March 24, 2015

GSA Preps Next Iteration Of Federal Payment Card Program By JoAnn DeLuna

March 23, 2015

Supplier contracts for the U.S. General Services Administration's SmartPay card program—which spans purchase, travel, fleet and integrated charge cards and related payment solutions for more than 350 agencies—don't expire until November 2018. But considering the massive program's implementation time, GSA's SmartPay team recently began to explore the features the next set of contracts will require.

Total SmartPay card spend for GSA's 2014 fiscal year, which ended Sept. 30, 2014, was $26.4 billion, up slightly from $26 billion the previous year. Specifically, the 2.4 million travel cardholders spent $7 billion, the second-highest SmartPay card spending category after purchase cards ($17.1 billion). Since the initial implementation of the GSA SmartPay program in the late 1990s, GSA has earned $2.75 billion in rebates, according to David Shea, director of the office of charge card management for GSA's Federal Acquisition Service, including more than $240 million in its 2014 fiscal year alone.

GSA's current SmartPay 2 contracts with Citibank, JPMorgan Chase and U.S. Bank were signed in 2007 and became operational in 2008. Shea said it's now time to look into new options, a process he called a "recompete."

It starts with a request for proposals to determine which banks receive the master contracts. Shea compared it to a hunting license, "as [the banks] are then authorized to pursue business with individual agencies."

GSA purposely diversifies its card-supplier roster. "When you look at all the different missions the government performs, would you really want to put all your eggs in one basket?" Shea asked. "Or would you want multiple means of support and further leverage additional layers of competition across the process?"

Given the size of GSA's program—3.29 million cardholders and 84.7 million transactions in 2014—having three card issuers "makes a lot of sense," he said.

During the 18-month period after bank suppliers are selected, a time GSA calls the "transitional performance period," individual government agencies issue task orders for which suppliers compete further. Agencies then select providers, which then set up logistics like issuing cards and interfacing billing to the ledger system. "That takes time," Shea said. The "transactional period" follows and lasts 10 years.

Currently, Citibank has the largest portfolio, largely because it won the Department of Defense's large travel contract, according to Shea. "Which bank wins which agency depends on how the agency assesses the program."

Keeping Up With Evolution

GSA in December took a preliminary step in its "recompete," issuing a request for information. New consumer payment methods, increased security and data requirements and new players that have entered the payment industry since GSA awarded the SmartPay 2 master contracts, and the agency also hopes to learn more about new technologies like mobile payment, electronic wallets, digital currency and advances in data collection and analytics.

Following the close of the RFI on Jan. 20, Shea said, GSA would continue to research the market. "The RFI is just one part of it," he said. "What we really want to do is dialogue with the industry about the best commercial processes, products and services available."

The White House, during its February Summit on Cybersecurity and Consumer Protection, approved the use of Apple Pay for federal payment cards, including GSA SmartPay cards. While Apple Pay is not yet available for corporate card use, a GSA spokesperson said that if "one of our GSA SmartPay contractor banks chooses to make available new payment features or capabilities, we will consider them."


The federal government requires GSA to comply with the Federal Information Security Management Act, which ensures cybersecurity. Additionally, President Barack Obama's October 2014 executive order to improve the security of consumer transactions requires GSA to transition payment cards to chip-and-PIN cards. GSA in January announced it expected to issue more than 1 million this year.

As is the case for many corporations, finding the right balance among ease of use, security, merchant acceptance, data and transparency challenges GSA, as does the continually evolving payment landscape, which requires constant monitoring to decipher what can be adapted to "the government context," said Shea.

"Even though these are commercial contracts, we have some measure of government-specific requirements we have to meet because we are the government and we do a lot of things differently," he said.