Six leaders in the credit and charge card business have won the bidding to provide potentially lucrative payment services to U.S. government agencies.

Ending months of suspense, the General Services Administration gave the nod Tuesday night to units of American Express Co., Citicorp, First Chicago NBD Corp., Mellon Bank Corp., NationsBank Corp., and U.S. Bancorp.

These six gained the right to bid for five-year commercial card contracts and will compete against each other to serve more than 100 federal agencies. The agencies will be seeking customized programs that are likely to incorporate smart card technology.

"The federal government is evolving at different rates and is no longer a single identity from a financial/payments perspective," said Sue McIver, deputy director of the GSA's services acquisition center. The agency wanted to "take advantage of what was available in the commercial marketplace" and "let agencies choose a tailored solution."

Hoping to stimulate competition and innovation, the government is changing its current approach of having just one contractor in each of three commercial card categories: American Express of New York for travel and entertainment; U.S. Bancorp of Minneapolis for purchasing; and Wright Express of Portland, Maine, for vehicle fleets.

The six designated companies, in various combinations, won the right to bid for five-year contracts effective Nov. 30, which will come with five additional one-year options. Any agency will have the option of relying on one vendor for multiple services.

All six winners will be able to go after purchasing card business, mainly involving relatively small business-related transactions. American Express, Citibank, NationsBank, and U.S. Bank will be vying for travel and entertainment business. American Express (in partnership with Wright Express), Citibank, and U.S. Bank will seek fleet business.

All except Mellon have agreed to supply services that integrate two or more card functions, ranging from adminstrative support to account reconciliation and invoicing.

Government planners envision a "single-card solution across multiple business lines," said David Temoshok, an official in the GSA's office of federal electronic commerce and chairman of a year-old interagency Smart Card Task Force.

Computer chips in cards, with their multiple-function capabilities, are seen as hastening a "single-card solution." Mr. Temoshok said the GSA currently uses smart cards for building access and could migrate to a hybrid chip/magnetic-stripe card for multiple tasks.

In awarding the contracts, which are expected to cover $100 billion of transactions over 10 years, "we tried to present a vision for the future compatible with Vice President Gore's and the administration's vision, which would lead to multiple and efficient service delivery through smart- card-based services," Mr. Temoshok said.

Dan Goren, senior vice president of American Express Government Services, said his company is "prepared to start issuing smart cards as soon as the contract starts."

"The government paved the way for purchasing cards 10 years ago when it embarked on its program," said Judy Feldman, senior vice president at First National Bank of Chicago, "and we view this again as setting a benchmark for corporate America." The First Chicago NBD subsidiary is a part-owner of the Mondex U.S.A. smart card venture, as Citicorp will be when it finishes the purchase of AT&T Universal Card Services.

Paul Martaus, president of Martaus & Associates of Clearwater, Fla., said the government, having identified more than 250 applications that could run on commercial cards, "could well become a major driver of acceptance of chip in the marketplace."

BankAmerica Corp. and Paymentech Inc., a unit of Banc One Corp., were among those that failed to make the cut. Those that did will begin to woo agency business at a GSA-sponsored conference Feb. 23-25.

The new system is going to "make for a more competitive situation," said Tony Brady, vice president and GSA card project manager in Mellon's global cash management unit. "All of us are going to be competing for awards through the life of the contract. We're all going to have to stay competitive in terms of price, service, and technology."

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