Decentralized purchasing: A study of its efficiency and effectivenes

The focus of this research was to examine the effectiveness brought about within the federal government by making purchases using a credit card. This new method of purchasing was adopted with the intent of streamlining a cumbersome, protracted paper purchasing system. By legislative authority granted under the Federal Acquisition Streamlining Act, credit cards became an accepted means of purchasing items costing less than $2,500 each. The legislation permitted a wide dispersion of credit card authority. This replaced the traditional centralized purchasing system that relied solely upon contracting officers to issue written purchase orders.;This research examines the processing times experienced within the Department of the Army using both the written purchase order method and the credit card method to determine whether the credit card method is more efficient and effective. The Department of the Army's credit card program is well recognized within the federal government as a leading program that has embraced this new paradigm of purchasing. Using a time-motion study conducted by the U.S. Army Audit Agency, an analysis of the processing times experienced using the centralized purchase order system and those recorded using the new credit card system was conducted. Additionally, specialized interviewing with key policy makers and operational managers provided insight into the genesis and experiences to date using the credit card method of purchasing.;The research demonstrates that credit card purchasing offers a significant reduction in processing times. It is more efficient, because it reduces administrative processing time and concomitant costs. This benefits the internal customer and the taxpayer. However, the almost exclusive emphasis placed on achieving administrative savings is at the expense of other measures of effectiveness. Issues such as internal controls are purported by agency officials to be important, but a lack of effective control systems paves the way for fraud, waste and abuse. Agencies must take the necessary steps to design and implement rigorous control systems that deter and detect fraud, waste and abuse. Without systemic control, a credit card system that is faster and cheaper may not be better.