PARTICIPANTS:

PROCEEDINGS

MS. BENNETT: Good morning. My first thing this morning is to welcome you to our customer/industry exchange on the next generation of charge cards in the government. This session is a joint effort of GSA Federal Supply Service, who will be conducting the procurement of these card programs, and the Chief Financial Officer of the Council, who will play an assumingly important role in shaping the programs of the future.

Just for all of our information, I am interested in knowing this morning how many of you represent customers. Could I see a show of hands on that? Okay. And any potential users of these card programs, rather than industry, who are supplying programs for card procurement? Okay. And any IC industry hands? So we've got a pretty good mix of folks here this morning.

We're brought together by a certain date. Exactly two years and one month today, we will throw a switch on our card programs that have served the government so well in the 1980s and the 1990s. We will turn on a new program that will carry us into the 21st century. Most of you undoubtedly realize that this doesn't really entail just throwing a switch. At that point, many things will have occurred.

GSA will have awarded master contracts for fuel, travel, and procurement cards on a timely basis, no later than November of 1997. Agencies will be rated. Of course, at that point, we'll both have to be ready to finalize our requirements and issue fact requests. Industry will be prepared to respond to those fact requests and make their offers. Those will be awarded in a timely fashion. Something in the neighborhood of perhaps two million cards will be issued to individual cardholders. Hundreds of central reporting accounts will be established. The hierarchy for reporting and payments will have been established. If we are really lucky, the agencies will have attempted to use the new cards when the old program expires. Finally, vendors who accept these cards for payments will have to make the adjustments to their systems that were necessary for a smooth transition.

Obviously, this is a somewhat difficult task. GSA obviously cannot do this alone. In the last couple of months, we have gone out to customers, stakeholders, and industry to share our vision of the future programs and how we will go about putting them in place. We have sought your input. You have offered us insightful comments, and asked many relevant, and very helpful questions. The customer focus groups, we heard that we have very diverse needs of our customers, and that a broad range of card attributes will be essential to the success of the future programs. Industry briefings have been certainly informative.

The purpose of this morning's gathering is to share what information we have learned up to this point, and help all of the parties to understand what we will be doing and what the issues will be before us. If agencies have the opportunity to hear from industry what key issues are to them, we believe that it will help agencies better define the definition of their requirements.

The topics that have been established for this morning's discussion emerged from our focus groups, and the industry briefings. Those who have volunteered to lead discussions by each of the topics, agreed to do so in their presentation to GSA staff, and we appreciate their willingness to step up to this. They are taking a lead in this discussion. I want to make that point very clear.

In the audience today, in addition to other folks from their companies, we have other companies to provide card programs. And we also have industries who are prepared to accept those cards for payments. You may recall, most of you who were present for the July 10th meeting, that we emphasized that our partnership with industry would extend beyond the card providers, and encompass those who accept these cards for payment. We realize that this is a very serious process for them, too, and we ask for your input.

We are pleased today that we've received a significant general input, in particular from the travel industry. We thank our partners in the airlines, the travel agencies, hotels, and rental car companies for the extensive effort they've gone to to outline the incentives that they have. And to the Society of Travel Agents in Government we owe a particular thanks to for their efforts in putting together a survey, submitting it at our fall conference, which incidentally really added new information.

You will not hear every point that some of you have made to us discussed this morning, but I would urge you not to despair. I believe when you see our last statement of work in late November, early December, or right in that time frame, you will see that we have in fact been listening to your concerns, and you will see many of them addressed. And obviously the purpose of issuing that draft is to give you a sense of what we've learned and what we've found out so you can get a better reaction. So I think that rather than discussing this process a little bit more fully, there are several options for providing input to us, and hearing from us as to how we are evaluating, and the different options that are available to us.

We appreciate your continuing interest in our card programs. And we look forward to an ongoing partnership with our customers, industry, and stakeholders. One of our stakeholders is represented this morning, the Chief Financial Officers' Council. Dennis Fisher is GSA's CFO. And most of you probably know that this is a person who generally thinks outside of a box and pushes the rest of us hard to do so as well. We will enjoy hearing from him this morning. Thank you very much.

(Applause)

MR. FISCHER: I would like to welcome you all on behalf of the Chief Financial Officer's Council. We obviously think that this is an extremely important effort. The section is actually co-sponsored, and there are two parts to the CFO Council in your report. One is the Human Resources Committee, which is headed by Edmundo Gonzales, who is the Chief Financial Officer of the Department of Labor. And the CFO Council, which also has an Electronic Commerce Committee which I head, is also a sponsor.

There are a couple of other resource groups of the CFO Council that are here. And I'd like to just -- in a moment, I'm going to ask you to stand. We have viewed electronic commerce as such an important item that we put a group of people together, working full-time to deal with the financial aspects of electronic commerce. And that group is known as the Financial Implementation Team for Electronic Commerce or FITEC.

I see some of them are sitting over there. I'd like them just to stand, so that if someone during the session says, "I want to talk to somebody from the Electronic Commerce Group," and you see those persons, grab them at the break. There's a guy with a collar on. He's wearing that just to help identify himself. Please avail yourself of that opportunity.

Also, recently, under the leadership of Allan Tucker, the Deputy Chief of Defense and the Chair of the Financial Systems Committee, we have put together something called Joint Systems Solution Team. They are charged with looking at the overall aspect of what's going on with financial systems. And both of these efforts tie together.

These groups meet regularly over pizza and beer and other things to try and move forward in what we are doing. I would challenge all of you, those of you from industry, those of you who are speaking here, those of you who are out there as customers or rather stakeholders, that when you look at what we are talking about, this is truly a chance to push the envelope and sort of think out of the box.

We have, in my view, three very successful existing programs that help us tremendously. And you will see -- although I cannot imagine an environment which we didn't have a travel card, or charge card, or fuel card -- that we have a tremendous opportunity to improve where we are.

And I'd ask you to look at those improvements for us in perhaps two ways. The first thing I think most importantly is to think out of the box in ways that these mechanisms can help our employees do what the American taxpayers ask of them to do. And so, think of the person that may be out there fighting a forest fire in California, on the ground in Bosnia, or in a Congressional office, or in a hotel someplace. Think of ways that these mechanisms can actually further those employees to do things with support, permission of their agency, and the taxpayer's expectation. I think, secondly -- and I have to put this plug in for the financial guy -- also think of how these mechanisms can help us, if you will, in the backroom and overhead portion of what goes on in government, to streamline and do things better. And each of the mechanisms, in one way, represent an outsourcing of work that, prior to reduction, was done in-house. That's an inexorable move. I think it's going to continue. These vehicles will give us, I believe, an opportunity to accelerate that. And let's face it, we're all under pressure to do that.

So I ask you to look at those two things. But most importantly, don't just think of the mechanism as you see it today and those little things that you'd like to see better, but to try to really force and propel yourself and think where we might be in 5, 10, 15 years with the mechanisms, with the technology that's out there and that's coming. And push us -- frankly, push the industry people that are here, the other people that are there, and push our FSS Team to say,"We want the best." That is certainly what we want to deliver for you. But to do that, we have to hear that from you, and we have to hear that clear articulation of what we're going to do.

So that's it in a nutshell. We want to leave you, now, on behalf of the CFO Council and my co-sponsor in this, Edmundo Gonzales. I now introduce

Sue McIver from our federal supply contracting group. And Sue is a person that, frankly, every time something difficult, delicate, and hard to handle comes along, she always shows up.

And so every time I see her, I know, well, not only do we have a good problem, but we have a good set of hands to solve them. So with that, Sue --

(Applause)

MS. McIVER: Thank you, Dennis. I'm substituting for Allan Zaic this morning, and I'd like to thank you all for being here. Allan is unfortunately struggling with the flu, and he apologizes for not being with us this morning.

As Dennis said, I'm the contractor of the Federal Supply Service. I'm Deputy Director of the Services Acquisition Center. And we are responsible for this re-procuring effort for the travel card, the purchase card, and Fleet card programs.

Many of you were with us on July 10th. At that point in time, Allan walked through what our goals were, and he gave some comments on what the procurement pattern would be. And we'll be doing that with our meeting, here, this morning. For those of you who were weren't with us, we'd like to walk you through a little bit of what happened at that meeting, and what are our plans are for the future.

The current travel purchasing Fleet cards' contracts expire in November of '98. In January of this year, we at FSS, in conjunction with other components in GSA, formed a steering group to identify exactly how we would pursue this in procurement. The sole focus of this group is to determine how best to deliver strong programs to replace our existing successful programs. We wanted to let our agencies, our customers be able to do more with less in this current environment of downsizing within the federal government.

We came up with a new procurement strategy within the steering group. We feel that this re-compete for a travel, purchasing, and Fleet card programs required some thinking outside of the box. In July of '96, we announced what our new effort was, that we were moving away from traditional single one-price procurements to a task with a delivery approach.

GSA anticipates awarding a master contract to multiple vendors, and this will include both core and a value-added services. We feel this new approach will give agencies --our customers -- flexibility to tailor their card programs to meet their usual requirements. And we'll also provide them with continued access to emerging technologies, provide them with tools they need to do more with less, and provide them with quality service at favorable, competitive pricing.

At the meeting we had in July, we asked for your input and participation in this process. Through the course of this summer, we have been meeting with customer agencies and state corporate partners, trying to identify what it was that they wanted to see as next generation card products so that they could use these programs to make their efforts more efficient and more effective. We spent September and October with industry representatives, one end with the industry view, where the industry is going, and where GSA -- the government -- can make the card more attractive for industry to participate in.

As a result of these meetings that we had, we've learned an incredible amount from all the parties that participated. And that's why we've called this forum together today. We want to provide firsthand opportunity to our customers, stakeholders, and industry partners to hear what each other has to say. And we hope that the exchange today will facilitate that process.

Our steering group has been working hard since January, as I said. Our discussions have been facilitated by Steve Klink of the Federal Quality Consulting Group, which is a component of the National Performance Review. Steve has been an incredible support to us and is extremely knowledgeable in our efforts. And he's going to be facilitating our discussions today.

Steve?

(Applause)

MR. KLINK: Thank you, Sue. I appreciate that very much. Good morning. Thanks for taking time from your normal Halloween activities to be here today. I think we have a real treat for you, here. I think we have something that you really are going to enjoy, and you will find to be very valuable.

What I would like to do is just spend a few minutes to talk about the flow of the day, how the day is going to proceed, what are some of the ground rules that we'll be observing as we go along. I will briefly have the analysts introduce themselves, and then we'll get started.

Before I get started, I just want to remind you of a point that has been made earlier. I want to reiterate what the purpose of today is. We found, in talking with our customers, that they have a lot of things that they were interested in pursuing. We found, in talking to the industry people, that they have a wealth of knowledge of information about where this whole area was heading to. And we thought it would be really useful and valuable to bring those two groups of people together, and talk about where we are, where we're headed for, what are some of the questions that we've heard when we talked with you. What are their views on where we're going. So our real goal today is to create a dialogue between these folks, who were kind enough to offer their time and effort and energy to provide that viewpoint, and our federal customer agencies, who are the end users of the products and services that we'll be providing.

With that purpose in mind, we've structured an agenda which is organized around seven topic areas. The way we will proceed is that, to each of those topic areas, we have asked each one of these folks to take the lead on that topic. They will present about a 10-minute overview in which they will provide their thoughts on that particular issue. At the end of that period of time, we will have about minutes for the other panelists to respond to that and add any additional thoughts or ideas that they might have. And then what we'll do is we'll throw the floor open for our federal customers to ask questions of the panelists, along the lines that you told us this summer -- what were some of your concerns, your expectations, how accurate is the information that you receive.

