchasing Policy. Items purchased without an annual agreement must be of
a business, non -reoccurring nature. If the volume of PCard purchases with a vendor exceeds
$3,000 in a 12-month period from the date of the first purchase, the department must submit
a requisition in the BuySpeed Online (BSO) purchasing system and specifications so the
Purchasing Division may competitively bid an annual agreement for the goods and/or services.
The Purchasing Division will review all non -annual agreement expenditures by vendor to verify
the need for annual agreements.
XVII. Split Transactions
The splitting of a purchase into multiple transactions in order to circumvent the intended control
of the single transaction limit on the PCard is prohibited. The following are definitions of
split purchases that violate Texas law:
a. Separate Purchases: Purchases made separately of items or services that, in normal
purchasing practices, would be acquired in one purchase.
b. Sequential Purchases: Purchases made over a period of time of items or services that, in
normal purchasing practices, would be acquired in one purchase. This does not apply to
subscriptions or membership renewals.
c. Component Purchases: Purchases of the component parts of an item or service that, in normal
purchasing practices, would be acquired in one purchase.
XVIII. Restricted Uses and Vendors
The City's PCards program utilizes programming associated with vendor Merchant Category
Codes (MCC) in order to regulate transactions. The MCC codes are established to deny certain
purchases that are not allowed by the City of Fort Worth's PCard Program. Examples of restricted
MCC's include, but are not limited, to Cash Advances, Gambling, and Money Transfers. For a
comprehensive list, please contact the PCard Administrator.
In addition, the PCard cardholder must check the Excluded Parties List System (EPLS) list at
www.sam.gov prior to making any purchase. City and grant requirements preclude purchases
from vendors who are listed on the EPLS system as excluded from doing business with the United
States federal government. Results of the EPLS search process must be retained in the
department's procurement file.
XIX. Fiscal Year End
Effective Date 06/07/2017 M&C G-19014
All PCards will be suspended for a period of time (PCard Black -Out), as established in the Fiscal Year
End Closing Process memo. Proper planning of goods and services acquisition prior to fiscal year
end is essential. PCards will not be kept active for any reason other than City -related travel.
Emergency needs during the PCard Black -Out will be handled on a case -by -case basis. Poor
planning will not constitute as an emergency.
XX. Approved Uses
Payments for refreshments, meals and other supplies must have a clearly identified business
purpose, prior approval, and must be of an occasional, non -recurring nature. The City promotes
progressive, productive work practices and supports "planning ahead" to achieve the best
possible results. It is important to be sensitive to how expenditures may appear to the City Council
and to the public.
XXI. Policy Violations and Appeals
Neither JPMorgan Chase nor the vendor bears any responsibility for prohibited expenditures. If
such a purchase is made by a Cardholder, the vendor will be paid and the Department budget
charged. PCards may be immediately canceled or suspended for any violation of this policy. The
PCard Administrator will notify the Chief Procurement Officer, Department Coordinator,
Department Director, and Cardholder when a PCard has been canceled or suspended and the
reason for the cancellation. Department Directors shall hold the Cardholder personally
responsible for payment back to the City for the prohibited expenditure and any PCard abuse or
misuse should be addressed as part of progressive discipline as outlined in the City's Personnel
Rules and Regulations.
XXII. JPMorgan Chase Customer Services
The PCard program is serviced using a team approach with the JPMorgan Chase Customer Service
Center. This center is available 24 hours a day, seven (7) days a week to assist the Cardholders with
general questions about their PCard account. The Customer Service telephone number is: 1-800-
316-6056 and can be found on the back of thecard.
XXIII. Software Applications
PaymentNet: PCard transactions will be processed though the JP Morgan Chase Bank PaymentNet
Program, a web -based application. Users may access the site from anywhere, including
while on business travel, by logging into
https://www.paymentnet.ipmorgan.com.
Laserfiche Forms and Client: Laserfiche Forms is used to submit electronic copies of the PCard
Statements and Receipts (reports) to the Department Director or Designee Approver and the
PCard Administrator. Users may access the site from the City's server only by logging into
http://forms.cfwnet.org. Laserfiche Client is the electronic storage application for all cycle reports
approved by the PCard Administrator. The City's Records Management Division maintains the
retention schedule and disposal of all PCard Program records stored on Laserfiche Client.
XXIV. Transaction Cycle and Default Fund Identifier
Effective Date 06/07/2017 M&C G-19014
All Cardholder accounts must be assigned a complete default FID consisting of Fund, Department,
and Account. Any Cardholder not having a complete FID in PaymentNet will be assigned a general
FID until the Cardholder or Department Coordinator submits the complete FID.
Transactions in PaymentNet must be reviewed and approved within three (3) business days of
the Post Date. Transaction review shall include assignment of the proper FID applicable to the
purchases. All transactions not reviewed and approved within the three
(3) business days will be automatically interfaced into the General Ledger Program, PeopleSoft, to
the default FID. Subsequent to this time, departments can reclassify PCard transactions from the
default FID to another FID using a journalentry.
