The purpose of the Purchasing Card Program is to establish a more efficient, cost-effective method of purchasing and paying for small dollar transactions as well as high volume repetitive purchases. The program is designed as an alternative to the traditional purchasing process for supplies and services. If used to its potential, the program will result in a significant reduction in paperwork and processing time at all levels.
The Purchasing Card can be used with any Vendor that accepts MasterCard/Visa as a form of payment.
The Purchasing Card Program enables Cardholders to make authorized purchases directly from a Vendor.
In order to have a clear understanding of expectations and the role your Agency/Department will assume, we ask that you review the following material provided.
A Project Team that included individuals from the Department of Buildings and General Services, Finance and Management, Office of the Treasurer, Agency of Natural Resources and Department of Public Safety was brought together to develop and implement the Purchasing Card for the State of Vermont.
Initially, through a pilot program, the Purchasing Card was offered to the Department of Buildings and General Services, the Agency of Natural Resources and the Department of Public Safety.
After the successful completion of the pilot program, the Purchasing Card Program was approved for all State Agencies. Participation in the program is considered voluntary.
2.0 What is a Purchasing Card?
The Purchasing Card is a Visa Credit Card issued by Bank of America for the State of Vermont. The Purchasing Card enables a Cardholder to purchase non-restricted commodities and services by telephone or in person, directly from Vendors, and is to be used only for official business purposes. Orders can also be placed using the world-wide-web.
3.0 Guidelines for Purchasing Card Use:
The Purchasing Card works just like a personal credit card, except the State of Vermont pays all charges in full.
The Purchasing Card is flexible and safe, and offers an alternative to the existing Purchasing process. It provides an extremely efficient and effective method of purchasing and paying for small dollar transactions as well as high volume repetitive purchases with a total value of $2,500.00 or less per transaction.
The Purchasing Card is authorized and may be used as a form of payment on commodity contracts that have been identified and approved by Purchasing. Such contracts appear on the Purchasing Card Approved Contract Listing. Reference Attachment “III”, and the web at Purchasing Card
. The Purchasing Card Approved Contract Listing is updated on a quarterly basis. Note: It is the Cardholder’s responsibility to verify contract pricing on items and to ensure that the items are received when using the Purchasing Card.
The Purchasing Card is authorized and may be used as a form of payment for Travel Expenses including airline tickets, hotel room and tax, and car rentals. Entertainment expenses, including restaurants are not permitted.
The Purchasing Card may be used as a form of payment for state-sponsored activities and/or events such as catering needs for jurors, etc. In such instances, Agencies/Departments must receive prior authorization from the State of Vermont Purchasing Card Administrator.
The Card adds more accountability and convenience through control features built in at the Card level and provides for management reporting.
Many items purchased under Blanket Delegation of Authority #1 (BDA#1) may be purchased using the Card.
It is not our intent to have the Purchasing Card compete with any type of buying authority that an Agency or Department may already have, therefore, it is possible to have Card controls established to accommodate other BDA’s that have been approved. Cardholders may not use the Card for cash transactions, to receive cash credits or to make non-business, personal purchases.
There are control features built into the Purchasing Card Program.
Each Agency/Department defines its controls within the parameters of the State of Vermont guidelines. An Agency tailors each Card by establishing controls at the Cardholder level. Just as a personal credit card has a credit limit, so does a Purchasing Card.
Single Transaction Limit: The State allows for a maximum of $2,500.00 per transaction. This coincides with existing purchasing authority.
Purchase of items or services off-contract may not exceed the per transaction limit. However, if the Purchasing Card is used to purchase items or services on contract with the State for a price in excess of $2,500.00, the single transaction limit may be exceeded with approval of the Agency Administrator. This exception applies ONLY to items on State Contract; purchases of off-contract items in excess of the limit shall not be approved.
Merchant Type: Similar to the State’s use of expense codes to describe purchases, a Merchant Category Code (MCC) is a 4-digit number assigned by a merchants credit card processor according to category or type of business a merchant conducts.