And we'll have roving mikes around the room area. We'll have a couple of microphones floating around for to you respond, to ask your questions. We'll go through each of the seven topical areas. And then at the end of the day, the last period, we'll have an open comment period because we know that there are representatives here from a variety of industries that are related to these programs. So we've built some time in there to hear your comments as well, and your reactions to some of the things that we talked about today.

And any final chance for agency customers to provide your questions to the panelists or to each other, at that point. This is really an open dialogue where we hope to really help educate, and inform each other on this process.

And then the last thing that we will do is that Sue will come up and talk about the next steps in this process -- where we go from here.

The two ground rules that we'd like for you to observe is that our focus here today is on the future, not on the current programs, but on where these programs are heading for in the future. So we would ask that you keep your questions, and your comments focused on the future, not on the current programs that we have.

Second of all, we'd like for the agency customers, when you do the question and answer, to please identify yourselves. Give us your name and the agency that you're with so that help the panelists, in terms of responding, when we do the seven topical areas, unless you have a specific person that you want to address your question to, your question will probably go to the lead presenter, who will then handle that question. And there are plenty of other resource people here in the audience that will be able to handle that as well, okay.

What I'd like to do next, then, is ask our panelists to briefly introduce themselves. Dan, we'll start with you.

MR. GOREN: Good morning. I'm Dan Goren. I'm the general manager of the American Express Government Card Provider.

MR. TUFANO: Hi, I'm Frank Tufano from Chase Manhattan Bank. I am the commercial card business manager for our bank.

MS. FRANCIS: Mary Ann Francis, National City. I'm the manager of the Corporate Payment Solutions Group.

MR. PIEROTH: Hi, I'm Chris Pieroth with First Bank, which is the parent company of Rocky Mount Bank Card, and I am the government product manager.

MR. KUHLE: Good morning, I'm Bruce Kuhle of Bank of America, and I am part of our commercial card services group.

MS. COOK: Good morning, I am Victoria Cook, Citicorp Diners Club. I'm vice president, government sales.

MR. CATELOTTI: Good morning, I'm Bill Catelotti from GE Capital, Corporate Expense and Management Services. I am a purchasing card consultant.

MR. KLINK: Okay. Again, I want to -- before we get started, I want to reiterate, express our appreciation to the panelists who have taken time from their schedules to both come and talk with us, and agree to do this presentation for us this morning. We are very, very grateful for that. We sincerely appreciate that.

All right. Without further ado, we'll move on to the first topic, which is the industry viewpoint on government requirements. Dan Goren from American Express will present that portion of the program. Dan?

MR. GOREN: Thank you. Good morning. First of all, I'd like to wish everyone a happy Halloween. As we all know, unusual things happen on Halloween, so have a happy day. It is my pleasure to be here this morning in the company of members of government and leaders of the industry.

I am pleased to have the opportunity to discuss the impact of the proposed structure of the upcoming bids, as well as to have an opportunity to inform you about our industry. One of the main goals in procurement is to provide government agencies with greater flexibility in the travel and purchase card payment system. In looking toward the future of government initiatives, we see the government could greatly benefit from having customer program assistance, and I am very supportive of this development.

The topic I was asked to speak on, industry's viewpoint of the government's requirements centers in part around the subject of the new methodology and the critical choices GSA and the agency will make. Specifically, I would support two of these choices and the impact they will have on the industry. The most straightforward item, and therefore, the first one that I will address, is the one related to timing.

When does industry need information related to specific requirements of the agency? At the time of solicitation, or at the time of placing task orders. Simply put, the sooner requirements are known by industry, the better equipped we'll be to develop solutions. And the more complete information known, the easier it will be for industry to make the decisions about designing and developing products and services that have developed.

While timing of the availability of the requirements is important, what is even more critical to the success of the next contracts is achieving the appropriate balance between core requirements and value-added products and services. Clearly, this is the more complex topic. As you all know, the current contracts have been awarded based on a similar set of requirements that are applied equally across the board to all agencies. These are, in fact, contracts based on core requirements alone.

For the upcoming contracts, it is our understanding that the new methodology would include a single set of core requirements as well as an additional set of value-added services. We also understand the intent of breaking down the contracts in these two categories, is to allow the individual agencies to have a greater flexibility in choice. Agencies can select those value-added services that can best fit their respective needs.

Overall, this methodology or approach could create a high level of uncertainty for the industry related to business decisions. The industry will not know which products will actually be put to use. Some of the agencies, if any, may want each of the products. The result of this uncertainty could relate to investment, product development, and how to price profits and services.

The impacts in this industry are very different from other industries. The card industry is a very complex one. It is a service industry, not a commodity business. The distinguishing elements in this industry are the services we provide, the important customer and agency contact that is ongoing, and the end users' interactive requirements with a variety of service providers.

To highlight the potential impact on the industry, I would like to discuss three possible scenarios for the future. First, the contract where there is a large number of core requirements and a small number of value-added services. Second, the contract where there is a large number of core requirements, as well as a large number of value-added services. And finally, the contract where there is a low number of core requirements and a high number of value-added services. From the industry perspective, there are likely to be three main areas of impact in each scenario: First, cost; second, the ability to provide services; and third, rebates. I will briefly explain these areas of impacts on industry in each of the scenarios.

The first scenario, large number of core with low number of value-added as it relates to cost, there are high-entry costs due to a large number of mandatory requirements, potentially higher operating costs, and unknown development costs for the value-added. From a service perspective, the most stable customer in product service environment exists in this scenario. In this, you will be able to plan for, and better manage resources. As it relates to rebates, similar conditions exist now, but that is dependent upon the number of new improvements, and requirements, you know, goes to the core of listed requirements. This scenario mostly resembles today's environment. It provides more flexibility than today, however, not necessarily the maximum flexibility.

The second scenario, high number of core requirements and high numbers being added. As it relates to cost, this is the highest overall cost, the most expensive for industry. It has significant core investment and operating costs, and significant value-added investment and operating costs. From the service point of view, this is the most difficult to service due to the large number of core and value-added services and the uncertain environment for managing resources. As it relates to rebates, this scenario provides industry with the lowest ability and flexibility to rebate the high amount of cost. This scenario provides a higher flexibility for agencies with a higher cost to industry and a lower economic return to the government.

The last scenario of a low level of core requirements and a high level of value-added services. As it relates to cost, this has the lower entry cost, with increased higher development and operating costs, assuming this will be required to develop a large number of new value-added services. From a services perspective, it does have the ability to plan for customer services due to uncertainty about the number of agencies, if any, who will select the new value-added services. As it relates to rebates, you get opportunities with how you invest in operating costs for value-added requirements. The closing on this one is that the model provides the agencies with the highest rebate flexibility and the most flexibility in rebates.

In conclusion, as I mentioned earlier, impacts in this industry are very modern industries. And as you can see, there are a great number of trade-offs that needs to be considered when making your decisions to develop a partnership for card services. I hope this discussion has provided you with a useful framework for your thinking about the various choices that you are facing in preparing for the upcoming RFP. And I want to thank you for the opportunity to address this subject with you this morning. Thank you.

(Applause)

MR. KLINK: Anyone want to answer that? Comments or reactions from the panel? Okay. All right. Customers, ADT customer questions for Mr. Goren? Reactions to the topic? Hang on for a second. We'll get a microphone to you. Please identify your name and agency for us, if you would, please.

MS. ALDERMAN: Good morning. I'm Karen Alderman from the Department of the Defense. What might be perceived as value-added capabilities, such as split disbursement, once implemented with the use of the operator's cost, deal with changes in business practices that have different economic impacts. Could you address the value-added capabilities with respect to keeping business finances on a capability basis?

MR. GOREN: That's a good question. Basically, one of the things I highlighted when we talk about uncertainty, this is just a viewpoint, so we have to make an assumption. So the assumption we're making to some degree is some of the value-added are brand new. The split disbursement is a very good example, so disbursement is not a really brand new issue. It is not a capability that you will have to invest in, it's something that has to be implemented. And therefore, in that regard, in that example, yes, there is that approach of a whole economic model. And in fact, as this would benefit the industry, that would be an offsetting in that example.

But when you look at value-added, we're discussing it in concept of an anecdote. And it is probably reasonable to assume that there are some requests or desires out there that don't exist today, that would require some accessorizing, in that regard. Clearly, in the area where this could possibly happen on the vendor level is the credit card loss to the customer, in answer to the question.

MR. KLINK: Okay. Other questions? No? That's pretty easy for Dan.

(Laughter)

MR. GOREN: Well, I studied all night. In closing, we're going to hand out some information packages with the agenda. What we had decided to do was to republish a survey and just pick out some salient excerpts that relate to trend and card users which I thought may be beneficial in providing additional information in what is going on in the industry as based on our analysis.

MR. KLINK: Thanks a lot. Thank you, Dan.

(Applause)

MR. KLINK: All right. Frank, if you don't mind, I think we will move along.

MR. TUFANO: Sure.

MR. KLINK: The next topic we have is the business case for industry participation. And we have Frank Tufano from Chase Manhattan Bank.

MR. TUFANO: Good morning. It's a pleasure to be here and have the opportunity to address the audience. I have been asked to speak about the business case for industry participation. If any of you were here on July 10th, this room was filled to the gild with industry participants. The going-in assumption is that there is a business case. We have one of the largest financial institutions in the room so there's a lot of attractiveness to the government programs.

One fact is the fact that the government programs have active volume that is so attractive to card participants, that it is mainly driven by scale. But one of the key factors for the issue to determine the profitability and the business case for the government programs is, first and foremost, that the core product requirements are requirements that mirror the operating environment developed for the private sector.

What I mean by that is, as it relates to card functionality, the data requirements, and the reporting requirements. Now, why I say that is that it provides benefits to both government agencies and to the industry. First, the government agencies. Why should your program look like the program in private sector? For a number of reasons. One, as it relates to having each agency have access to the newest developments in product renovations and customize solutions. Having your program look like the programs out in the industry would look. Everyone in the industry that's working towards solutions will work. Therefore, you get the best access to the most latest developments within the industry, as it relates to either Internet development or smart card technology. So while adopting a platform that is consistent with the private sector, the benefit to the government agency is just that much greater.

The second benefit to the government agencies on building off of core private sector platform is the amortization of costs. Clearly, as an issuer within the administration, we're developing a solution that cannot be resold, that is limited to the government sector, the amortization of that cost is over a finite marketplace. As soon as the solution is available to the complete marketplace, it can be resold a number of ways. It lowers the costs to the government, and it gives the industry more freedom to develop that solution, knowing that it can be sold beyond the walls of the federal program.

The third is it fully utilizes the volume that the government programs provide. If you are sitting on the same backbone processing-platform, as the rest of the private industry, the scale that private industry gets from that benefit can then be passed back to your programs. So it facilities the issuers, the industry, it also facilitates the pricing that you will receive because it's not a run-off process. It's streamlined, related to all the other programs outside the government.

And then, fourth, it provides a broader selection consistent with the government's approach, which was just spoken about of, keeping the program in the parameters of private issuers, which opens up your choice among providers to a broader spectrum, as opposed to only one issuer who would customize that program specifically for the government as the only place you could go to get that solution. So it allows each agency to have a broader choice of where to go to find the solution. Obviously, there are benefits to the card issuers and the industry on the whole to complement that. One, it gives us access to track the volumes throughout the government agencies without the up-front customization costs.

As Dan started to allude to, we're making up-front investments that are in a finite world, and even more finite is each specific agency. The decision to make that investment becomes much more complicated, to the extent where the customization that meets a market need -- a broad marketing need, you can bet that the industry would be that more responsive to that customization cost. And the cost to the individual agencies will be reduced based on that factor.

