Aiming to speed the shift toward electronic government, the Bush administration has proposed setting aside $100 million for federal agencies that want to pursue innovative projects in areas such as online purchasing, e-mail outreach to citizens, and electronic transactions.
The E-Gov fund, which was included in the budget sent to Congress April 9, would be administered by a federal chief information officer, who would, in the words of a stump speech Mr. Bush gave last year, be responsible for providing the leadership and coordination needed to realize the vision of a truly digital and citizen-centric government.
In practical terms, such a program would probably benefit banks both directly and indirectly. The five banking companies that supply payment cards to federal agencies Bank of America Corp., Citigroup Inc., U.S. Bancorp, Bank One Corp., and Mellon Financial Corp. would stand to gain the most, especially if the fund led agencies to shift more business to smart cards and electronic procurement. And if the government gets citizens to do more transactions electronically, banks would benefit from a computer-literate publics inclination toward online banking and the like.
The federal government has been encouraging a switch to electronic services for more than a decade, and the effort picked up a lot of speed during the Clinton administration when Vice President Gore championed a switch by agencies to electronic payments as part of his Reinventing Government campaign.
On the Clinton/Gore watch, legislation was passed requiring that states and federal agencies meet various deadlines for converting government benefit checks, such as Social Security and welfare, into electronic payments.
Like the Clinton administration, the Bush administration is trying to emphasize the cost savings of moving away from paper-based systems. As a candidate, Mr. Bush tried to use the issue to score political points, charging that Mr. Gore had not moved quickly enough to convert the government to electronics. Today, when Americans look to Washington, they see a government slow to respond, Mr. Bush said in a June 9 speech in Philadelphia. Slow to reform. And ignoring all the changes going on around it.
But executives at Visa U.S.A., who have been cheering along the governments leadership role in promoting electronic payments, say the feds have proven far more nimble than is often acknowledged.
The federal government has in fact embraced electronic payment solutions at a greater rate than their counterparts in the private sector, said David Minier, director of government services in the commercial markets group of Visa U.S.A. The federal government for us is a very significant customer.
Under the E-Gov proposal, agencies would compete for grant funds by writing applications, which would be judged on merit, said Chris Ullman, a spokesman for the Office of Management and Budget, or OMB. If agencies can make a good case of why they need the money to further these goals, that will decide who gets it, he said.
In congressional testimony May 10, OMB Director Mitchell E. Daniels Jr. said: The E-Gov fund will be used to fund interagency initiatives that will expand the use of the Internet to provide individuals, businesses, and other government agencies with simpler and more timely access to federal information, benefits, services, and business opportunities.
Criteria for using the fund are still under development, he added, but would include placing a priority on funding innovative interagency projects that would deliver services directly to the public, or create the infrastructure to support such delivery. The OMB would manage the grants, but the fund would be kept in a General Services Administration account, he said.
An aide to the Senate Governmental Affairs Committee said the idea of the E-Gov fund enjoys bipartisan support in both House and Senate but that questions linger about how much should be allocated and what projects would get funded. He said the Bush administration is proposing that to qualify for an E-Gov grant, a project would have to be applicable governmentwide. The aide said that about $40 million a year is already spent on electronic government initiatives and that some members of Congress want to know what more they would achieve under E-Gov.
Dennis Fischer, vice president of Visa U.S.A.s government services division, said E-Gov was envisioned as a funding source for projects that are wide-ranging and that could affect the way the government interacts with citizens.
The funds in this program are set up to include electronic government, not just electronic procurement, Mr. Fischer said. This could also be for citizen interaction with government, such as setting up a Web site where Social Security recipients could discuss their benefits by e-mail, he said. Before joining Visa last year, Mr. Fischer was chief financial officer of the General Services Administration, or GSA.
Mr. Fischer said the plan is to fund E-Gov with $20 million in its first year, then to increase funding to $100 million in the third year.
The governments SmartPay program, in which the five banking companies issue agencies Visa and MasterCard corporate cards, has already proven that savings are obtainable, according to Sue McIver, director of services acquisition for the GSA. She said electronic procurement has saved more than $1 billion a year, an average of $56 per transaction.
The OMBs Mr. Ullman said the policymakers who crafted the E-Gov initiative have not quantified the savings they anticipate.