By designating each Merchant Category Code as allowable or restricted, the Cardholder is blocked out at the point-of-sale for all unauthorized merchant types. Reference the List of Restricted Vendors.
Spending Limits: By setting the spending amount per day, billing cycle, and month, a Cardholder can only incur transactions totaling a predetermined dollar amount within any defined period. The default billing cycle spending limit per Card is $10,000.00.
Transaction Limits: By setting the transaction limit, a Cardholder can only incur a predetermined number of transactions within a predetermined period, per day, billing cycle and month. At this time, the State of Vermont has elected not to limit the number of transactions.
The Program allows you to set controls at an Agency/Department Level and/or employee level.
3.2 Purchasing Card Limitations:
- Transactions are accomplished and authorized by the individual whose name appears on the front of the Card.
- The approved authorized limit on small dollar purchases is $2,500.00 or less per transaction. The Agency Administrator and Manager determine this amount.
- State of Vermont related business purchases only. Cardholders may not use the Card for cash transactions, to receive cash credits or to make non-business personal purchases.
- Merchant Category Codes (MCC) which are available to the State. Reference the List of Restricted Vendors.
- Although the Card is issued to an employee, it is the property of the State of Vermont.
3.3 Restricted Vendors:
The Purchasing Card Program and the State of Vermont requires that certain types of Vendors be restricted from Purchasing Card use.
For instance, with regard to Travel Expenses, the Purchasing Card may be used to purchase airline tickets, hotel room and tax, and car rentals only. Entertainment expenses, including restaurants are not permitted. Cardholders may not use the Card for cash transactions, to receive cash credits or to make non-business, personal purchases.
Please refer to the List of Restricted Vendors in the back of this manual for the types of Vendors at which the Purchasing Card may not be used (Attachment II).
NOTE: Just because a Vendor may not be restricted does not mean that it is an acceptable purchase.
If a Purchasing Card is presented for payment to the Vendors on the Restricted List, the authorization request will be declined. If a particular type of Vendor should be added or deleted, contact the Program Administrator.
4.0 Cost and Benefits:
The Program was designed as an alternative to the traditional purchasing process for supplies and services. If used to its potential, the program will result in a significant reduction in paperwork and processing time at all levels.
Currently there is no service or administrative charge being assessed by the Department of Buildings and General Services to manage this Program. However the Department of Buildings and General Services reserves the right to give a thirty (30) day notice to any Agency/Department involved in the Program should the need arise for such a change.
4.1 Payment to Bank of America:
Each Agency or Department involved in the Purchasing Card Program is set up as a separate customer. A separate invoice is generated by Bank of America on the 10th of every month for every customer involved in the Program. Payment is due within seven days to Bank of America.
In order to take advantage of rebates offered it is extremely important that no company or Agency be delinquent in their payment to Bank of America. Therefore, at this time, the Department of Buildings and General Services shall receive invoices for all customers involved in the Program, and immediately make payment directly to Bank of America.
The Department of Buildings and General Services will then back charge the appropriate Agency or Department in the same manner as the other internal service funds do. Karen Bagley with the Department of Buildings and General Services, Administrative Services Division, administers this process.
4.2 Payment to The Department of Buildings and General Services:
Once payment has been made to Bank of America on behalf of an Agency or Department, the Department of Buildings and General Services will issue an internal invoice to the Agency or Department. The invoice will be dated the last day of the previous month. Payment is due to the Department of Buildings and General Services thirty (30) days from Date of Invoice.
If payment is not made within thirty (30) days to the Department of Buildings and General Services, Purchasing Cards under the Agency/Department control may be suspended.
An Agency or Department must understand that non-payment to the Department of Buildings and General Services is not the process to resolve issues regarding Cardholders, i.e., sales tax or other items under dispute. Those issues need to be resolved using the proper process within the parameters of the Purchasing Card Program.