It also provides the issuer the ability to meet some agency needs with off-the-shelf products. There are some agencies that have various standard programs; if they keep their requirements consistent with private industry, they can meet their needs with the lowest possible costs. Also, the government sector is an ideal place to test new products. With the volume in that, when new products come out, and product innovations, it is ideal to take an agency or part of an agency and introduce that new product to them. Be it smart card technology, Internet technology, it's a perfect laboratory to get out of government, to have first shot at these pilot programs, and roll them out to the government agency. And therefore it ultimately is a good risk investment. And the investment allows more participation.

Based on the award structure, it brings a number of issuers and some other factors that help industry make the business case, to participate lesser. Some of those are the duration of the contract. Clearly, a contract that has a duration -- a long duration allows the individual issuers to recoup their investments with some certainty, as opposed to a short duration. And some of the programs we have spoken about are five-year term with up to two and three renewals. It's the type of contract duration that makes it attractive, from a business case perspective, for issuers to participate.

Limiting the absolute number of issuer-awarded contracts also help. That kind of implies some minimum models. So to the extent the issuers are participating in the program, and building solutions to meet the government's needs, to the extent that it's available to a limited competitive audience, gives us some insurance that there's volumes, in that regard, before we make a large investment.

That's a big contrast to a single source award. A single source award, you can make some bets on what you're going to develop, knowing that the volume is all volume. When the volumes can be split up among a number of issuers, knowing which up-front investment is part of the complexity of making a business case. Early provider selection, as when you contemplate, it is very important. As Dan alluded to in his presentation, the sooner we understand the requirements, the sooner we can start building solutions and make a way, it is a key to allowing us to insure that our business case as well as constructing, anticipates the fine line required to beat the solution.

And the last is that I have been, asked to talk about rebates and the fact that it's key from a business case perspective that the rebates are consistent with the product accounts. Clearly, that's a complicated issue and what I was asked to see about are how rebates impact the card industry. I want to talk about a couple of factors that issuers must look at as it relates to rebates. One is the volume. Absolute volume helps issuers get fixed costs. Therefore, helping to analyze the rebates, the payment sector, how quickly is the payment received from the time the purchase is made until the time reimbursement is received is the second critical item in evaluating potential rebates. Third is the absolute level of interest rates in the economy. Clearly, when issuers earning money on an interchange or merchant discounts, that percentage is reasonably fixed, if interest rates grow dramatically, as perhaps one of our major cost elements having enough impact on our loss of funds, and therefore, profitable or valuable to calculate our rebates. And last, we just need to keep a track record within the industry.

So, in summary, the government represents a large attractive audience to the issuers. To the extent the government builds their programs on the backbone of the private-sector solution, provides a benefit to both the individual agencies, and the issuers in building a business case. The last is that, in evaluating the program of the business case, the key is that the risks and rewards are accurately balanced among the agencies and the issuers so that it's a win-win situation for both. That's all I have. Are there comments? Thank you very much.

(Applause)

MR. KLINK: Thanks, Frank. Good timing. Panel, are there comments, reactions, or additions you want to make? Okay. All right. Let's throw it open to the floor, again, for questions from agency and customers related to the issuer business case.

MS. ALDERMAN: Karen Alderman again. The discussion of commission or rebates, what is the industry's perspective on business case of reflecting commission for rebates at point of sale, rather than having transactions after the fact? In the case of rebates to the government, it requires a lot of account back in and an accounting of a relatively small dollar involvement.

MR. TUFANO: I'll try to make sure I understand the question. The question is, contrast the current process to get rebates back to the individual agency, as opposed to providing some of that benefit directly to the suppliers?

MS. ALDERMAN: Yeah. I'm talking about the point of sale rebates. In other words, right now, the point of sale rebates -- the point -- if basis points are taken off the direct bill at the point of sale, rather than rebating after the fact back to a guarantee -- for customer use.

MR. TUFANO: You know, I guess I hadn't thought about that as a solution. I think some of the first reaction to that is that trying to enable point of sale merchants to have the capability to calculate, because of the number of factors that go into a rebate, may be difficult. What is required is that it would have to be done at the association, Mastercard, Visa, or American Express or one of those. That information would be captured and fed back. It sounds like a complicated solution to try to impact the point of sale. When you try to impact the transactions at a point of sale, the issue becomes the number of merchants and getting all of those merchants the capabilities and technologies to do those calculations. Alternatively, rebates should be paid either annually or some period of time that would make the administration less cumbersome. I would think it would be difficult under the current setting.

MR. CATELOTTI: I would think that it would be the technology that would limit us from doing that at the point of sale because of the processing involved in that transaction, when it goes through the processors, and back to the card issuers for further processing. Authorization is often difficult at the point of sale because of technology, and telecommunications.

MR. KLINK: A question over here.

MR. FISCHER: Just to add to that. Today that capability exists because I have an entertainment card which allows me to register my credit card. And when I use it at certain restaurants, the first time I use it, 25 percent is deducted from my bill. Subsequent use is 10 percent. So the capacity is out there within the bank card, Visa, and Mastercard to do that today. And I would agree with Karen that this kind of an option would give us, in the financial community, something to deal with that we now have to deal with, the influx of rebate, somewhat different.

MR. GOREN: I see that as not just a point in sale. There are other options. More to what Frank was saying, that there's a cost issue involved. In the example that Dennis used, for example -- in this case, the government would use that in the current environment, the rebate would go back to the cardholder. So there has to be some very heavy-duty technology solutions to accommodate the needs, so I think there's really no more than that. You know, one has to look at the costs of those technology solutions to do that, to see if there really is a rebate. When I use the example as the cardholder, I was using Dennis' example from his personal card, when he gets the credit back on his bill. Anybody who can answer the question, please shake your head.

MS. ALDERMAN: In Dennis' example, the cardholders charge $100 per meal, $80. That means then that the direct cost of travel, for instance, TDY travel, would be instead of $100, $80. That just means that the agency is reimbursing $80 for the transaction after the fact in this rebate process.

MR. GOREN: All right.

MS. ALDERMAN: So it's not rebated back to the traveler.

MR. GOREN: Oh, I see.

MR. PIEROTH: I think when you're talking about really applying that rebate up front, it is certainly something that can be done. You know, the technology is there. It's just a question of, you know, the development effort. But I think it's important to point out that, today, the federal government is one of the few organizations today that receives, in certain programs, what we call a straight rebate where, you know, rebates apply against the dollars, and is concluded. In most corporate arenas, there are usually other factors that play into that rebate. For example, on the travel program, rebates are usually calculated, and then credit losses are deducted from the rebates. On the purchasing card side, rebates are sometimes offered but you also have to factor in turn days. And so the industry, on the commercial side, has not developed that capability because we're not giving the rebate up immediately. We have to wait for a specific period of time in which, we then take any of these other factors and come up with a net amount that is then rebated out to the customer. So I understand your request, but a lot of that request comes from some of the unique nature of how rebates are paid in the federal government.

MR. KLINK: I have one more response, and then we can take questions. Bill.

MR. CATELOTTI: In line with Chris' response, if we had been asked to think out of the box on how we might apply the new technologies and new methods, then maybe the way rebates are applied should be more broadly applied than to the cardholder, or to the ultimate buyer, but by the agency, through an allocation, rather than to try to get back to an individual account. I think that might be a little out of the box for government rather than industry on this one.

MR. KLINK: Sir, do you have a question?

SPEAKER: This is for the panelists. I know you all have proven customers, and I was wondering how you deal with rebates in the corporate marketplace?

MR. TUFANO: In answer to your question, within the corporate marketplace, some of the factors that I have mentioned were certainly the same factors that go into rebates and what percentage. It's how quickly they pay, the amount of volume, interest rates and credit issues are all the same factors. Annual payments of rebates are probably one of the more frequent ones I've seen, based on those four factors. And as Chris pointed out, it's after the fact, it's after you're able to sit back and analyze line -- the various factors that you would commit a payment. And certainly, the general support has as much flexibility you need to maximize rebates, and you want to make sure that the supplier insures prompt payment. You know, there are ways of getting electronic acquisitions of payments, you know, the day after the supplier has been paid, in which payment can be settled electronically.

MR. KLINK: Would the panel like to add to the rebate issue? Any of you? A question down there? Hold the mike up.

SPEAKER: We would all like to believe payment can (inaudible), but according to Prompt Payment rules, we are not permitted to do that, which means that we have to wait 23 to 30 days during that window to make payments. You can help us generate a change if we can get Prompt Payment rules updated. We would appreciate that.

MR. KLINK: I saw a number of hands go up. The gentleman over here wishes to comment on the Prompt Payment Act.

MR. BURTON: Mike Burton, the Joint Systems Institute. We deal with a lot of vendors who sell us accounting software. Their biggest complaint is that it's very hard to figure out the government requirement. Once they figure it out, we don't want to tell them the details. How well is the government going to explain these requirements to date? How well do you understand that? In this November 25th draft that GSA will be putting out, how detailed should those requirements be?

MR. TUFANO: Well, I think Dan addressed some of that in his comment. The more detail we have, the better we are able to assess the business case, assess what's needed. To date, we all have access to the existing statement of work to understand some of the specific requirements. Clearly, as we move forward, I think that the plans would be for various issuers to meet specifically with specific agencies to really start to understand their needs.

It's hard to do when we're covering every agency with one set of documents. You know, it's important to sit down with the agency, to really start understanding their situation specifically, and what their specific needs are.

So I think, until you get to that stage, you're not sure what the solution is, or what needs to be done.

MR. KLINK: Dan, do you want to add to that?

MR. GOREN: I would say that the requirements, the information should be very detailed. I mean, you don't -- the most difficult situation is that you get a list of requirements or you put it in a draft statement of work, and it can be interpreted different ways by different people. So the most detailed information is most beneficial, I would think.

MR. KLINK: Vicki.

MS. COOK: I'd just like to add one comment. If we could also get a better understanding of some of the task orders from the individual agencies, that would be helpful. While everything may not be finalized, just understanding some of those specific requirements would be helpful as we try to frame our responses to the solicitation.

MR. KLINK: Okay. Other questions on the -- in the back, sir.

MR. KASWELL: Yes, this is Bruce Kaswell, IBM Corporation. Frank, I agree with your -- this is a response to the business case.

MR. KLINK: Okay.

MR. KASWELL: Is this thing working all right?

MR. KLINK: Yeah, it is. We were hoping to have the comments from the other partners later in the day. If you can just hang on.

MR. KASWELL: A brief comment just to extend this analogy to the additional value-added service. I think every point every point you made about being consistent with commercial practices, currently, is off-the-shelf available services and so forth, needs to be extended to the value-added services. And I would just comment that I hope the release of the statement of work in November includes, as succinctly as possible, that those departments will be for value-added services and commitments for upgrades.

MR. KLINK: Thanks again. I appreciate your comments. Again, we want to focus on the dialogue this morning. We'll have an open time this morning where we'll invite everyone to provide those kinds of responses. Thank you. Other questions particularly related to this issue?

SPEAKER: You mentioned that the government is a good place to test new products. That, historically, has been very true. Do you think the government knows what your future capabilities may or may not be well enough to put in your paper? A lot of this stuff that I have been hearing over the past three months deals with, "How do I correct late payments?" And there are a few very senior people talking about debit cards or multi-purpose smart cards. They see it in a very general, fuzzy way. What would be the value of forums like this as we go through the process of the next year? There's going to be mutual education of industry understanding really what the problems are, and us introducing specific solutions that may need new technology. And I can think of a lot of examples where, you know, you're trying to solve today's problems, but there might be tomorrow's solution that really kind of leap from how you might be required to solve the task. So I think that this process will facilitate that.

