FMS' new purchase card expands electronic commerce

The Treasury Department's Financial Management Service plans to allow federal buyers to purchase electronically goods and services from other agencies a decision that extends electronic commerce (EC) to as much as $3 billion in interagency transactions.

Procurement officials and other federal employees allowed to make purchases could sign up for the USA Card a type of debit card starting next summer under a new financial-services procurement that FMS announced late last month. Among the purchases the card would cover are books from the Government Printing Office and military supplies from the Defense Logistics Agency.

The card would put FMS closer to its legally mandated goal of automating all federal financial transactions by Jan. 1 1999. Although FMS operates the Online Payment and Collection System which transfers funds between federal agency accounts it is designed for use by billing departments after they are given invoices - not by customers when they make their purchases - and not all billing offices use it.

"[The electronic funds transfer] legislation accelerates almost every thing we do " said Diane Logan an FMS financial program specialist.

FMS plans to purchase the cards as an upgrade to its Plastic Card Network (PCN) the system used for credit card transactions by agencies that sell products such as collectors' coins from the U.S. Mint and government documents to the public. Mellon Bank Corp. and NationsBank hold the current five-year contracts for PCN.

Howard Stern director of government markets with Sterling Commerce Inc. Reston Va. said that to date federal EC efforts have focused mainly on transactions with the private sector. "As government agencies are downsizing as they look at opportunities to become more effective in their processing they have to look internally as well " he said.

Unlike the credit cards that agencies are using more frequently to make purchases USA Card transactions would not be subject to the fees that credit card companies charge merchants.

Eventually the USA Card would incorporate smart card technology equipping the cards with chips that could store transaction data or digital cash.

David Temoshok who chairs an interagency smart card task force staffed by the General Services Administration said the USA Card is a very important piece of the government's EC strategy. "There's a lot of potential where there could be a card-based transaction " he said. Although Temoshok said GSA is exploring whether buyers can also use credit cards for interagency transactions the USA Card is not designed to compete with the government purchase card the International Merchant Purchasing Authorization Card. GSA plans to release soon a solicitation for a new set of credit-card services contracts said Allan Zaic director of GSA's Services Acquisition Center but "what we're basically looking for is a way of making payments with the commercial world."

FMS hopes to offer the USA Card to state and local governments for any purchases they make from federal agencies but Logan said the agency does not have any specific applications in mind today.

Only financial-services companies will be allowed to compete for the FMS buy but information technology companies are expected to compete as subcontractors to supply equipment and software. One or more contracts are expected to be awarded in November.

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