Small Business Opportunities in Micro Purchasing

Did you know that 70% of government procurement transactions are micro-purchases through credit cards.  Micro-purchases means the acquisition of goods or services up to $3,000.  Micro-purchases may be awarded without soliciting competitive quotations, if the contracting officer or individual appointed considers the price to be reasonable.  Such purchases must be distributed equitably among qualified suppliers.  The purpose of this program is to reduce administrative costs, streamline payment procedures in the area of small purchases and to improve opportunities for small and small disadvantaged business concerns to do business with government.

Getting Started

1.  Accept the government-wide commercial purchase card. 

Purchase cards may be either a Visa or MasterCard.  They operate just like any other corporate charge card.  If you do not currently accept these cards, contact any financial institution or one of the GSA SmartPay® contractors to establish a merchant account.  They include: Bank of America, Bank One, Citibank, Mellon Bank and US Bank.  These five contractors provide the GSA SmartPay® cards to over 300 Federal agencies.  GSA SmartPay® is the Federal government charge card program.  Federal cardholders use the program to pay for commercial goods and services, travel related expenses and fleet expenses.

2.  Find out what federal agencies use the credit card for micro-purchases.

Go to www.fpds.gov and register.  Login and go to "Standard Reports."  Click on "How" and scroll down and click on "Purchase Card as Payment Method Report."  Type in a beginning and an end date.  *Note: There is a 90-day delay on the DOD data.  As an example, let's just use 1/1/09 - 12/31/09.  Click on "Execute."  The agencies that spend the most on credit card purchases are:

• The Department of Defense (DOD)- 2.6 billion
• Department of Veteran Affairs- 1.1 billion
• Department of Energy- 136 million
• Department of Agriculture- 72 million
• Department of Justice- 63 million
• Department of Health and Human Services- 55 million
• General Services Administration- 41 million on credit card purchases

3.  Find out what they are buying.

From the last report, click on "Home", "What", and "Total Actions by NAICS Report."  Again, as an example, let's use 1/1/09 - 12/31/09.  Next to the "Department ID Field" click on the three dots, click "Search", select "Department of Defense", click on "Select."  Click on "Execute." The DOD % Total Dollars Spent for the following products and services are:

• 33 Manufacturing (Metals, Machinery, Computer, Electronics, Electrical, Transportation, Equipment, Furniture, Miscellaneous)- 38%
• 54 Professional, Scientific, and Technical Services- 25%
• 23 Construction- 8%
• 56 Administrative and Support and Waste Management and Remediation Services- 5%
• 42 Whole Trade- 5%
• 32 Manufacturing (Paper, Printing, Petroleum, Coal, Chemical, Plastics, Rubber, Non-metalic Mineral)- 4%
• 52 Finance and Insurance- 3%

4.  Visit their websites.

Now that you accept the government purchase card and know what agencies are the largest credit card users and have an understanding of what they buy- Now what? You have to market to these agencies.  As an example, the Department of Defense has a guide on "Marketing to the Department of Defense: The Basics"  Also, if you need help at any stage, go to the "Department of Defense: Office of Small Business Programs."  They are there to help you, plus they have to meet their contracting goals.