Fleet Card Data Not Accurate Enough for Reporting Fuel Use

April 11, 2008

Federal fleets have a statutory and regulatory duty to measure and report the use of alternative fuels under the provisions of the Energy Policy Act of 2005 and Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management. The majority of Federal fleets purchase alternative fuels at commercial retail sites using General Services Information (GSA) SmartPay® contracted fleet cards. These fleet cards collect extensive data regarding fleet operations and refueling—including fuel type—from retailer point of sale (POS) equipment.

However, Federal fleet managers cannot use reports available from fleet card companies to demonstrate compliance with the requirements to use alternative fuels in alternative fuel vehicles, because fuel type reporting from retailer POS systems is only accurate 40 to 50 percent of the time.

Two recent surveys of alternative fuel purchases by Federal fleets highlighted the challenge encountered by Federal fleets in reporting compliance. The GSA refueled with E85 at 217 sites; only 73 transactions had the correct fuel code. LMI Government Consultants review of biofuels use for the Department of Defense concluded for fiscal year (FY) 2006:

• 82 percent of E85 purchased at commercial stations was incorrectly coded, most as either gasoline (59 percent) or marine fuel (19 percent).
• 59 percent of E85 transactions (by volume) reported to GSA by commercial stations are actually gasoline or diesel.
• 94 percent of B20 transactions are coded correctly, [but] only 4 percent of stations that sell B20 actually code the fuel correctly.
• 92 percent of commercial stations that report selling B20 do not sell the fuel.

Vista Consultants interviewed the petroleum retailing industry, alternative fuel providers, fleet card issuers, network operators, POS manufacturers, card processors, and trade associations to identify the source of fuel reporting problems and propose a solution. What emerged was a picture of an industry with fiercely independent merchants, extremely varied transaction pathways, multiple opportunities to mistranslate codes from one system to another, and no common standard for coding alternative fuels or, for that matter, conventional fuels. However, some common themes became apparent.

• Every card system has its own proprietary requirements for transaction data; every card accepted by a retailer requires different program conditions in the POS.
• The retailer, or the retailer's contracted POS installer, creates the majority of fuel type coding errors in the on-site POS set up.
• Once established, the retailer rarely has further visibility of the codes used and never sees what the customer receives at the end of the transaction system.
• No regulatory agency has oversight responsibility to ensure that the correct product information is printed on the POS receipt or available to fleets at the conclusion of the transaction.
• Only the customer can identify transaction errors. It is the customer's responsibility to notify the retailer that the coding is incorrect. However, there is no requirement that the retailer fix the coding.
• Some code translation errors occur between nodes in the financial system outside the control of the retailer; however, every indication is that these are rare.
• POS installers do not understand the differences between gasohol, 5.7 percent ethanol blends, and E85. Gasoline specification changes from the use of MTBE to ethanol as an oxygenate have resulted in some stations reporting sales of ethanol (E85) when in fact the product sold was E10 (gasohol).

There is no "silver bullet" solution to the problems associated with fuel type coding. However, Vista Consultants identified a number of concurrent actions that can begin to address the issue and resolve it over time. A process is required to get the data, analyze the data, advise the fleet card company and the retailer of problems, and follow up on the progress in correcting the fuel coding. An active outreach program to the merchants, networks, manufacturers, and card processors is also recommended.

These actions would require new work for the fleet and program managers in Federal agencies who must now track—at least periodically—the data provided at both ends of fleet card clearing transactions. A Federal fleet-wide approach to collect data on incorrect fuel reporting is called for. However, the analysis of data and actions taken would be more consistent and efficient if consolidated with one agency or contractor.

Federal fleet managers should encourage the retail alternative fuels industry to remedy the reporting issues cited in this report. The alternative is to accept the status quo. The resolicitation of agency task orders under the SmartPay®2 contract provides an opportunity to manage the refueling of flexible fuel vehicles through hose level authorization controls and other purchase card management policies. In any case, SmartPay®2 contract task orders should include provisions that allow the dispute of billing transactions that do not include the proper fuel codes.

This article is the Executive Summary of a larger report, Fleet Cards — Reporting of Alternative Fuels, developed by Vista Consultants. For more information, please contact Marc McConahy, Vista Consultants, LLC, at Marc.McConahy@verizon.net.