The United Kingdom’s Foreign and Commonwealth Office, whose purpose is to support the country’s interests overseas and is responsible for safeguarding the UK’s national security, has lots of acquisition needs. To simplify that process and to keep track of purchases more efficiently, it uses corporate and procurement cards for much of its spending.
Responding to a Freedom of Information Act request related to its new, exclusive card contract with Royal Bank of Scotland, the agency recently released information that spells out just how large its procurement activities are. The agency has used corporate and purchasing cards (P-cards) for years, and its contract with the bank commenced Feb. 1 this year and expires on Jan. 31, 2016. It has an optional additional year the would end on Jan. 31, 2017.
Besides helping to improve national security, the Foreign and Commonwealth Office also has a worldwide network of embassies and consulates, employing more 14,000 people in nearly 270 diplomatic offices. As such, it has a particularly large number of low-value transactions that are otherwise very costly to process.
“We regularly review the operation of these card schemes along with other government departments to ensure that they are as efficient and cost effective as possible,” the agency notes in its response to the information request.
Through May 22, the Bank of England had issued to the Foreign and Commonwealth Office 5,165 corporate credit cards and 1,645 government P-cards, including 12 hosted/lodge cards, the agency noted in its response. This fiscal year through May 22, the cards were used to make purchases totaling £9.5 million (US$15.4 million).
Total spend on all of the cards in fiscal 2013 was £26.5 million, though the agency anticipates spending £45 million to £50 million this fiscal year. “This reflects a policy to use cards for more low-cost expenditure rather than other procurement methods, so (it) does not imply any increase in overall costs to the taxpayer,” the agency noted.
As the agency views them, corporate credit cards and P-cards are an efficient way to buy goods and services. That’s because they avoid the need to raise and process requisitions, purchase orders and invoices in a back-office system, thereby reducing overhead costs for the taxpayer.
The agency uses the P-card to purchase low-value goods and services required to support its operations and to support the government’s transparency agenda by allowing individuals’ expenses to be open to public scrutiny. It uses the corporate card for the expenses of individual agency staff when carrying out official duties. PYMNTS.com was unable to identify the card brand.
The agency noted it has stringent guidance for use of both cards, and both its internal audit department and corporate services center do spot checks on card use to ensure cardholders are using correct procedures.
A recent review of agency spending by The Independent suggested that some purchases were not essential and that some companies may have benefited from card spending more than others. The publication, which said it scrutinized thousands of transactions, found a range of additional spending–from taxpayer-funded pizzas to a kilometer of Union Flag bunting costing £2,500.
“Among the companies to have benefited from the diplomatic shopping list in recent months is the high-end interior design company Osborne & Little, set up by [George] Osborne’s father and in which the chancellor retains a 15 percent stake worth an estimated £4 million,” the publication noted in a recent article.