WASHINGTON - The General Services Administration, which has taken on the tough task of getting government agencies to adopt chip technology, is making progress but has far to go.
In May the GSA awarded contracts to five vendors that will start issuing chip-based common access identification cards to government agencies. The five vendors include KPMG Peat Marwick, which is working with U.S. Bancorp, and Logicon Inc., which is working with Citigroup Inc..
The contracts further the GSA's two-year-old SmartPay program in which each agency was required to select fleet, purchasing, and travel card products from among designated banks.
In another good sign for the GSA, the Department of Defense has said it intends to give smart cards to all its service personnel in the next two years.
In November 1998 the GSA awarded SmartPay contracts to five banking companies - Citigroup, NationsBank, Bank of America Corp., U.S. Bancorp, Bank One, and Mellon. All but Mellon agreed to offer provisions to add chips to the cards.
SmartPay's magnetic stripe card component has had strong growth, but chip cards have been a tougher sell. Many agencies have said they do not want to combine payment and identification functions on one card, and even more have said they are not ready for chip technology at all.
In answer to these complaints, the GSA developed a separate card - the common-access ID - that gives people access to buildings and computers and has digital certificates for secure online shopping
Government agencies can choose to have a separate card for secure access or to develop a multiple-function card. The GSA itself is conducting a 450-card pilot with Citibank and Visa involving multiple applications, and it is looking into a transit feature for use with the Washington Metro.
David Temoshok, director of the GSA's Access America for Students program, said he is confident that the government agencies are beginning to see the value of smart cards.
"Two years ago, when we were building SmartPay, a lot of agencies said 'We're not ready for smart cards,'" Mr. Temoshok said. "Now every government agency sees the need to do business on the Internet, and business on the Internet requires authentication.
"While we recognize that for convenience, much of the approach within the industry has been to put certificates access on the browser software, we believe the smart card is a much more secure, convenient vehicle."
The government's purchasing card program grew 100% in 1998, to $10.2 billion in card volume, according to Visa. The number of purchasing cards issued rose 96%,to 517,000, and the average dollar transaction rose 161%, to $493.81.
Dennis J. Fischer, vice president of sales and integrated solutions at Visa, said the card association is working to increase usage even more.
"The engine that has driven government change has been in large part the private sector, in large part the card sector," Mr. Fischer said in a speech Thursday at the Visa Government Forum in Washington.
Mr. Fischer, a former head of the GSA who joined Visa in April, said one way the card could save money would be if agencies used it to negotiate contracts for recurring payments, such as telephone service or utility bills. But government agency employees in the audience said many suppliers refused to accept the card because of the high interchange fees. Visa said it would look into the problem.
Mr. Temoshok said SmartPay is now mandatory in the government.
"Every government agency not only needs to be part of that contract, they want to be part of that contract," he said. "Those cost savings are real. They can't go back to an invoice payment process."
In 1990 the purchasing card program was a small experiment in the government, but it has grown 75% a year, Mr. Temoshok said. "It will be the same with smart cards," he said.