Officials from more than 100 federal agencies got their first glimpse this week of the commercial card systems that six companies have crafted for their use.

At a three-day "beauty pageant" five banking companies and American Express Co. showed off the smart cards, hybrid cards, and desktop computer systems they are selling to track travel, purchase, and fleet card transactions.

With some $10 billion a year of transaction volume up for grabs, the card companies tried to show how their expertise, size, and customer- friendliness would work to the agencies' advantage.

It is up to each agency to decide by Nov. 30-when current contracts expire-which vendors suit them best.

"This is the biggest thing to hit the card business for a long time," said Steven M. Putney, president of corporate payment systems at U.S. Bancorp.

The General Services Administration, following the principles of Vice President Gore's "Reinventing Government" initiative, is clearly hoping to usher in a new generation of card systems that will set a high-tech example for the entire country. Smart cards are likely to play a big part in the government programs. The GSA has given the project a catchy name, GSASmartPay, which it is seeking to trademark.

The agency chose the six companies in a bidding process that concluded this month. The winners-American Express Co., Citicorp, First Chicago NBD Corp., Mellon Bank Corp., NationsBank Corp., and U.S. Bancorp-have the right to woo about 120 federal agencies.

Each agency can shape its card program with one or more of the designees. The contracts will run five years, with five one-year renewal options.

"We knew that we needed to take a great step with this new credit card contract," said David J. Barram, administrator of the General Services Administration. "We all know that one day we will be using one smart card for a whole variety of things."

To symbolize the new era, Mr. Barram hoisted a glass ash tray at the conference podium, recalling the time Vice President Gore smashed one on "The David Letterman Show."

"Today you don't need a band of people to write specifications for an ash tray, because you can buy an ash tray at a store commercially," Mr. Barram said. "We've moved from purchasing to shopping."

"Government is not the dopey, frozen organization everyone outside the Beltway would like to think," said Deputy Secretary of Defense John J. Hamre. "There is a lot of creativity and innovation."

The next step will be electronic commerce. G. Edward DeSeve, acting deputy director of the Office of Management and Budget, exhorted card issuers to develop on-line shopping malls with retail and catalogue companies.

"We're looking for cards on malls, with payment solutions that take the small-purchase cards the next logical step," Mr. DeSeve said. "The wonderful thing about cards is how they allow processes to be reengineered."

A task force called EPIC-Electronic Processes Initiative Committee-will monitor agencies' progress and spread "best practices" ideas. "When a solution pops up that we think is particularly good, we'll make sure everybody knows about it," Mr. DeSeve said.

Before this open bidding process, the GSA designated one company for travel and entertainment cards (American Express), another for purchasing cards (U.S. Bancorp, the former First Bank System of Minneapolis), and a third (Wright Express of Portland, Maine) for fleet cards. It decided to do things differently this time to encourage flexibility and creativity.

The incumbent contract holders called attention this week to their experience. American Express is offering a fleet card program in partnership with Wright Express. U.S. Bancorp is making a wide range of services available under the new regime.

Veteran card executives recalled how far the government program has come. Ten years ago, at the first meeting about commercial cards, "there were two people from Visa, two from GSA, and four from two different government agencies," said Gary Cowen, Citibank's director of government card services, who was then with Visa. As the agency officials left, he said, "I heard them say, 'That will never work.'"

This week's conference, with more than 1,300 attendees, was billed as a "training session." Each issuer gave a brief presentation, then spent two- and-a-half days holding product demonstrations and seminars in a hotel ballroom.

Mr. Hamre of the Defense Department, taking a break from the Iraq crisis to address the meeting, called the government's card effort "truly revolutionary," saying it would be "hard to overemphasize how important this development is."

"It used to take procurement specialists to go out and buy things," Mr. Hamre said. "We don't need the expertise that it takes to buy an aircraft carrier every time you want to buy a ream of paper."

William Gormley, assistant commissioner of the GSA Federal Supply Service, said, "There are few times in a career that one has the opportunity to promote change as you people here have today."

MasterCard International waved its flag too, sponsoring coffee breaks and handing out free newspapers. With several banks in the hunt for new business, MasterCard perceives an opening it lacked over the last 10 years, when the American Express and Visa brands had the government transactions locked up.

"We have an opportunity to gain a very big share of a $100 billion opportunity," said Steve Abrams, MasterCard's senior vice president of U.S. corporate products.

Total System Services Inc., the Columbus, Ga., credit card processor, also did some crowing. It declared in a press release that it is "the only third-party processor with clients who were successful contenders for GSA contracts." Total System is therefore almost sure to be a winner, regardless of which banks do best.

Credit card executives said the government decisions augur well for the adoption of advanced card technology.

"If there are hundreds of thousands of government employees carrying smart cards in their wallets, the market is going to shift," said Dan Goren, senior vice president of American Express Government Services.

Tony Brady, project director in Mellon's global cash management unit, said many Mellon corporate customers still mistrust the Internet and rely on paper purchasing reports. He said the government's embrace of card technology would "spill over."

"We believe this bid represents the catalyst for change in the commercial sector and the commercial marketplace, bringing new technologies to fruition," said Cathleen Raffaeli, executive director of commercial cards for Citibank.

In the companies' presentations, acronyms were flying thick and fast. U.S. Bank's IMPAC (International Merchant Purchase Authorization Card) has been used by the government since 1989, and the bank emphasized how it has been expanded to include fleet, travel, and integrated services.

"You can count on us to make a transition seamless," Mr. Putney said. "No other bank card program can bring you our experience, expertise, and proven performance."

NationsBank countered with EAGLS, the Electronic Account Government Ledger System, a travel, purchase, and integrated card system. Myra Woods, senior vice president, called it a "Windows-based point-and-click system" that is "Web-enabled" and compliant with SET, the credit card industry's Internet security protocol.

In NationsBank's favor, Ms. Woods said, was its presence in the Washington area and its technology expertise. "We have issued more stored value cards than any other bank in the U.S.," she said.

Citibank touted its size-it is the largest bank card issuer-and international reach. "No one can bring you the global arena the way Citibank can," Ms. Raffaeli said.

Mr. Goren said American Express already has 400 people assigned to government card work, plus "a global network of 1,700 offices in 130 countries." The company provides purchasing cards to more than 300 companies in the Fortune 500, he said.

Mr. Goren promised "multiple reward opportunities" and "refunds greater than you have ever seen in the past in any card program."

He also offered prizes to conference attendees who stopped by American Express' booth and experimented with its new stored value card, GovernmentFunds.

First Chicago played up customer service and the more than 350 client card programs it has set up since 1992. Judy Feldman, senior vice president, cited the company's ownership stake in the Mondex smart card venture and its past experience with multiple functions.

"While this integrated card is new to this government contract, our clients have been using it for several years," Ms. Feldman said.

By contrast, Mellon Bank, which bid only on the purchasing card component of the GSA contract, played up its role as a specialist. "We understand our own key markets, and because we concentrate only on these markets, we are very service-conscious and responsive," Mr. Brady said.

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