XXV. PCard Administrator and Purchasing Division
The PCard Administrator is designated to answer questions, issue cards, and provide administration
of the program. This person is knowledgeable on all procedures and processes. All PCard
requests must go through the PCard Administrator. The PCard Administrator will audit PCard
transactions for appropriateness, policy violations, and compliance with this policy as well as
related policies, including Travel and Purchasing. All issues of non-compliance will be brought to the
attention of the responsible Cardholder, the Cardholder's Supervisor and/or Manager, their
Department Head, and the Chief Procurement Officer.
Responsibilities of the Program Administrators include:
a. Maintaining PaymentNet and Laserfiche records and reports in accordance with the Records
Retention Schedule
b. Training all PCard Program users, sending updates on the PCard Policies and Software
Applications
c. Auditing transactions and submitting cycle reports
d. Managing the accuracy of the PCard Program use through monthly, quarterly, and yearly
reports
Responsibilities of the Purchasing Division include:
a. Maintaining all Annual Agreements and updating the PCard Administrator on any new or
changed agreements, procedures, and processes
b. Working with the PCard Administrator and Cardholders on any PCard Policy violations and
cancelling PCards when appropriate
c. Processing the annual rebates associated with the PCard Program
XXVI. Department Directors
In the event a Department Director is also a Cardholder, their PCard Statement and Receipts
must be reviewed, approved, and signed by their Assistant City Manager. In the event an Assistant
City Manager is also a Cardholder, their PCard Statements and Receipts must be reviewed,
approved, and signed by the City Manager or theirdesignee.
Duties of Department Directors include:
a. Appointing the PCard Department Coordinators, Managers/Supervisors, and employees who
will be responsible and accountable for PCards under the program
b.Optionally appointing Department Auditors
c. Ensuring Cardholders and Coordinators are in compliance with the provisions of the PCard
Effective Date 06/07/2017 M&C G-19014
Policy, counseling and/or disciplining Cardholders and Coordinators, as needed
d. Managing the Departmental budget. PCard expenditures are not committed in the financial
system at the time of purchase
e. Addressing performance deficiencies in Cardholder and/or Coordinators' performance
evaluations or through the remedies outlined in the City's Personnel Rules and Regulations.
f. Authorizing Cardholder applications and permanent or temporary monthly limit increases
g. Assisting with PCard cancellation appeals
XXVII. Department Managers/Supervisors
Department Directors may assign a Manager/Supervisor within their department to handle certain
responsibilities within the PCard Program.
Duties of a Department Manager/Supervisor include:
a. Authorizing Cardholder applications
b. Reviewing and approving PCard Statement and Receipts on a cycle basis in Laserfiche Forms
c. Ensuring Cardholders and Coordinators are in compliance with the provisions of the PCard
Policy, counseling and/or disciplining Cardholders and Coordinators, as needed
XXVIII. PCard Department Coordinator
A PCard Department Coordinator is designated by the Department Director to keep
documentation for the PCard activities within their hierarchy. Department Coordinators are
knowledgeable about the Program. Cardholders should first contact the Department Coordinator,
who will then refer questions or potential problems to the PCard Administrator, when necessary.
Department Coordinators shall not be Cardholders, taking into consideration segregation of duty
principles.
Duties of a Department Coordinator include:
a. Immediately notifying Department Directors, Department Managers/Supervisors, and the
PCard Administrator of any Policy violation for a Cardholder within their hierarchy
b. Attending training to understand the PCard Policies and any procedures associated with the
PCard Program
c. Assisting Cardholders in reviewing transactions in PaymentNet on a daily basis and assigning
appropriate FIDs for the purchase
d. Gathering and sorting all original receipts, travel authorizations, and any supporting
documents for each Cardholder within their hierarchy and submit timely cycle Statements
and Receipts through Laserfiche Forms
e. Notifying all Cardholders within their hierarchy of any updates sent by the PCard
Administrator
XXIX. Cardholder
Effective Date 06/07/2017 M&C G-19014
The Cardholder is identified and approved by the Department Director to utilize the PCard for
purchasing small dollar goods and services. The Cardholder is responsible for following the
guidelines contained in this policy. A Cardholder is assigned to a hierarchy based on department
and division when completing the application process
Duties of the Cardholder include:
a. Maintaining strict adherence to the PCard Policies
b. Reviewing transactions in PaymentNet on a daily basis and assigning appropriate FIDs for
purchases
c. Submitting all original receipts, travel authorizations, and any supporting documents for each
purchase to the Department Coordinator immediately after making purchases
XXX. Department Auditors
Department Auditors are assigned to a hierarchy by the Department Directors for "view only
"access and reporting functions in PaymentNet. Department Coordinators cannot have Auditor
duties. Internal Audit Department auditors also have this role to view citywide transactions.
Duties of Department Auditors include:
a. Access for viewing transactions only (will not have ability to change FIDs or notes)
b. Creating different reports based on Cardholders, FIDs, Vendors, and a variety of other criteria
within their hierarchy
c. Identifying transactions for which additional research and/or justification is needed, and
completing follow-up actions to confirm adherence to this policy
d. Analyzing report data and submitting to their Department Director
Effective Date 06/07/2017 M&C G-19014