Leading the Charge
GSA won't divulge specifics, but contractors expect changes in the government's SmartPay program.
Federal employees soon could find themselves slapping down new charge cards when they pay for travel expenses and retail items. The General Services Administration is overhauling its SmartPay program, through which agencies bought more than $24 billion worth of goods and services in fiscal 2005. As a result, the institutions that supply the charge cards-Citibank, Bank of America, US Bank, JPMorgan Chase and Mellon Bank-soon could find themselves playing a different or reduced role in the popular program.
While details are scarce, GSA has released preliminary information, including a request for information to solicit feedback from industry and other sources. The agency says it wants the new program, which will kick off in November 2008 after the current contracts expire, to be more secure, offer better customer service, reduce waste and fraud, and rely on innovative solutions for data management. In other words, GSA wants a strong program, but it wants industry to come up with specifics. And the agency wants something different.
"We'd want it to be easier for bank systems to interface with agency financial systems," says David Shea, director of the SmartPay program. He says he cannot elaborate on details, some of which will be spelled out when GSA releases its draft solicitation for proposals later this spring. (Shea says the final solicitation will be released this summer.)
Based on its July 2005 request for information, GSA also will be looking for innovative contracting methods. Shea says new ideas could include separate contracts for card-issuing banks and program data management. Reading between the lines, contractors and consultants anticipate some shake-ups among SmartPay providers, partly because GSA seems to be looking for more than just financial services. "I think they're definitely looking for the next generation of this product," says Katie Hirning, a consultant at Jefferson Consulting Group, a Washington-based professional services company. Hirning adds that GSA is likely looking for solutions that will improve internal controls-a topic that has been getting a lot of attention lately.
In August, the Office of Management and Budget issued new charge card guidelines that focus on reducing misuse and fraud. Over the past five years, audits by the Government Accountability Office and inspectors general have found instances of weak internal controls and abuse. At the same time, the cards have been shown to generate significant savings: GSA estimates their use saves about $50 per purchase, or about $1.3 billion a year, by reducing paperwork and other processes.
Kathy Conrad, senior vice president at Jefferson Consulting, says she expects to see systems integrators, which are companies that manage a broad package of services, bid in the coming round. "Nontraditional offerers will likely express interest," says Shea, adding that a bank still has to be involved to provide the cards, but it does not necessarily have to be the prime contractor.
Banks are hesitant to talk openly about their own interpretations of the information GSA has released, for fear they will tip their hands. JPMorgan Chase, Citibank and US Bank say they will be bidding again; Mellon Bank says it has not yet decided and Bank of America did not return calls for comment.
Laurie Neill, senior vice president and head of relationship management for Government Treasury Services at JPMorgan Chase, says that while she expects healthy competition, she's confident banks will prevail. "Financial institutions have the experience in terms of card-based solutions. . . . Banks are in the business of making payments," she says.