June 14, 2013
Re: Division of Local Government Services issues guidance on the use of Procurement Cards
The Division of Local Government Services has issued Local Finance Notice 2013-17 providing guidance on the New Rules expanding the permitted use of Procurement Cards (P-Cards) by local units. P-cards are electronic procurement systems incorporating access restrictions determined by the contracting unit in accordance with an agreement with the issuer. They are not the same as credit cards, debit cards, in-house or store credit card, which are still not permitted for use by local governments. To contract for a P-card system the local unit can negotiate an agreement at the time you are choosing your bank, a cooperative purchasing agreement, or by competitive contracting.
The recently adopted rules, N.J.A.C. 5:30-9A, expanded the use of P-Cards. The rules abolished the current 15% of the local unit’s bid threshold limit on P-Cards. Municipalities can still limit P-cards to the 15% of the local unit’s bid threshold or if they appoint an officer or employee possessing a Qualified Purchasing Agent (QPA) in the capacity of program manager they can establish a limit to meet their local needs. Please note that P-cards cannot be used for the purchase of items or services of a personal nature for employees, volunteers or officials. Travel, dining and room and board expenses also cannot be paid for by P-cards except by the County in limited circumstances.
To utilize P-cards to acquire goods and services the governing body must adopt a resolution or ordinance, as appropriate to the form and type of government, setting out the policies and procedures that govern their use as well as ensuring sound fiscal and managerial controls. The governing body must also appoint a program manager to be responsible for the day-to-day oversight and management supervisory review of P-card usage.
Before implementing a P-card program, local units must first have all personnel connected with the local unit’s program complete training on the P-card system. First, the Chief Administrative Officer, CFO and program manager should receive training in all aspects of the system. Following their successful completion of training, the local unit’s chief administrative officer, in consultation with the CFO and the program manager (if someone other than the CFO) and subject to the local unit’s policies, is to identify positions within the organizational structure that will benefit from use of a P-Card and, pursuant to the local government’s policies and procedures, establish limits by amount, period (time) and categories of permissible use. In turn, the program manager will develop and administer a supervisory review process, identify and manage all risks associated with P-Card use; as well as engage in any other oversight or management duties required to ensure their proper utilization.
A program manager must organize training for each individual whose duties may at any time include the use of a procurement card, supervisory review or reconciliation of activity in the P-Card program, as well as the local unit’s policies and procedures concerning P-Card usage. The program manager will notify in writing every employee identified as a person who would be offered a P-card to obtain their consent for the required training. If the employee declines, they shall not be eligible to utilize a P-Card. When the list is finalized, the program manager will initiate training for those employees who will be assigned a P-Card. The Local Finance Notice details topics that must be covered in training.
When issued, P-cards must name the specific individual who has completed the training. They cannot be issued to personnel who are neither covered by a fidelity bond nor a blanked honesty policy held by the local unit. Users shall expeditiously provide all receipts to the program manager.
Please note that all purchases of goods and services using a P-Card must be in compliance with the Local Public Contracts Law. The use of a P-Card does not change or eliminate any provisions of the Local Public Contracts Law.
If you have any questions or need additional information please do not hesitate to contact Lori Buckelew at email@example.com or 609-695-3481 x112.
Very truly yours,
William G. Dressel, Jr.