I can speculate, but I don't have direct knowledge.
I do have direct knowledge. I used to have a P-Card. Not federal, but most likely functionally the same.
1) The more people with purchasing authorization you have, the higher the likelihood of fraud, and the higher the threshold for action against fraud ends up being. It's hard to tackle $50 worth of fraud happening across 5,000 people... so companies end up looking for big and obvious fraud and the threshold rises. I'm extrapolating based on the type of fraud monitoring I see in my company with respect to provider charges. If the claim is less than $5,000 we pretty much just ignore it, because there are so many claims it would be impossible to evaluate all of them. We absolutely know we're overcharged for things, but we can only reasonable monitor a small number of claims, so we only focus on the big ones. So I assume that the same dynamic is in place here - it's really only the big cases of fraud that get actioned. The article references 1% fraud, which ends up being $600 Million.
A couple of things here.
First of all, P-Cards are not the only way to make purchases. There are other ways as well, such as purchase orders and the like.
Second, purchases with P-cards go through the same approval process as purchases that are made through other means. the review happens after the fact rather than prior to the purchase. If a purchase is not approved, the P-Card holder is responsible for the purchase. I've seen this happen when someone accidentally paid with the wrong card. It was deducted from their salary.
By the way, the example above is not "fraud." I've noticed that word used lately in places where "waste" or "things I disagree with" would be the more accurate terminology.
Anyway, it's actually pretty difficult to use a P-Card for personal purchases. Even small ones. Here, every purchase gets signed off on by three people, working its way from project, to department, to institution. P-Card or otherwise. (I'm one of the people with approval authority on some of the accounts.)
2) There is an administrative cost to having that many cardholders. Cards have fees associated with them, charge tracking, billing, accounting, etc. Those things aren't free, and the costs add up. Having fewer cardholders means having fewer costs.
This is true, at least to an extent. The cards aren't free. This is why I no longer have my P-Card. I used it something like twice in five years, so it didn't make sense for me to have one. This saved on the card fees. But the rest of the costs were still in place because reducing number of cards does not reduce the number of transactions. Administrative overhead doesn't change much.
3) With more purchasers, there's a higher likelihood of ending up with duplicated items. It's entirely possible that the needed item already exists within the facility, or at a nearby facility, so there's no need to order one. In your example, sure, it's *easier* for each department to order what they think they need... but that also means that Department A might order three widgets and only use two of them, then Department B orders four widgets and only uses two of them, and Department C finds they need a widget so they order one because they aren't aware that there are three spare widgets sitting around between Departments A and B. Having more purchasers increases the risk of having duplicates that aren't all well-tracked and accounted for, leading to inefficient purchases and overspend.
Yes, and no. That has less to do with purchasing than it does with inventory management. And those are not remotely the same thing. A centralized purchasing department is not going to know That department A and B have extra widgets. they just know that they purchased widgets for department A and B and now department C needs some. What actually reduces duplicate orders is not central purchasing, but the heads of Departments A, B, and C talking to each other every now and then.
You may think that centralized purchasing has a handle on inventory, but the reality is that they don't for most things.
4) Bulk purchasing can usually get better pricing. When there's centralized purchasing, especially for more commonly used items, you get a deal. If every department in my company were to go out and buy their own laptops, for example, the cost would be many times higher than having one small part of our tech services department purchase all of the laptops for the company in bulk.
Again, you don't seem to be familiar with how large organizations work.
For an agency as large as the VA, DOD, or a major University, they will have a contract negotiated with vendors that gives a discount for list price. For example, we have a contract with Thermo-Fisher that gives us a reduced price on lab supplies. The price is not negotiated each time we make a purchase, but the discount is negotiated annually. When we order, say, pipette tips, we go onto the portal and make the purchase. If we need it quickly, we can use our P-Card. We get the negotiated bulk price. (Similar deal with CDW and Dell.)
We still have to fill out a purchase request/justification just like any other purchase.
You mentioned laptops. Typically, one would not purchase a laptop with a P-Card, unless instructed to do so by purchasing. (Because it sometimes makes things easier.) But even if I did, I would get the same deal from Dell that our IT department would get. But computers are a bad example anyway because most large organizations (like government agencies) require IT to make those purchases and set the computers up for security reasons. If you took your P-Card to best buy to get a computer, you would end up paying for it yourself.
Larger items (>$100,000) would need to go out for bid unless it was covered under one of the negotiated contracts. (We can buy an ICP-MS from Thermo without going through a competitive bid because of the contract I mentioned.) But you couldn't put that on a P-Carde anyway as the limit isn't that high.
A side note:
When you are dealing with scientific/medical supplies, it's generally better to have the people who use them determine exactly what needs to be purchased. Purchasing people usually don't have the technical background that would allow them to shop around.