4.3 Cardholder Benefits:
The Card is convenient. It provides a better method for users to make authorized purchases directly from a Vendor. When using the Card, the Cardholder will be able to obtain goods much faster and easier than before. It significantly reduces the workload and processing costs related to the purchase and payment of allowable commodities and services.
- The Card will allow for a broader range of Vendors.
- The Card will simplify the purchase process and add accountability.
- Through reporting features, the Card will provide information about local purchases.
4.4 State of Vermont Benefits:
The Card program will provide a cost-efficient, alternative method for purchasing low-dollar supplies. Built-in Card features make the program easy to control and manage. The State of Vermont will benefit from reduced paperwork and processing time at all levels. The Purchasing Card enables all departments to focus on higher value-added activities.
This savings in time and money can be substantial. In addition, we will be able to reduce the number of checks processed to multiple suppliers by issuing one payment each month to Bank of America, our Card provider.
4.5 Vendor Benefits:
Vendors who accept VISA will welcome the Purchasing Card. When they accept the Purchasing Card for business purchases, Vendors need not send invoices to State of Vermont, as they will receive payment directly from Bank of America within 48 to 72 hours.
Acceptance of a Purchasing Card for customer purchases also adds a new marketing strategy to the Vendor’s sales portfolio.
4.6 Parties Involved:
There are various parties involved in the Purchasing Card Program. Those parties are as follows:
Card Issuer: Bank of America was selected as the State of Vermont Purchasing Card Provider. Bank of America’s services include issuing Visa Purchasing Cards to State of Vermont employees, providing electronic transaction authorizations, and billing State of Vermont for all purchases made on the Cards.
Bank of America’s Customer Service: The Purchasing Card Program is serviced using a team approach with Bank of America’s Customer Service Center. This center is available 24 hours a day, 7 days a week to assist the Cardholder with general questions about the Purchasing Card account. If a Purchasing Card is lost or stolen, Customer Service should be notified immediately.
The Customer Service number is: 1-800-822-5985, option 2 Toll Free
State of Vermont: Arranges with the Card Issuer, Bank of America, to have Purchasing Cards issued to employees approved to receive Cards and agrees to accept liability for the employees’ use of the Cards.
Agency Administrator: An Agency Administrator will be designated within your Department/Agency for questions, issues and administration of the program. This person will be knowledgeable on all procedures in the Cardholder User’s Guide. The Agency Administrator has a direct relationship with Bank of America. All Purchasing Card requests must go through the Agency Administrator. The Agency Administrator must approve an employee’s request for a Purchasing Card, assign a Departmental Liaison if applicable, submit applications to the Card Issuer, and acts as the intermediary in correspondence with the Card Issuer.
Departmental Liaison: In some instances, an employee(s) in each department will be designated by the Agency Administrator to be responsible for reviewing transactions of individual Cardholders to make sure the transactions are legitimate business expenses and are classified appropriately. The Departmental Liaison will be designated to keep documentation for the Purchasing Card activities within a Division. Departmental Liaison individuals are knowledgeable about the Program and can request changes on behalf of the Cardholder and Department Manager with the Agency Administrator.
Cardholder: An employee of State of Vermont who is designated by the Department Manager, and approved by the Agency Administrator, to utilize the Purchasing Card by purchasing small dollar supplies and services. The Cardholder is responsible for following the guidelines provided by the State of Vermont in regard to purchases, selection of Vendors, and security of the Card.
Individuals selected to receive a Purchasing Card should have job responsibilities that require them to purchase certain types of goods or services.
- Applicant must be a permanent or limited status or exempt employee of State of Vermont and nominated by the Department Manager.
- A Cardholder would fall into one of two categories:
- Purchasing only
- Purchasing and Travel combined
- If applicable, an applicant will be assigned a Departmental Liaison selected by the Agency Administrator.
- Agency Administrator must approve applicant’s request for a Purchasing Card.
- Employee must attend a training session before they are issued a Purchasing Card.
- Each individual Cardholder must sign a Cardholder Agreement (Attachment I) in the presence of the Agency Administrator.
