DOD awards largest-ever electronic credit card pact
- By Dan Verton
- Jun 21, 1998
The Defense Department last week tagged U.S. Bancorp Payment Systems division for the largest electronic purchase card contract ever awarded— a contract that DOD expects will help the department develop electronic commerce.
The 10-year contract, which is scheduled to begin in December, provides U.S. Bancorp with exclusive rights to issue purchasing cards to the Army, the Air Force and other DOD agencies for purchases that are expected to exceed $3 billion annually. The Navy will award its own contract in the next two weeks that will address service-specific requirements for online contracting and purchasing that were not covered in the DOD contract.
In addition to the purchase cards, U.S. Bancorp will provide Web-based electronic statements to cardholders and workflow management tools to contracting and purchasing officials, according to Steven M. Putney, president of U.S. Bancorp's corporate payment systems.
Greater use of the International Merchant Purchasing Authorization Card will allow DOD agencies to move beyond simplified acquisitions under $2,500, said Bruce Sullivan, program manager and Department of the Army coordinator for DOD's Purchase Card Joint Program Management Office.
Putney said as much as $16.6 billion in purchases between $2,500 and $25,000 could be conducted over the long term. Most of this business is available on government indefinite-delivery, indefinite-quantity contracts, he said.
"The opportunity is there to move that volume onto the card," Putney said.
Lt. Col. John McMonigle, the program office's Defense Logistics Agency representative, said the new contract "will help facilitate use of [DLA's] Electronic Mall significantly."
McMonigle also said the U.S. Bancorp solution should increase the confidence of purchasing authorities by providing them with the ability to set dollar amount limits or limits on the number of transactions that can be made with any one card.
The Army has 72,000 IMPACs in use by soldiers worldwide. Last year the service used IMPACs for 96 percent of its purchases under $2,500, Sullivan said.
"Now we're looking at other areas where we can save money, such as eliminating multiple invoices for payments, commercial training requests and transportation bills of lading," he said. Overall, "it's probably a $10 billion opportunity."
The Navy, which uses about 27,000 IMPACs from U.S. Bancorp, has been given approval from DOD to look outside the current contract for a bank that can address Navy-specific requirements, such as combining paperless contracting initiatives with online purchasing. The Navy is researching six vendors, including U.S. Bancorp. Eva Robinson, the Navy's purchase card program coordinator, said U.S. Bancorp has not been eliminated from the competition.
Barbara Odgers, the Air Force's purchase card program coordinator, said the Air Force has about 44,000 IMPACs in use throughout the service, and the number has been growing steadily since they were first issued. Odgers said, if necessary, the new cards will be issued in a one-for-one swap-out with existing cards but that expanding the number of users is up to the individual Air Force organizations.
U.S. Bancorp has been the exclusive issuer of government purchase cards for the past 10 years. DOD is the largest user of government purchasing cards, responsible for more than 50 percent of all government sales.