MR. KLINK: Okay. Karen. Could you grab a mike for Karen? I'd be happy to lend you mine.

MS. ALDERMAN: I have one question, point of clarification. Definition of requirements versus not knowing how industry is moving this, seems to be somewhat in conflict. One of the things that I would like to know from industry is, you want a performance-based, you know, task orders, here's the capabilities as argued. We have a spec date when government spends. We want this kind of capabilities that will be open to look at all kinds of solutions to those capabilities. I seem to be hearing different things. One, I'm hearing more detailed requirements. And the other is, there are a lot of things emerging that, you know, the current federal (inaudible).

MR. TUFANO: I'll take the first shot at it. I believe that it could fall into two camps. One is, you have a specific area of what you want, and it is very unique and you have a lot of detail. If you have that detail, I think your point was communicated and only helps us. Secondly is you have an issue that describes, say, receipts from national forests are difficult to -- the data there is difficult to centralize it and give that data central reporting.

We're looking for solutions to that generic problem. I think that's also a useful statement of work, developing some technology solutions that might go a long way with providing that solution. So I think there could be both camps. Even the one where you describe the detail, what you think the solution is, or what your statement of work is, there may be an ultimate solution. So I would say, don't limit it to where you have the detail, only the details. You're right. In some situations where, "This is my business issue, help me solve it," this is a reasonable and encouraged avenue to solicit.

MR. KLINK: Well, Frank, Mary Ann, and Chris had comments on this as well.

MS. FRANCIS: There are really a couple of buzzwords that we all like to use that are really appropriate for that scenario. And things like solutions, tools -- what we're really looking for is tools that will help you accomplish what it is that you're trying to accomplish. So where requirements are really well-known and definitive, it is extremely helpful to have those actually listed.

But in some cases, what we really want to know is what is it you're trying to accomplish? What process changes do you think you have in mind? What is your end goal? And just understanding what it is you're trying to accomplish gives us the latitude to then say, "Don't ask me for a smart card that does this. Tell me what it is you're trying to accomplish." And it may be a smart card, or it may be a variety of other things that we ultimately end up offering. But it makes us understand where you're going, as opposed to just the specific mechanics that you're asking for.

MR. KLINK: Chris and then Bruce.

MR. PIEROTH: I think when you talk about requirements, what you're really talking about -- you know, at least in my mind -- are those things that you need today with the technology that is available today to accomplish your goals. And then when we talk about emerging technology, it is true that we don't know all of the things that are going to be available next year or the year after. But I think it's important to add that one of the most critical pieces of this new procurement procedure that GSA is instituting is it will really foster competition among the suppliers, not just during the up-front bid process, but throughout the schedule period. And so even though certain emerging technologies may not be clearly defined in the RFP as it's going to be issued today, I think that it will be competition that will ensure that the government has access to that technology as it becomes available.

MR. KLINK: Bruce.

MR. KUHLE: I think Chris covered it pretty well there from the perspective of what we would like to try to do to assist you in the future. And I would say that in the RFP process, if you can consider the idea of leaving future technology as sort of an open-end question, that we can come in and address in future time frames as they permit themselves.

Today is an example. Smart Card technology might be placed out three to five years, people would say, and everybody is going to have a different perspective on that. Well, there may be things that bring that into focus much quicker because demand, all of a sudden, becomes more of a factor. And so, from our perspective, it would be nice to have some open-ended opportunities there in this process to be able to address those issues as they come into play.

MR. KLINK: Okay. One final question in this hearing. Dan.

MR. GOREN: I just had one more comment to that, Karen. I would say, "Do both." I mean, the comment on making sure that what's your business end goals, you know, what you're looking for, are clearly spelled out. But also, I would say that if you see technology solutions, even if it's emerging technology solutions, you should put them out front also. That will give you the best of both worlds. It is not the intent of industry to have you write the solution. What we said earlier about the most information known, knowing your goals and seeing what solution you have in mind, current or emerging, you know, I think we will come out with the best products for you.

MR. KLINK: Okay. Frank, thank you very much. I appreciate it.

(Applause)

Okay. I'd like to take a break at this point. Let's take a 15-minute break. For those of you -- before you attempt to leave -- who aren't familiar, there are restrooms either to the left or to the right at the end of the corridor. There are pay phones on the G level below. There are coffee shops on the B level, or outside on the street. Come back in 15 minutes.

(Recess)

MR. KLINK: Just as a quick reminder for those of you who may have come in late and missed my opening remarks, I wanted to again remind you that during the past presentation, we are focusing on agency/customer questions. We will fill time in at the end of the day for comments from all of our in this process, and we certainly welcome and want that. But for now, we're trying to keep the focus on the dialogue between our presenters and our agency customers, so I just want to remind you of that. Again, that was a great dialogue this morning, and we're going to keep that up. The next topic that we have is Delinquency Management, and that will be presented by Mary Ann Francis from National City Bank. Mary Ann.

MS. FRANCIS: Good morning and thank you. With the time I have to talk about delinquency management, I thought maybe it would be important for us to kind of start off talking about some of the terms that fall within payment premiums and make sure we are all talking about the same thing. There is going to be a handout. You've heard a lot of this, it's already included in what was done this morning. This talks about the differences in payments from the delinquency perspective, those that are excused and that are bought out because they all need to be non-pays. In some ways, they are non-payments for several reasons.

A delinquency is a true non-payment of a bill. That means that the time has passed from when you're given the bill and the due date and it has just not been paid. There may be a variety of reasons why it has not, but it kind of becomes delinquent because it has not been paid. The evidence is, then, given a discussion of why hasn't it been paid, is it because it's a disputed item? A dispute is an item that the cardholders see on their statement that they are going to challenge. They either don't recall making it, they don't feel that they did make it, they don't remember doing it. In some cases, it may be because the goods that were actually purchased with it are in dispute themselves. They're not performing to standards and there is a dialogue between buyer and seller of whether or not they want to pay that bill.

The dispute gets classified once the issuer is notified that there is a dispute on the transaction, and that needs to take place in a specified time frame. Once it is -- once that "NYU" notice has been received, that non-payment now becomes a disputed item, and it is literally removed from your bill and moved into a special category, into a special account. It's called Disputed Accounts, and it has its own set of guidelines it has to go through in order to get that dispute resolved.

During that time frame, your account is not inactive, it does not show as an outstanding balance or delinquent on your account. It may be accruing interest in that disputed amount account, but it is not interest that is being assessed to you -- at least not yet. And then, at the end of the dispute resolution, there may or may not be payment made depending on when that dispute is resolved. The key is that that transaction is not considered delinquent, either by the issuer or to the party that had the original dispute. It's not counted against you.

Other items that may be non-payment are fraud. And that is if there is intentional misuse of a card or a card number by someone other than the cardholder. It could be the cardholder depending on what the intention is, but by and large, it ends up being a non-cardholder or the owner of the card. In some cases, disputed accounts versus the transaction levels end up falling into the fraud category as well. An isolated transaction on our account may just be a dispute, but we end up paying this off. However, when an entire statement or an entire account or such transactions end up being disputed, again, from a stereotypical perspective, that ends up being in fraudulent situations as well.

The entire set that end up getting put into a different category for different research, being attached to them for dispute resolution, as well. So we thought it was kind of important to just talk about the different categories that you have for non-payment, for what we call delinquency, you know, its own term.

The criteria that are established quarterly -- some of these things vary by issue or by industry, to some degree. Everyone has what they call a fraud loss, where certain characteristics may show up for that. But there are billions of dollars that could be involved in the fraud loss to the insurer, and those are their own -- industry will pay for that themselves. From plain commercial practices about how each of these different types of transactions is handled, especially the delinquency, we just talked about a typical credit card one.

The typical practices -- and again, these may vary to some degree on the number of days involved, depending on the issue and the provider of the card -- the typical cycle date for a consumer card is 25 to 30 days, meaning that there are 25 to 30 days allowed spending and then the invoice is received. And the due date on that invoice is typically 25 to 30 days after that.

If there is not a payment made within that due date time frame of 25 to 30 days, that's when paper notices may start to go out. The mailing that you receive indicates, you know, "You're a valued customer, we know that you may have made your payment and it might be in the mail, if you've made your payment, please disregard this notice." Those kind of start in that 5 to 7-day time limit. And in the consumer industry, they will pretty well continue every 5 or 7 days until payment is received on the account.

Once a customer gets 30 days past that original due date, in most cases, that may be when phone calls start. That's where you might just get one phone call that says, "I'm just checking to let you know we didn't receive your payment. Did you mail it?" When?

You get beyond the 30 days and you start getting into 60 days past due mail. That's where a different set of criteria begins to kick into place on the consumer side. When you get into 60 days past. You're getting into a little bit more serious collection process that may take place. It may be approval collectors. These are the ones that really want to spend some time talking to you, telling you that while they value your relationship, they really would like to see a payment made. And they may even try to arrange payment terms for you. This is a section where promises are made, we really expect you to live up to your promise.

Suspensions may be given at this point in the consumer industry. The card may be turned off. Should you try to use it, it may not be available for your use. There may be initial transactions available to you until at least the original agreed-upon payment is made.

In 120 days past that cycle date, hardcore collections -- these are the mean guys that really want you to make the payment. Around 6 months or 180 days past that cycle date, that's when it usually goes to charge-off. That means that it's written off, with no immediate signs of collecting those funds, goes into the loan officers, or the financial or the issuing institution of the card.

Obviously, then, from a suspension of days all the way through to closing, there's an individual credit issue, and credit history is seriously impacted at this point as well. And that's a permanent mark on your record, and it can remain there even if it's settled, depending on how the collection process went.

Obviously, the cost issues that goes along with something like this are going to be tremendous, depending on the goal and the length of time that's involved in the different collection efforts. In some industry cases on the consumer side, once that first payment cycle date is missed, there can be late fees assessed. You see them range anywhere from $10, $15, $25 to $30, depending on the issuer of the card, and that will show up on your next statement date, in addition to the accrued interest that has been accumulating on this outstanding balance that has been sitting there.

Obviously, as an industry or as an issuing perspective, the more non-payments in the delinquency category that we have affect a variety of business issues. Those are outstanding funds that, while they may be accruing interest, we don't know if we're going to collect either the principal or the interest. It obviously affects the ability to lend additional money, if you will, into other areas. It affects the outstandings that we are attempting to manage.

In a way, we all pay. You've heard over and over again that we all pay for these non-issuing situations, where there's a lot of money sitting in -- where interest may be accumulated, but we're not sure if payment is made. From a GSA, a government perspective, the impacts of the industry, obviously the suspension, collection, and conversation practices that are attached are somewhat different under the Prompt Payment Act, and a variety of other agency requests that are out there. And they do have varying impacts on the industry.

In part, as we go forward and talk about how we want to work with these contracts is, how open to different opportunity and solutions to manage non-payment in the delinquency. Is it going to be on a GSA level as well as an individual agency level, and how they are going to work with their individuals? I'm holding them accountable for the payment of bills.

It does vary, we know, according to the type of card being issued, the central bill versus the individual bill. But following the sequence of events that we currently understand them to be, and trying to compare them to the consumer side, 30 or 45 days past that cycle date is when, in the government world, we may start having conversations about non-payment.

From the very beginning, there's a few days there, there are 5 to 15 days that are automatically given to the consumer. Again, we said that the due dates may be up to 30 days after their invoice is received, they have about 5 days flex time before those notices start going out in the mail. On the other side, we may have 30 days from the invoice date or the first time that payments may be due. And that obviously is changed from that 30, 60, or 90-day payment term. But if you just go with the 30-day, it's not until 15 days after that date that we typically start sending notices, out to the individual agencies, that that bill is past due.