The Department Manager, or equivalent, is responsible for designating Cardholders, and will assist in assigning the Cardholder spending limits and regulations. The Cardholder should verify the single purchase limit assigned to their Purchasing Card with their Department Manager.
Department Manager: The Department Manager, or equivalent, is responsible for designating Cardholders and approving monthly Purchasing Card statements of Cardholders to ensure they are within State of Vermont policy. The Department Manager will also assist in assigning Cardholder spending limits and regulations.
Purchasing Card Administrator: The central Administrator located in the State of Vermont’s Purchasing and Contract Administration Division who coordinates the Purchasing Card program for State of Vermont and acts as State of Vermont’s intermediary in correspondence with the Card Issuer.
Vendor: The merchant from whom a Cardholder is making a purchase.
5.0 Becoming a Participant:
State Agencies or Departments interested in participating in the Bank of America Visa Purchasing Card Program must first consult their internal procedures, regulations, and policy, and then proceed accordingly. An Agency or Department would need to review the overall program parameters and determine if the Purchasing Card Program meets their expectations. Participation in the Program is voluntary.
The Agency or Department would then proceed in assigning an Agency Administrator. The Agency Administrator is responsible for the overall Purchasing Card Program within an Agency/Department.
Each Agency/Department within the State of Vermont is treated as a separate customer. The State of Vermont Program Administrator will assist the Agency Administrator in the implementation of the Purchasing Card Program.
Some of the Agency Administrator’s responsibilities include, but are not limited to:
1. Processing authorized requests for Purchasing Cards, maintaining control over active Cards, and closing accounts in accordance with operating procedures.
2. Establishing and maintaining accounting code and usage controls for each Card.
3. Periodically reviewing listing of Cardholders and summary reports to identify unauthorized use.
4. Exercising control over the program.
5.1 Developing Departmental Procedures:
The Program Manual is intended to provide guidelines, but it is each respective Agency or Department’s responsibility to establish and implement its own internal procedures concerning the Program.
If an Agency or Department determines they want to participate, the Approving Authority of that Agency or Department would need to review and sign a “Memorandum of Understanding” which states they will comply with all guidelines of the Program.
Once you have determined that a Purchasing Card is right for your Agency or Department, you need to consider the following questions. A short discussion is linked to each question. These questions will help guide you in determining your departmental policies for Purchasing Cards.
- Who will be the Cardholders in my Agency, Department, Division?
Purchasing Cards can be issued to any State of Vermont employee who has job responsibilities that require them to purchase small dollar commodities and services.
The Card may be used for in-person, telephone, facsimile or world-wide-web ordering.
- Which Business Unit, Department Id and Account Codes are Cards assigned to?
Each Card is assigned to a default Account Code as well as a default Business Unit, Department ID, and Fund as determined by the Department Manager and Agency Administrator. All purchases will be charged against the default budget unless reallocated. Multiple Cards can be charged to the same budget.
- Will Cards be held centrally or distributed?
Department Managers have the option of allowing Cardholders to retain possession of their Cards or holding them centrally and issuing them as needed.
- Should I designate a Departmental Liaison? Who will be responsible for maintaining the Purchasing Card Transaction Logs?
In some cases, the Cardholders will be responsible for tracking, logging, and reconciling all purchases made with the Purchasing Card. Otherwise, a Departmental Liaison will be assigned and will be responsible for these activities, but it remains the Cardholder’s responsibility to provide all receipts and documentation to the Departmental Liaison.
- Who will Perform Expense Reallocations?
It may be the Cardholder or Departmental Liaison.
- Who will Provide Support for Card-Related Activities?
The Agency Administrator and Bank of America will assist in all areas.
- What about Training?
Training is mandatory prior to using the Purchasing Card. Generally, in less than an hour, Cardholders will learn how the program works, how to work with their Card, where they can use it, and what their responsibilities are under the Program.
5.2 Purchasing Card Maintenance and Closure.
All contact with Bank of America for Card set up, maintenance and closure (except for reporting lost or stolen Cards) will be handled by the Agency Administrator.
