Charge Cards Get Smart

Officials from the Defense Department, the Office of Management and Budget and the General Services Administration gathered Monday in Washington to celebrate new governmentwide charge card contracts, which they touted as the largest charge-card procurement ever. GSA estimates that federal employees will use the purchase, fleet and travel cards to pay for $100 billion in expenses in the next 10 years.

The officials said the new deal would cut agencies' administrative costs and make it faster and easier to pay for small purchases and travel expenses. In addition, they predicted that the new contracts, under which six companies will compete to provide card services, will eventually allow federal employees to use single "smart cards" for all their purchase, fleet, and travel expenses, and for identification, access to secure buildings, and other purposes.

"This is a form of the ultimate democratization of the acquisition process," said Deputy Defense Secretary John Hamre. "We don't need the expertise it takes to buy an aircraft carrier when you buy a ream of paper. We've treated this like only a cadre of appointed priests are able to do this."

OMB Deputy Director G. Edward DeSeve called on managers to streamline the procurement process before giving employees charge cards.

"We can't give them a card and then have seven levels of approval," DeSeve warned. "This procurement requires creativity to reengineer the back-room office."

Under the new contracts, federal agencies will choose from six companies for charge-card services: American Express, Citibank, First National Bank of Chicago, Mellon Bank, NationsBank and US Bank. Agencies can choose one contractor for purchase, fleet and travel cards, or mix-and-match card providers.

Contractors will also offer additional services to agencies under the contracts, including online transaction systems, additional authorization controls for card use, stored-value cards, debit cards, and smart cards. The providers may also set up intragovernmental transaction systems, allowing agencies to use cards to transfer funds to other agencies.

The new contracts go into effect Nov. 30, when the current charge card contracts expire. Agencies are putting together teams to review contractors' offers, and GSA is holding a three-day conference in Washington this week to allow agency personnel to meet with contractor representatives. Agencies are required to give fair consideration to all the contractors. But because GSA has already screened the companies as part of the award process, selections should move more rapidly than they would during a standard procurement.

Some agencies are hoping to pool together to get better deals from the vendors. GSA is encouraging agencies to work together if they have similar needs.

Ten years ago, when the first conference on purchase cards was held, only a dozen people showed up, said Steven M. Putney, president of US Bank corporate payment systems. By contrast, 1,300 federal managers and employees attended the first day of GSA's charge-card conference on Monday.

"It's taken us a long time to get here," said Dan Goren, senior vice president of American Express Government Services.

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