After that it's another 30 days and then it's 45 days. And the notices are going out, and each time, rather than involving, perhaps an outside or an in-house collection service, we're really just kind of involving different layers in each agency. The first notice may go to the cardholder, the second notice may go to the cardholder and immediate level above them, the third notice goes to two levels above the cardholder. So it's kind of an internal collection process, or collection function, if you will, by using the hierarchy to put pressure on the cardholder to make the payment. And this is obviously much more billable in an individual situation with a cardholder you are trying to have pay the bill.

The key is that the suspension process may or may not kick in, depending on what requirements may also go into that process -- until very late in the process. In the consumer world, that suspension process is going to begin earlier. We're going to shut off the opportunity for those folks to use the card. Depending on when there is a requirement, this begins the suspension process on this side, and to that effect, are available to follow that account, the amount of time that we're going to be working with you, and that you may be working within your agencies to actually correct those.

So some of the things that we think are important to keep in mind in that solution-oriented approach to this is who is ultimately responsible for these accounts. Is it going to be the centrally-billed agency level? What individual level of responsibility do you wish to place on those cardholders? And what is the agency accountability, even in those situations? And knowing that the outstandings can eventually get settled, but that the longer and longer they go, there is additional cost associated with those, both with the loss of the collectible funds and the ability to lend money, as well as the human resource cost in maintaining and overseeing it.

The other, small differentiating factor here, too, is that it's always kept very internal. The credit rating and/or relationship is usually not effected, at least, not in the short term, when it's kept in-house within the agency as opposed to the consumer world, where it may involve and actually impact credit ratings.

From an overview perspective, that's kind of where a consumer standard commercial card reference may work versus what we understand some of the requirements to be, or where we -- this might be the requirements that might be going forward, assuming the delinquency management practices that you may have. So do you have any questions on the specific issues at this point?

MR. KLINK: Panel, do you have any comments or questions to any of this? Anyone? Chris.

MR. PIEROTH: I would just to like to add from the delinquency management perspective, with respect to the travel program, that is something that I think is of some concern for, at least I know for my own reputation and probably for others. As you all know, today on the travel program, there are other delinquency fees charged regardless of how the employee may go delinquent. And I think what we would submit to you, as customers, is that you need to understand that there is a cost to that. You know, the pool of revenue that we have available to us cover our expenses to fund development and to pay rebates is a finite rule.

And, you know, in the commercial sector everyone pays agency fees. At different points in time, everyone pays those fees, and those fees are used to offset our credit losses and our costs. And you know, if that is -- if you, as users, come back and say, "Well, you know, there are reasons that the government -- we can't do that." That's fine. We can factor those costs into the program, as long as you understand that there's an opportunity of costs there, you know. And there is a loss, in terms of development funds and rebates.

And we would simply ask that as you, you know, look through the draft RFP, you give that some thought. And see -- and perform that balancing test, "What's it worth to me to provide this benefit to my employees?"

MR. KLINK: Any other comments? All right. How about questions on this issue, delinquency management? Dennis.

MR. FISCHER: In your corporate environment where you issue a card to an individual, where the individual is responsible for it, do you have situations where, after a certain point, they will come back and garnish their salaries through the employee pay process? That is a solution, at least, that some of us have talked about to get at the very problem of payments.

MR. KLINK: Mary Ann.

MS. FRANCIS: The T/E card -- I'll answer your question in just a second, just to make sure that the T/E card is typically -- the cardholder is liable for the payment. They then are responsible for paying their bills and submitting their expense reports back to the company versus, say, purchasing our commercial card where the corporation, itself, is responsible for paying that bill. It may go back to the employees, on an individual basis, to get funds. So just to make sure that we understand the level of liability between the two cards.

Whether or not we can actually have access, "We," as Collection -- a piece of that -- could actually have access to that employee's paycheck would be something that we would have to do a lot of conversations on, the technological perspective as well as, you know, our corporate willingness for that to happen. We, obviously, would like to have conversations with that, you know, employee's agency as to, you know, get the opportunity to be able to do that. But that would be a great opportunity that we would like to hear from you, as a possibility, in your requirements that would enable us to talk about the possibility of doing that.

MR. KLINK: Okay. Victoria and Chris.

MS. COOK: We have actually seen a couple of programs that are set up like that, but it really is an arrangement between the employer and the employee. And the employee might be asked to sign a statement that if, indeed, they did not pay the bill on time, they will then be garnished. But that would be something that the employer would have to definitely initiate. And it is a way to ensure that the payment is made on time.

MR. PIEROTH: I just want to add to what Victoria said. We also have some customers that do payroll deduction at a certain period of time, maybe it's 180 days, maybe it's 360 days, but at some point when they are certain that it is a valid debt, and that the debt has not been paid, they will do a payroll deduction. But it's, you know, subject to having the proper authorization from the employee up front that allows that to happen.

MS. FRANCIS: And that definitely would be the extra point that I was going to make as well. If there is an openness from the very beginning to fill those up-front requirements, and those documents that we call a cardholder guide that is issued to each cardholder when the card goes out. And we would suggest that in that cardholder guide, where it very explicitly gives all terms of use of the card, and the responsibilities that go with it, and, in some cases, the consequences of misuse of the card, that in there, the signature to accept the card at that point, and to accept the consequences, one of which may be garnishment, is outlined right there. And you have your explanation and your approval right up front.

MR. KLINK: Other questions? Over here. We'll get a microphone for you.

MS. LABBEE: My name is Jeannette Labbee. I'm with the Department of Commerce. I have basically a government question at this point. It's the point of being able to garnish your wages. We're trying to look at the possibility of combining, maybe, travel with the government purchase card. How, in fact, would the government handle this thing if we continue with the same ideas of providing funding back to travelers, and then, of course, having that mixed in with actual purchases? How are we going to handle this kind of misuse on the bill? On what we do here?

MR. KLINK: Sue, do you want to --

(Laughter)

MS. McIVER: That's really not a technical contracting question. Obviously, it's a requirements question, and that's part of the kind of feedback that we're trying to get from agencies, and agencies to work out among themselves as to what their requirements are.

Jeannette, you've been obviously involved with the purchase card for years. And, you know, from the travel side, too, I think that they come with two separate sets of current parameters, as different agencies, some of them are looking to merge those two. They need obviously to be looking at how those different parameters will impact that. From GSA's perspective, we're not coming up with the answers to try and help the agencies to develop their requirements.

MR. KLINK: Frank wanted to add a comment.

MR. TUFANO: From a corporate perspective, we have some clients who are the one card for both purchasing and T/E. Typically, it's a migration to a corporate-wide ability, and it becomes the primary liability of the agency, and this is an example of the corporation, under the theory that these are, in both cases, business expenses, and they just happen to be different commodities.

MS. FRANCIS: And that's actually an additional point that I was going to make, is that, in the outside-the-box realm of thinking, because one is typically classified as personal expense and one is more a corporate-level expense, we have found, in our experience, that the corporate world -- themselves, as well -- are much more open because of the convenience of value one card, the cost savings that go with the reporting to go with the combining of those cards.

And part of that is taking off some of the liability complaint that has previously been the individual's, knowing that one, they do have some control over that individual. I understand that proof of that control can vary in its condition of employment, if you set it up in front, with some controls and understanding of the consequences, taking on that liability shouldn't be as onerous as it might sound. You will ultimately have control over that employee, if they're not making their expenditures correctly. And it really is a great chance to step outside of the box from the traditional separation, and combine them in order to get that benefit.

MR. KLINK: I've got a comment from Bill and then from Dan.

MR. CATELOTTI: And I think that quite a simple solution is to use that one card and bill it as a corporate liability. Technology is going to allow us, and if we want to step out of the box and look up to technology, technology is going to allow us, in the short term, or really, in the near future, the ability to separate those charges, maintain corporate liability for business charges that are purchasing-related, and segregate out the travel charges that you want to have individual liability for, report them separately, and make payment terms separately in business. How we can apply those technologies to government, I guess, remains to be seen with your requirements.

MR. KLINK: Okay. Dan.

MR. GOREN: I would concur with the comments, except, we have a lot of customers who do use a one card approach for the liability issues. The information that GSA gave out, and what we see in a lot of our private sector customers is there's not always a lot of overlap. So when you look at the sure number of cards today, in the marketplace and the government sector, which is probably around a million and a half and, if I recall, 100,000 purchase cards, I think each agency has to decide the degree of overlap that they have to see how much of valid issue that is, and, you know, in that purchase area.

MR. KLINK: Okay. I've got a question from Dennis.

MR. FISCHER: Yeah. This is perhaps more of a statement for those of you in the industry, but we know that when there's a corporate liability, as well as an individual liability, that one of your cost factors is the cost of money. And I think we also recognize that as a given, while we will -- a lot of us will say the Treasury Department does not do a lot of things well, they do borrow money more cheaply than anybody else. They've had more experience.

(Laughter)

One of the things, frankly, that I'm interested in is where we have a corporate liability card is that every bit of that float is squeezed out. And beyond just saying, "Well, after the 25-day cycle review run, we will send you a bill. If you pay us the next day, we'll have a rebate," we know that within that 25-day cycle, your current cost of money would be (inaudible.) And I certainly would like to see, down the road, if not, as soon as possible, some situation where we would say, "We have truly squeezed all the float out of the cost that comes to me," which says to me some sort of data billing, drawing out a letter of credit or something like that that you can hold and eliminate that, because that's going to maximize the savings for the taxpayer and that would lower our costs.

MR. KLINK: Mary Ann, you want to --

MS. FRANCIS: Other than that's good news. You know, that's an opportunity, the situation you mentioned: daily settlement and keep a run, and other situations. They're wiser to understand the process behind everything which, the longer that things are stretched out, the greater the opportunity costs can be. And that's a value-added. I mean, that's a true value-added statement. And in understanding a value-added situation, when it doesn't just become cost issue, but the understanding of the value for all parts perceived in changing the process itself.

MR. KLINK: Okay. I got a comment from Bruce.

MR. KUHLE: I think with the federal government looking at going to complete electronic payment systems, ACH today, if you think about the idea of daily payments, that really is the easiest mechanism to set in place. And clearly, that then takes out the float. I mean, you may have hours in there but you're getting down to what is helping us the most in eliminating our costs, and that's the costs of funds. And having that system set up and just repeating itself day after day after day pretty soon becomes a pretty regimented routine to be involved with, and a very effective one.

MR. KLINK: All right. Any questions?

SPEAKER: What is the cost in practice in an industry for T/E cards? Is a penalty assessed for the cardholder for this T/E, is that a common practice in the business industry?

MR. KLINK: Can I get your name?

SPEAKER: Bruce Alden.

MR. KLINK: Thank you.

MS. FRANCIS: On a global industry, yes, it's very common, as we indicated. And I think Chris made those comments earlier. It is very common to assess either interest, additional interest or definitely late payment fee once the cycle is passed.

MR. KLINK: Any other reactions on that, panel? All right. Any other questions?

SPEAKER: Hi. I'm Cheryl Henley from U.S. Information Agency. I wanted to ask about the delinquency. Someone said that there is a definite cost to having this. So what I would like to know is, are you implying that in the future this new contract that there is going to be a cost associated with the delinquency. And if so, how does it compare to the cost that you're applying to the commercial customers?

MR. KLINK: Mary Ann.