5.2.1 Card Set Up:
- Based upon a request from a Department Manager, a Cardholder Application is completed and submitting for signature by the employee. The Department Manager will assist the Agency Administrator in assigning a default accounting code to the application.
- Once reviewed and approved, the Agency Administrator submits the application to Bank of America in format approved by Bank of America.
- Upon receipt of the Purchasing Card from Bank of America, the Agency Administrator will conduct a training session with the Cardholder prior to issuing the Card.
- Cardholder signs the Cardholder Agreement signifying agreement with the terms of the Purchasing Card Program. Reference Attachment “I”.
5.2.2 Card Maintenance:
The Agency Administrator will submit all requests to Bank of America. This may include changing a default accounting code assigned to a Card, credit limit increase or decrease, or transaction limit increase or decrease, etc.
5.2.3 Lost or Stolen Cards
If a Purchasing Card is lost or stolen, the Agency Administrator shall immediately contact Bank of America’s Customer Service at 1-800-300-3084. Prompt action can reduce your Agency’s liability for fraudulent activity.
5.2.4 Fraud/Cardholder Abuse
The following section details the type and amount of coverage offered by Bank of America for fraud or Cardholder abuse.
Bank of America
- Bank of America’s coverage for “fraud” on a lost or stolen Card is up to $15,000 per Card with a deductible of $50 per Card if the Monthly Spending Limit is $15,000 or less. Fraud is defined as when an individual not authorized to use the Card makes charges to the account, or when the company does not directly nor indirectly benefit from the transaction.
5.2.5 Terminated or Transferred Employees:
The Agency Administrator is to secure Purchasing Cards from terminated employees and employees who transfer to another Department. A request for closing the Cardholder account will be submitted to Bank of America within two days of receiving the notification. All Purchasing Cards are to be returned to the Agency Administrator for disposal.
5.2.6 Other Card Revokes/Closures:
The Agency Administrator will notify Bank of America immediately of all revocations and closures.
The Agency Administrator is required to close an account if a Cardholder:
(a) Transfers to a Different Department,
(b) Moves to a New Job in which a Purchasing Card is not Required,
(c) Terminates Employment or
(d) For any of the following reasons which will also subject Cardholder to disciplinary action in accordance with State of Vermont Policies and Procedures relating to disciplinary action and termination for cause:
- The Purchasing Card is used for personal or unauthorized purposes.
- The Purchasing Card is used to purchase alcoholic beverages or any substance, material, or service which violates policy, law or regulation pertaining to State of Vermont.
- The Cardholder allows the Card to be used by another individual.
- The Cardholder splits a purchase to circumvent the limitations of the Purchasing Card.
- The Cardholder uses another Cardholder’s Card to circumvent the purchase limit assigned to either Cardholder or the limitations of the Purchasing Card.
- The Cardholder fails to provide their Departmental Liaison with required receipts.
- The Cardholder fails to provide, when requested, information about any specific purchase.
- The Cardholder does not adhere to all of the Purchasing Card Policies and Procedures.
A request for closing a Cardholder account will be submitted to Bank of America by the Agency Administrator. If a plastic card exists for the Purchasing Card account being closed, it should be returned to the Agency Administrator immediately.
State of Vermont Cardholder Purchasing Card Agreement
The Purchasing Card Program and the State of Vermont requires that certain types of Vendors be restricted from Purchasing Card use. If you present your Purchasing Card for payment to the Vendors on the Restricted List, the authorization request will be declined. If you feel a particular Vendor should be added or deleted, contact the Agency Administrator.
Purchasing Card Approved Contract Listing
The Purchasing Card is authorized and may be used as a form of payment on commodity contracts that have been identified and approved by Purchasing. The Purchasing Card Approved Contract Listing is updated on a quarterly basis.
Note: It is the Cardholder’s responsibility to verify contract pricing on items and to ensure that the items are received when using the Purchasing Card.