September 01, 2003

U.S. Bank's corporate payment systems division just got a big boost from Uncle Sam. The bank received the contract to provide purchasing card services to the Department of Homeland Security (DHS). The deal calls for at least 18,000 to 20,000 DHS staff members to start using the new charge cards by Dec. 1, says Rob Abele, Minneapolis-based president of U.S. Bank's corporate payment systems division. The purchasing cards will pay for necessities such as pens, software, equipment leases, postage, some utilities and temporary labor.

The one year deal has four one-year options to the DHS to renew. U.S. Bank's current clients include the Army, Air Force, the Department of Health & Human Services, the Postal Service, Department of Defense and the Executive Office of the President.

Big Spenders

The newly formed DHS has 22 agencies under its umbrella, and Abele says each had already made individual deals with banks for cards as part of the U.S. General Services Administration (GSA) SmartPay program. SmartPay, launched in 1998, designated five banks as eligible for contracts: Bank of America Corp.; Bank One Corp.; Citibank, N.A.; Mellon Financial Corp.; and U.S. Bank. The SmartPay program aims to save the federal government money by using charge cards to pay for products and services rather than footing the administrative costs of handling purchase orders and invoices.

Earlier this year, DHS decided to consolidate the agencies' cards with three banks: Citibank for travel and entertainment; Bank One for vehicle fleet charges; and U.S. Bank for everyday supplies.

As for the purchasing business, Abele says, "We figure it is going to be a minimum of somewhere around $500 million charged annually. And they tend to be larger transactions, so they are economically more attractive."

The implementation phase has several elements. The cards employees currently have must be swapped for the new cards. DHS administrators have to be trained to use the card's accompanying software application to perform account set-up and maintenance. And U.S. Bank's technology has to be adapted to provide the agencies with the information they want.

The new contract "absolutely" means that U.S. Bank will hire more staffers to service DHS, Abele says. Although at press time he declined to be specific about numbers, he says most of the new hires will be in relationship management and would be based out of the bank's Fargo, N.D., call center.

Despite the added support, Abele says public sector projects typically encounter some challenges. The federal government's complex hierarchy means "both the technological and informational needs become...more daunting than in the private sector," he says. "Where there may be four or five layers of hierarchy in the private sector, there might be seven or eight in government." Working with federal agencies also requires having IT generate detailed reports tracking budgets, he says.