MS. FRANCIS: I think what we're trying to imply is that where there is non-payment of funds, and however long that stretch may be, whether it's a standard business cycle for 25 days or 30 days, which is automatically dated to the interest rates, it's provided on cards. And in fact, when we sit down and decide what the interest rate is on any loan, any credit purpose loan just like a mortgage or a business loan, baked into there is the cost of funds for having that money outstanding. So even in a standard non-delinquent situation, the card fees that are assessed on an annual basis, the discounts that may or may not be provided, and the interest rate that's ultimately charged on the revolving amount that isn't paid, all that is factored in by how long this money is outstanding.

Where it's more obvious is where there is non-payment. In a delinquency situation, there's a fee called late payment fee. There may be a penalty assessed in those amounts, depending on the issuer or the provider. In some cases, the government is exempt from those in the current credit practices. But it's only exempt in an explicit way, in that, implicitly, the industry refers costs by having those outstanding terms exist. And it's baked into a variety of other areas: the interest rate on other accounts, the late fees that are charged on other accounts or, perhaps, implicitly backed in the transaction fees that may be pending. So, in today's environment, it just may be a little more implicit then it is explicit, but it exists and it affects everyone that uses those funds.

MR. KLINK: Okay. We have Dan, and Chris with a follow-up.

MR. GOREN: I would just add that it's hard to answer the question now, because we haven't seen the requirements going forward. You know, that we're providing approaches, and the core and value-added requirements. But I would also add that the industry, the government, has had a T/E card program for close to 14 years, and the industry has been able to, you know, respond to it.

MR. KLINK: Chris.

MR. PIEROTH: I think it really boils down to the fact that while all of us up here were bankers and that, you know, it ultimately comes down to simple mathematics of, you know, we have revenues coming in. From those revenues, we take expenses. What's left is what we have on the table to give back to you in a form of a rebate, or to invest in further development of answers that you might like to see.

And I think the only point that I was trying to make is that when you take a look at delinquency, if a card issuer does not have that delinquency fee coming in because of the requirements in the RFP then, you know, that gets accounted for in the map somewhere. Okay. So those cardholders are still going to wait, that card issuer is still accruing those expenses. But if they do not have a delinquency fee to fray that expense, it's simply being taken out of other areas. It's less money on the table that I can give back to you as a rebate, and that I can see in development. And I think the only point that I was trying to make is, you know, when you take a look at that, you need to acknowledge that there is a cost somewhere and you have to decide if it's worth it.

MR. KLINK: Okay. Maybe one final question.

MS. LABBEE: I have a question. There appears to be a change of business practice when reservations are made at hotels. The first day of billing is reflected on the credit cards, and the point of reservation as the point of execution. Is this a common practice? It would appear that it would affect delinquency rates over a time, because people typically do not pay -- this is on a T/E card, and people typically don't reimburse credit cards or charge cards until they, in fact, execute business for them.

MR. KLINK: Mary Ann.

MS. FRANCIS: I don't really have an answer for how they review that transaction on their statement. But I think what you're saying is that the bill date -- the transaction date may show the first day of the hotel stay as opposed to the last day?

MS. LABBEE: No. It's at the point of reservation.

MS. FRANCIS: Yeah, I can't say that I have seen that. If one of the card folks wants to talk about it.

MR. KLINK: Bruce has a comment.

MR. KUHLE: As a frequent traveler, I've experienced this, and I think what the question is centering on is in the hotel industry today, they are, in effect, setting aside or asking our service to set aside the funds for that future bill. Those are not showing up on the cards at that moment in time. Those sums are just sitting, if you will, in reserve. So the hotel industry has gone out and said, "We believe we're going to have this potential bill, we've set these funds aside for us," but it's not going to be billed at that moment in time.

MS. ALDERMAN: They are being billed. They are being billed, and it's going to confuse the view about what is delinquency in your industry. It is already.

MS. FRANCIS: It's obviously a point that should be included as a question that, you know, you have an opportunity to --

MR. KLINK: Maybe something that needs to be defined in the process.

MS. FRANCIS: Right. Because it's obviously very --

MR. KLINK: Okay. One more quick -- a couple more questions. Go ahead.

MR. HAWKINS: Jay Hawkins, Travel and Transportation from NASA. I believe what Karen is referring to, sometimes when we're going on travel, it is not helping to make hotel reservations two weeks in advance on an actual trip, depending upon what's happening with that hotel in that particular city, they will say, "Advance deposit required for the first night." The active bill will probably read very well depending upon the time of the cycle. I may get the bill and have that charge on there before I even embark upon my trip. Then when I come back two weeks later because I was out of town for two weeks, it's active on the charge already -- the delinquency, and I haven't even filed my voucher yet. I don't know how we get around it, but that's the trend in the hotel industry. And I have a follow-up.

(Laughter)

MR. KLINK: Dan.

MR. GOREN: I would just say hotel deposits would appear on the bill. Traditionally, though, you would see hotel deposits required more in a resort arena than you do in a commercial arena. But, yes, if somebody has agreed to give a deposit, then it would appear on the card.

MR. KLINK: So it all depends upon where you're staying, in general. One more question.

MR. HAWKINS: Okay. The follow-up, Dennis has challenged us to think outside the box, and one of the things that I have mentioned previously and I think Sue is aware of, as a government employee, I currently carry four cards. I have my travel card; I have my government-issued vehicle card for my government vehicle; I have a telephone card, and I have my purchase card because I'm authorized to make purchases in my agency. None of those cards are issued by the same vendor. So I already have multiple vendors, which, to me, means multiple cards. The question I have for the distinguished panel of vendors, how close are you to being able to issue me one card, either with multiple chips in it, or one programmable chip so that that one card will satisfy my needs.

I don't want to carry four cards. I think it's not cost-efficient. Personally, I think GSA is making a mistake by asking for multiple vendors, when one vendor, if you have the capability of doing it, can issue me one card to satisfy my requirements.

MR. KLINK: We're going to cover, this afternoon, the question of emerging technology, so I don't want to be non-responsive. But if we could hold that question, I think it would be better covered in the discussion this afternoon because the whole emerging technology area, which Bill is going to cover, will deal with that. So is that okay if we defer that to this afternoon? Can you live with that?

MR. HAWKINS: If you're going to provide an answer prior to the issuance of this next RFP.

(Laughter)

MR. KLINK: I don't know if we'll go that far. I'm the facilitator, not the answerer. One more question and we'll move on.

SPEAKER: A similar question to what's going on here about the T/E, and hotels billing before the person actually made the trip. We've actually seen the bill for something before the actual delivery, official delivery of goods. Do you have any thoughts or solutions on how we might handle that easier for the agency side versus the industry side?

MR. KLINK: Mary Ann and Bill have comments.

MS. FRANCIS: Yeah, I'm sure we have some thoughts, and it's going to be a situation in that the actual person who, you know, authorizes the complete process of that transaction is, obviously -- they're all varying how they're actually processing that. In some cases today, especially with telephone transactions compared to, like, a catalog order, from a pure customer services perspective, a lot of times the customer is not going to be billed until the item is, at least, you know, shipped or mailed. And that, again, is going to vary by who is actually processing that transaction for you. I think that they -- based on argument, that once they filled your order, or once they have taken your order, they are going to put it in for as early a payment as possible because they -- they're settling on the transaction as well. But that's really different trends from those who are actually processing the transactions.

MR. KLINK: Bill wanted to add to that.

MR. CATELOTTI: And those business rules, I think, apply across all our businesses that we bill, that the supplier bills upon shipment. But to get to that information in a more timely manner, I think the solution, again, is held in technology, and I'll talk a little more about it this afternoon. But it's delivering you the data regarding that transaction in a timely manner so you can manage that data before the goods arrive. So within "x" number of days, there will be a postdate of that transaction for the network, along with access to the data to see what that -- where that shipment is, what the cost was, and maybe some more detail about what the actual shipment was.

MR. KLINK: Okay. Can we move on to the next topic? Let's thank Mary Ann for her comments.

(Applause)

MR. KLINK: All right. The next topic that we have to discuss is Streamlining Government Operations. And we have Chris Pieroth.

MR. PIEROTH: First of all, I thank you for inviting us to participate on this panel. I would appreciate the opportunity to speak with you and to have dialogue about your concerns, and answer some of your questions.

In terms of streamlining government operations, I'd like to talk about that all day, I'm sure many of you could. And as you know, the buzzword that we hear this year is "reengineering," and it's quite an involved effort. People have different opinions as to what, you know, is and is not included in reengineering. But what I would like to do is just touch base on some of the salient points that we talk about when we talk about reengineering. Which ultimately, what we're really talking about, is administrative savings. And I think when you look at administrative savings and cost savings, you really have two types. You have those that are immediate. In other words, if I am in a purchasing card program, I am in a travel card program, I'm going to see these savings immediately.

For example, with purchasing cards, you know, if I issue purchasing cards to the appropriate people, and decentralize that process, and I allow them to place orders. And I allow, you know, the billings to be consolidated into a single monthly invoice, I've immediately reduced the number of requisitions for purchase orders and that processing. I've reduced the number of checks that I'm issuing to suppliers from invoices that I'm processing, and I see some immediate savings there. Same thing on the travel cards. I issue travel cards to all my employees who travel. I no longer have to issue travel advances; I no longer have to track those hotel advances, or try to collect on those travel advances. I've also shifted the reconciliation and the liability of the expenses that are incurred on the card to the traveler so that my staff is not doing those reconciliations or expending effort to reconcile those bills. And again, I see that in immediate savings.

In addition, of course, there's rebates. You become eligible for rebates, you know, you see that revenue stream. I think that on a more long-term basis, and where, by far, it would be a much greater savings to a company. It's true that process of reengineering that takes place, as part of the implementation process, so that as you're getting ready to introduce that purchasing card program, you're getting ready to introduce that valid program, you take a look at all of your processes, and you see how you can reengineer those processes, as well as treat them more efficiently. And that usually begins in examining your current behavior. So for example, on the purchasing cards that I, you know, you take a look at how I made my purchases today. Are they made in a centralized environment? Are they made in a decentralized environment? And it's usually not an either/or question. Often it depends upon, you know, the commodity type that are buying. You know, computer equipment centrally versus office supply is decentrally.

It may also depend on the degree of urgency. If I have people in the field that need to make immediate purchases, I may handle that one way versus routine purchases, which I may handle another way. If you'll take a look at, you know, the types of purchases, I have my indirect purchases which is really an employee that made a purchase themselves using cash, check, personal credit card, and our company needs reimbursement. There are purchases that I made where the invoice is coming directly to me from the vendor, in a paper format. There are other purchases that are coming in to me through EDI.

And so you have to take a look at all that purchasing behavior, and really understand the saving on the travel side. You have to look at, you know, "How am I procuring travel pay, how am I paying for it?" Depending on the type of travel that I have, the type of travel that I'm doing, you know, maybe I can put that all, individually, you know, cards, if we have to do centrally. That really comes down to beginning -- beginning with understanding exactly how your operation works.

Once you have that understanding, then you really begin going through what we call work flow analysis and documentation. Making sure that I have properly documented all of those processes, and those work flows, and I understand it.

So, again, on the purchasing side, you're talking about really looking at the requisition ordering process, looking at how your goods are being shipped or being received. And how you're reconciling those bills and how you are paying for them.

Same thing on the travel side, you know, "How am I operating, how am I making my reservations?" You know, we hear about on-line reservation systems, you know, versus going through your traditional travel agency. You know, "How am I paying for that travel back?" and what you're talking about is really documenting, step by step, all of those processes and making sure that each step, in that process, is added value.

Once you have those processes documented, then you really get into the process of improvement. That's where you're taking a real close look at those processes. You make sure that they each have a value, and you take out those pieces that don't have value. Also, you're talking about balancing the risk. What we mean by that is you take a look at some of the processes that you procedurally have in place; you take a look at what it costs you today to perform those, and then you look at the benefit on the back end.

