Merchant Category Codes
• List of prohibited products and
services
• Referred to as Merchant Category
Codes (MCC)
• Automatically configured into
Purchase Card
• Blocked code list found in
Cardholder Desk Guide Appendix
17
November 2005
Appliance Purchases
and the Purchase Card
Acquisition of Kitchen Equipment Generally
Allowable With Following Conditions:
1. Primary Benefit Accrues to Agency,
Notwithstanding Collateral Benefit to Individuals.
2. Agency IOP Ensures Uniformity in Use of
Appropriations and Determines Usefulness in
Light of Benefits – Employee Morale, Etc.
3. Appropriations Not Used for the Sole Use of an
Individual; Locate Appliances in Common Areas
18
November 2005
Appliance Purchases
and the Purchase Card
It should also be clear that appropriated
funds will not be used to furnish goods,
such as the coffee itself or microwaveable
frozen foods, to be used in the kitchen area.
19
November 2005
Light Refreshments
and the Purchase Card
General Rule:
Purchase cardholders are prohibited
from buying refreshments.
Exceptions:
The use of Official Representation Funds
for official entertainment and Center of
Influence events involving Navy recruiters
are exceptions to this rule. In addition, Navy recruiters
are authorized to use the purchase card to buy meals for
recruiting applicants as an out of pocket expense.
20
November 2005
Conference Fees Policy
Conference fees should be placed on
Purchase Card. (Per DOD PCPMO & FMO)
• If conference fee includes meals:
– It is proper use, if employee is authorized to attend
– Must indicate meals provided on traveler’s voucher
– The per diem amount is reduced based on meals provided
• Travel Card should only be used for conference fees
when feasible
– Although, it is not structured to accommodate these fees
21
November 2005
DOD Organic Distribution System
Avoiding “Frustrated” Deliveries
• Door-to door commercial
transportation is preferred
• DOD Organic Distribution System
• Vendor shipments must comply
with business rules stated in:
“Acquisition Policy on Facilitating Vendor Shipments in the
DOD Organic Distribution System”
22
November 2005
Transaction Types
• Over-the-Counter
• Over-the-Phone
• Over-the-Internet
23
November 2005
Transaction Types
• Online orders can only be placed
with organizations providing
SSL-encrypted protection
• Use a browser providing at least
128-bit encryption capability
• Online ordering systems that
do not provide encryption are
prohibited
24
November 2005
Vendor Rules for Purchase
Card Transactions
• Do not charge sales tax unless business is
in location that does not have tax-exempt
status
• No vendor fees are added to item price
• Remind vendor that Purchase Card
account is not billed until after
material has been shipped
• Avoid back ordering or delivering partial
quantities
• Ensure that all items are delivered or picked
up within same billing cycle
25
November 2005
Vendor Rules for Purchase
Card Transactions
• Request copies of itemized sales receipts
supporting Purchase Card transactions
• Retain documentation received from
vendors to support proof of sales
• APCs, AOs and Cardholders must maintain
purchase-related records or a minimum of 3
years and
• Retain financial records for 6 years and 3
months
26
November 2005
Split Purchases
Definition: The intentional breaking down of a
known requirement to stay within a threshold or
to avoid having to send the requirement to the
contracting officer is a “Split Purchase”.
UNDER NO CIRCUMSTANCES
IS IT PERMISSIBLE FOR THE
CARDHOLDER TO SPLIT
PURCHASES IN ORDER TO
EXCEED THE MICRO-
PURCHASE THRESHOLD
27
November 2005
Split Purchases
(Example)
You are issued a purchase request for items
totaling $3,000 and your single purchase limit is
$2,500. Do not purchase items totaling
$3,000 by making two individual Purchase
Card transactions.
28
November 2005
Overseas Purchases
Budget Exchange Rate or Daily Exchange Rate
• Confusion Regarding Overseas Purchases
– Purchases at or Around Authorized Limit
– Use Budget Exchange Rate (BER) or the Daily
Exchange Rate
• Obligations for Overseas Purchases Are to
be Established at the Budget Exchange Rate
– Financial Management Regulation (FMR), Volume 6A,
Chapter 7, Paragraph 070106.c
However . . .
29
November 2005
Overseas Purchases
Budget Exchange Rate or Daily Exchange Rate
DON CCPMD Instruction 4200.1B:
• Micro-Purchase Threshold is Stated in Absolute
Dollars
CONUS - Not To Exceed $2,500
OCONUS - Not To Exceed $25,000
Overseas Purchases Post Using Daily Exchange Rate
Bottom Line: A Prudent Cardholders Must Take the
Fluctuation of the Daily Exchange Rate Into Account !
30
November 2005
DON Purchase Card Certification Course
Review of Objectives
You should now be able to:
• List 3 statutory sources for Purchase Card acquisitions (REVIEW)
• Understand the mandate to purchase environmentally
preferable products and services (REVIEW)
• State the advantages of NAFI acquisitions (REVIEW)
• List the requirements for purchase of HAZMAT with a
Purchase Card (REVIEW)
• Understand the function of the Merchant Category Codes
(MCC) and purchasing blocks (REVIEW)
• List the 5 vendor rules for a Purchase Card transaction (REVIEW)
• Give the definition of a Split Purchase and the associated
restrictions (REVIEW)
31
November 2005
DON Purchase Card Certification Course
Lesson 3, Part II
Purchases
WinSALTS Cardholder Course
32
November 2005