As an example, one of the gentlemen in the audience mentioned earlier, we often get billed for goods on a purchasing card that have not yet been received. And so we dispute those bills, you know, as we wait for the merchandise to come in. And so part of the reengineering process, if we take a look at those disputes and say, "Well, in a given period of time, the number of disputes that I've made for non-receiving merchandise, how many times has that merchandise actually not been received?" You know, it's a very small percentage. Then I have to take a look at what's it costing me to dispute those items up front and, you know, you can use the trade-offs. You can use the cost estimate analysis. You decide what makes sense.

Generally speaking, most of our corporate customers try to decentralize as much as possible. The more you can distribute the work over a large area, or over more people, the more cost-effective it can actually become. For example, travel's a perfect example. You have each individual who carries their own card, who manages their own bill. And with their own reconciliation of the bill, it's very efficient. If you were to be centrally billed for all of those transactions, it would be a reconciliation nightmare, and you would pull a lot of resources in processing and paying those bills.

And I can't stress enough that you need to use all available tools, and you need to keep in mind that purchasing cards, travel cards, credit cards are just some of the tools in your tool set. And that when you're reengineering your process and you're streamlining your operations, you need to look at those tools, in addition to other tools, that you may have available.

Again, you have, maybe, third-party enhancements, service providers, so to speak. I know that many of you are working on, for example, automated expense reporting systems or automated reservation systems. And you need to look at those tools in conjunction with your purchasing cards, with your T/E cards, with your credit cards. You need to look at EDI and all of the available tools in electronic conference. And then taking the entire tool set and applying them to your needs is where you're going to see the greatest value. And, you know, last but not least, I'd also like to mention that, you know, there are some considerations that you have to take into account as government agencies, that many of our commercial clients don't have to take into consideration, today, or who don't give these considerations as much weight. For example, I'm sure you all know federal receipts have much more onerous regulatory and audit requirements than some of the reengineering that goes on in the corporate sector, may not be incorporated in the government sector because to utilize those methods, would be a violation of regulations or would be a violation of your audit requirements.

There are also policy considerations. One of the important things in the federal government is that it's using taxpayer dollars. And so there is, in many cases, policy considerations to make sure when you're spending, that we spread that money around. And that you make sure that you are utilizing small business, disadvantaged businesses, women-owned businesses. And so, as an example of the corporate sector, one of the reengineering points that they focus on is consolidating suppliers into a very small supplier base, so that they can try to leverage their buying power. The government side, that may or may not be operative, depending on the impact it has on these other policy considerations.

Probably most important of all, you need to consider the mission of the agency. Again, the corporate side is pretty simple. You need to make money. You need to have value as a shareholder. And it's generally pretty consistent throughout the corporate sector. There are similarities in the government sector. Clearly, you have to have the taxpayer dollars and you're going to use those dollars efficiently. But in most cases, the mission that the agency has to accomplish is something much different than making money, and that mission can impact how you go through the reengineering process.

MR. KLINK: Okay, panel, any comments or thoughts that you'd like to add to that? Bill.

MR. CATELOTTI: I think Chris did a great job representing the reengineering methods that have to happen, and happen with successful corporate clients that we have. One thing that I would add, and I'll try not to reiterate anything that Chris said, was that with our successful corporate clients when they've assessed their risk, and look at the benefit of what they're going to get out of the technology and the benefit of having purchasing cards and T/E cards reduce their transaction volumes, at the same time, they develop a plan. And the ones that are very successful look at that risk and the plan, and they carry the plan out to the extent that they make it a policy. And they set limits for cardholders to spend at certain levels, with certain suppliers. And I guess they take the risk, and they take the benefit, and they manage the change in the culture. And I think the thing that I would really add to what Chris said, is that it's a huge change in culture for business, and it probably needs to be the same consideration in government.

MR. KLINK: Frank.

MR. TUFANO: One of the things that may become apparent is that, we start to talk more and more beyond just offering you a card. It's really an opportunity for you to, not just put a card within your process, but really to look at your process, and to use us as part of the reengineering of your operations. To really help you find solutions to how you do end-to-end processing.

So I think, you know, with this new procurement bit, it's really a perfect opportunity to reassess, and not just leave the cards as is, but a perfect opportunity to go back and look at that end-to-end processes for improvement, and use us for that purpose. I mean, a lot of us have a lot of experience in industries, to help you find those solutions and to replicate best practices.

MR. KLINK: Okay. Questions from the customers? In the back, sir.

MR. WALSH: Jim Walsh, Social Security Administration. I have a question that comes down to the capability of doing electronic batch processing and some of this other stuff for getting people into the current systems for purchasing credit cards. Also, the agencies have their databases set up for their people, and all of the relevant information, you know, for example, for the purchase card, I guess, is a specific example.

We have always used our system plus, we also have other data such as e-mail addresses and other data. What happens is we have to put that into our system, but then in order to get into your system, we have to manually enter the data that's set up for that cardholder. We would like to see an electronic system where all the data entered for government agencies, enter into your system and is batch processed, then automatically transmitted to the department for coordination, rather than have to do dual efforts.

MR. PIEROTH: I think taking that kind of one step further to a more global perspective, what we're really talking about is data interfaces. Whether it's data coming in from you to us, whether it's data coming from us back out to you. And I think one of the challenges, it's going to be a big challenge for the government, is that the "reengineering processes" are not going to take place on an agency by agency level, but within the government as a whole.

For example, if you tell me, as a card issuer, that I need to provide data to you in a certain way, I can do that. And then if you also tell me, I'm going to send data to you in a certain way, and you need be able to process that record for new accounts, maintenance or whatever, I can do that as well. But now, if I need to do it for each and every agency a little bit differently, maybe this agency has a different format or that agency has a different format, I can do that as well, but there is going to be an added expense there.

MR. WALSH: Well, in this case, it's not that bad of a question. There's certain information that has to come from you to set up, you know, do maintenance for the cardholder. We'll send it to you, electronically, any way you want, but what we would like to do is do without that batch process, without the human intervention of, perhaps, sitting down and do batch processing, one at a time.

MR. PIEROTH: We do have that capability for some of our customers to do that today, as well as some of our other companies. You need to keep in mind that as a guess, I'm struggling a little bit because what we're getting into is something that's specific with the Impact card which, I do not think was really the purpose of today's meeting, but since you have raised it, I should also point out that from our perspective, we operate two platforms.

We operate a commercial platform for our corporate customers, which does have that capability. We also operate a government platform, which is the Impact platform, which today, does not have that capability. And quite honestly, it's because that capability does not include any specifications. And the Impact program was actually built to government specs. It only serves the government right now. And I think that kind of ties back to some of the comments the gentleman from Chemical or from Chase made, with respect to, you know, where the government can use commercial products so that the system that we have in place today, can be supported by other companies outside of the public sector.

MR. KLINK: And again, I'd like to remind folks that we want to focus on where we're going in the future, not necessarily the current programs that we have in place. Panel, any other comments or reactions? All right. Other questions in this area? Yes, over here.

MS. ALDERMAN: Is there any big 10 list of -- what are the policies, let's say, or any particular barriers to affecting streamlining business processes? I haven't seen any law or any regulation that's not subject to adjustment in proper cases.

MR. PIEROTH: I'm not aware of any broad regulation. I know a gentleman mentioned Prompt Payment Act earlier, but I'm not aware of any regulatory requirements, if changed, would benefit the entire government. What my experience has been, on an agency by agency basis, as the agency goes through the reengineering processing, documented their processes, and trying to streamline those processes, some of the stumbling blocks that they then run into is that, "Yes, we would like to change it this way, but regulation acts will not allow us to do that."

And then what they do is they take a look at why regulation acts were initially instituted, and then they see that there's a way that that regulation can be changed to still handle the purpose for which it was originally issued, but at the same time allow the streamlining to do what it's supposed to do. And again, the experience that I have was more on an agency-by-agency basis. It's not government-wide.

MR. KLINK: One question.

MS. LABBEE: Yes. My question is at this time, is the industry capable of delivering products on the Internet? For example, recording statements or something like that?

MR. PIEROTH: I guess I'd have to be wishy-washy on that, and say yes and no. I think the technology is there. What the industry is still struggling with is some of the security requirements. And you know, how do we insure that, you know, we get the data, whether it's secure, and that other people who aren't supposed to have access to the data, don't get that access. And a lot of strides that are taking place I think that that will be solved, you, know, relatively soon. I don't think we're quite there yet.

MR. KLINK: And again, we're going to -- when we talk about emerging technology this afternoon, that's another one of the issues that we'll pick up on. Dan, did you want to talk about that?

MR. GOREN: We'll wait.

MR. KLINK: All right. Question over here.

MR. SALVAGE: Ron Salvage of FITEC. The question is EDI. I'd ask the panel to individually address where they stand on implementing EDI transactions.

MS. KOSES: Actually, I don't think we should focus on that question.

MR. KLINK: Thank you, Rebecca.

(Laughter)

MR. PIEROTH: Well, I guess speaking for the industry as a whole, I think that all of us up here do EDI today, with selective customers. I think there's a lot of confusion in the marketplace as to what EDI is. People who may not be real experienced with EDI often think that it's one standard format that's out there, that everyone has agreed it's a form that's going to be used for the exchange of transactions when we exchange the data. And in reality, there is a wide variety of EDI formats out there. And there's additional formats that are being developed every day. And so, you know, that's one of the things that I think all of us struggle with a litle bit, making sure we've identified the types of formats that are out there, that we need to support. And it is my understanding that there's, actually, I think, the government task forces have taken a look at the government's EDI requirements so that they can communicate those requirements to the industry and the consumer.

MR. KLINK: I have a comment from Bill.

MR. CATELOTTI: With regard to commerce on the Internet and EDI, that it probably will fit prominently with the technology that we use to do settlement, and some of the correspondence that goes back and forth between traders on the Internet. And those are the standards that are being developed and will be utilized.

MR. KLINK: Okay. Other comments? Okay. We're actually ahead of schedule, we're on track. It's now time for lunch. We will break now until 12:45 p.m., in which case we will come back and pick up the remainder of our panelists. Thank you.

(Whereupon, at 11:30 a.m., a luncheon recess was taken.)

MR. KLINK: All right. Good afternoon and welcome back. We have three more topics that we would like to cover this afternoon. Again, I want to remind you of our focus on the future of the current programs. I, again, would also remind those of you from our industry partner that have comments, that we will provide some time when we finish to do that. For those of you that are real observant, you will notice that Mary Ann Francis does not have on a Halloween costume.

(Laughter)

MR. KLINK: She has been replaced by Mike McCord, who will be filling in for her this afternoon. All right, our next topic that we have is the topic of Data Capture. And we have Bruce Kuhle from the Bank of America. Bruce.

MR. KUHLE: Good afternoon. I trust everybody had a nice enjoyable lunch, and enjoying the outdoor weather that's out there. I call for a show of hands for everybody who would like to go on the patio and continue this meeting. It's a nice thing to do today.

(Laughter)

MR. KUHLE: In my presentation, to some degree I've taken on a little bit of the merchant's perspective to give you a flavor for what they're going through today. And hopefully, it's not flavored in such a manner that it's offensive to you in any regards, but it's educational from the perspective of -- the merchant supplier today is definitely motivated for your business. They are motivated to provide you with goods and services and information. But you also have to be involved with them in educating them on what you want in this equation.

We are in the middle of this process, either on the issuing side, giving you the correct cards to go out and partake in these activities. Or we're involved with you on the merchant side of it, the acquiring side, where we're setting up the systems to be able to use those credit cards. And in that side of the equation, this merchant supplier who definitely wants your business, is looking for meeting as many of those needs as they can. But they also have, then, commercial customers that are in, and today, based on the way the transactions occur, are asking very little of them.

And I'll go through the three levels of data capture that we have today. And you'll see in the description, that it's not much that we, as consumers, are asking for in terms of feedback, but we, as the government agency or as a corporation coming in, now, we have a whole new set of parameters when we're asking for information. And that really is one of the key points.

We are capable, within the system, to provide a lot of information but only as much information as we're able to gain from those merchant suppliers out there. And so to some degree, I will talk about how we have got to come together, both from the perspective of you wanting information, working with the merchant who wants to provide you that information, and how the banks and everybody else are going to be involved in trying to come up with technology that's going to support all of that.

The merchant clearly has some significant benefits today in this whole process. And many times, as I'm making presentations today, talking about purchasing cards, the question comes up, "Isn't the merchant going to be paying something here?" And we address those kinds of issues today. They are paying a discount fee for being able to accept credit cards, but they're gaining a lot out of this equation as well. And some of these things they're gaining center on gaining their funds quicker. If you're paying them today in a check settlement process, and that payment is 30 or 60 or 90 days, it takes a long time to get those funds. Switching over to credit card programs when they get them -- those funds in the neighborhood of 3 or 4 or 5 days. That's a big difference and a big savings for them today to be enjoying. So there's a clear benefit to the merchant community doing that.

You're also talking about reducing some of their collection expenses. Many of the retailers today have a problem with collecting bad debt. It's typically in the format of payments that are coming from checks. So it's great for them to get out of that process. Your strengthening ties with these merchants and suppliers when you are using something like a credit card product today, and you're relying on them to provide this information. That's a benefit.

And the final piece really ties into probably what their backroom activities center on today and that is the collection process, the reconciliation process, processing those checks, postage, envelopes, and the whole idea of managing their papepwork and administration. So, in a sense, we're not only working with you on reengineering your process, but we're also working with them on reengineering their's. And that's clearly a benefit to them today.

So the merchant is really getting something out of all of this, and in return, they're asking for something from you, in terms of this data capture area. There are three levels today that we talk about in terms of data capture. They really center on the amount of information that's available.

Level 1 is the normal credit card transaction that many of us partake in every day. And we're going out there having our cards swiped at the point of sale, or even if we're ordering from the mail order catalog and we're giving them a credit card number or such, it's being processed at this level 1 transaction. And what's being provided back, through the system, is the value of that purchase, the dollars and cents. The time frame or date that the transaction is going on, we're using the merchant category code today which is the descriptor of the kind of business that they're in, and we're giving their name to those four components that are coming back to us on these transactions. By and large, that's all we are asking for as consumers today, pretty much. And that's a pretty easy process. And I'll touch on how we're doing that on the equipment side of the equation here in just a moment, after I describe these levels.

Now, at level 2, we're taking a step up, and we're asking for some more information in this process. We're capable of giving a sales tax value, broken out of that purchase value. We're also able to put into the system an accounting code. I believe each of us may refer to this in different phraseology. It can be called a customer code, an accounting code. It's 16 digits of alphanumeric value today, that we can enter at this point of sale where level 2 is at the process for going through. Information that's coming through the system then is tax ID numbers are now being supplied more readily at level 2. We have the minority of women-owned business information coming through the system, they're being identified. 1099 status is an area that is being addressed. And finally, more information about the supplier, city, state, zip code kind of information is coming through this process as well. And this is what much of the business-to-business community is focusing its attention on today. And I'll stop here, at this point, and throw out a statistic for you, give you some flavor for what's going on out there in the community today, in the purchasing card community.

We have, roughly, 41 percent of the suppliers today signed up in a credit card accepting mode out of this universe of potential suppliers, distributors, wholesalers, and those kinds of titles out there. Roughly, 41 percent of them are identified today and accept credit card transactions. It's many of those kinds of customers that are looking at level 2 capabilities because they are supplying the product to businesses in many instances. And so that's the focus, is to try and get to this level 2, to be able to provide this business information. If you think of level 2 as giving us this kind of information and it's a business-to-business transaction, the likelihood of going to a Wal-Mart or Kmart or Target or some of the big retailers today, there's not a great impetus, on their part, to add an additional process into their sales transaction to put in the customer code. And we're probably not all that likely to use that, they're on a business-to-business transaction basis. So this supplier universe is really what we're talking about for level 2. And in many instances, level 3, detailed today.

The third level then focuses the attention now, on line item detail, trying to get down to tell us exactly what we bought. And so at level 3, we're using systems that are going to be capable or are capable of providing us with a description of the item you just purchased, and an item number, in many instances, describing that product. Then we move off into the quantities then, of that individual item that are also being identified. We've included the shipping 2 zip codes, if we have that kind of activity going on. Freight and duty cost are also a part of this equation. Many of our systems today, and to some degree I'm speaking for the ones that I'm familiar with, have an ability to capture all of this data today, but the key ingredient is how many of the merchants and suppliers out there are providing this and have this capability.

And that moves me to the next area then, after we have covered these three levels of data capture; how are we doing these activities today? And they center on point of sale terminals. Now, the most common today, and we're speaking about today's environment, just a short time ago, as a couple of years, we were with the old swipe-swipe machines out there. But many of those things have been replaced. And even though people are today, in many instances, concerned that some of that still exists, by and large, it's such a small number today that we don't really concern ourselves too much with that. We're really looking at this electronics capability. And what we have is an electronic data capture terminal.

They are typically little black boxes, little gray boxes; many times you'll see some key pads on them, and that's where the clerk is swiping our cards through, when we're doing a transaction. And it's that device that is really running this industry today. In general terms, there are 13 million locations worldwide that are accepting credit cards. Little over 3,000,000 are sold. Those are here in the United States. And that's the device that really is the workhorse of our industry.

To move up from there, now we're moving up into electronic cash register machine, or we're moving into a PC or a hosted computer. So that we have more capability there for once again inputting data. And it's these two mechanisms that are really going to be driving the ability to use credit cards to the degree that you want. And the cost associated with these activities today is -- I don't believe a factor that is going to be one that is going to create a hurdle for us, especially if, in the process, you think of this reengineering as an area to help with reducing your requirements -- once again, trying to support the merchant supplier community, reducing your requirements for information.

The more you're capable of doing that and thinking about that process, the more readily available the merchant community is going to be to take the steps to get into these couple of areas. To take and go at our workhorse product today -- that electronic data capture terminal, to go out there and improve that, in essence, to be able to move from level 1 to level 2 data acceptance is a very inexpensive software upgrade. Maybe it might run in the neighborhood of $20 to $50, to be able to have the capability of moving to level 2 giving us additional information. So from a merchant perspective, that's probably not a value that's going to have them up in arms about how they're going to be able to move from level 1 to level 2, so we really think that there is great opportunity.

And if you think about the federal government's programs today, wanting information and working with suppliers out there, and hopefully doing it in a very positive way, we believe that in the next few years that is really going to be the impetus for many of the merchants who want to move from level 1 to level 2. And they will take that step and be very anxious to do that in your behalf.

To move to the PC or hosted systems, there are a couple of other hurdles here. The first one, just being, into a PC environment. The software today, typically, to be able to take the level 3 transaction, doing it in a PC, is roughly about a $400 cost, to be able to set up software and to be able to get into the level 3 data capture business. And I think that is not a prohibitive dollar and cents value today either. But once again, you have to think about where is that going to be at. And that's going to be with the suppliers that you're working with primarily, and it's going to be trying to meet, once again, that supplier meeting the need that you have for them, keeping in mind what that requirement is from your perspective of consolidating the information.

Going into the bigger systems -- the host computers -- and that probably is the instance where you think of the Wal-Marts, the Kmarts, Targets, they have big mainframe systems. And to think about going in and switching over their systems today, to be able to provide all of the line item detail, now we are talking about a cost involved there. If you think about that premise, we're probably starting in the neighborhood of about a $25,000 expense, and moving up from there, to go in and reprogram.

The larger the entity, the higher those costs are going to be because they have maybe hundreds or thousands of terminals out there that are capturing data, that are all going to be a part of this system. And so there maybe some resistance there, but once again, it goes back on the whole idea of you working with these suppliers to try to make a good business reason for adapting to these systems. So those are the layouts in the levels 1, 2, and 3, the kind of capture capabilities that we have today, and the cost generally associated with upgrading systems that are in the marketplace.

The final piece that I'd like to touch on has to do with the need for data versus the desire. And I think in the layout of our presentations here today, Chris talking right before me about the idea of reengineering, really is the key ingredient when you start thinking about this need for data versus the desire for the data. And I will relate my little question and story here. The idea that today you have certain requirements, that you want information. In the example here, of thinking of paper-related products. We have copier paper, and we have paper that's used with printers and letterhead and all kinds of things, and each and everyone of them has their own particular code that we're trying to manage to get to this line item detail. Well, one of the big things that we could do, and I hear this from accounting firms today, would be to consolidate all of that. Let's just go to one general ledger number and consolidate all of that. That simplifies the process greatly.

And when you think about what are we going to with all the detail, anyway, what are you and your boss going to do when you're sitting down going over all of these reports, and you see that one item is a little bit more than another. Is that really impacting your business dramatically today, to where you can spend that kind of time and energy? And that's really the prime question today asked in the corporate world when they're reengineering their purchasing process, or their information processes, "What is this costing us to manage this whole process?" And if that's not a good number anymore, then reengineering really makes a lot of sense. And it really get's down to, what are we going to do with all of the information we have out there in the systems. I leave you with that thought.

MR. KLINK: All right. Panel, any comments?

MR. TUFANO: Yeah. Consistent with Bruce's last point, I think in looking at the upcoming RFP, I think it's important for each agency to take a look at what's their strategy around extra data. How you're going to use it? Is it important to you? Is it worth the cost of acquiring it? Is getting that data, that extra data at the point of sale, the best solution, or is it a better solution getting it at a back-end point as the data's distributed back to the cardholder? There's a general tendency to say, "More is better." I think it's worth each agency managing that expectation, and really understanding what they're going to do with data, as Bruce pointed out. Is it really a valuable extra piece of data, is it consistent with your reengineering goal, or does it just sound like more should be better? I don't think it's always the case. It's just something to keep in mind as you're looking at extra data, and the merchant's ability to produce it.

MR. KLINK: I have Bill and Chris.

MR. CATELOTTI: Okay. Thank you. Around the decision to -- and I agreed with Bruce on the fact that you wanted to compel your suppliers to pass the amount of data, that you, in fact, need to run your business. And a good way to do that is convince the merchants that they have benefit by sending you that data because they'd lose receivable costs, and things like that. And since we're sharing information today, I think the strategy that we might recommend that you use to do that, is sell it to your suppliers that benefit, establish a schedule for when you wish them to be compliant with that data capture and transmission. And at that certain point in time, tell them what the dollar amount is that you want to capture, and if they don't capture and send it to you, move on to another supplier that will. Nobody is going to spend that incremental cost for the point of sale upgrade, unless you -- they have a reason to. And if the reason is that you've taken your business somewhere else, you have the leverage.

MR. KLINK: All right. Chris and then Jim.

MR. PIEROTH: I also think when you're talking about data, you think in terms of data management. What we mean by that is you start out with the data, and that in turn becomes information. And that's where the data is organized, sliced and diced and fried in a variety of ways. Information, in turn, then becomes knowledge. And that's where you understand what the data is actually counting. Which knowledge, in turn, becomes wisdom, and that's where we actually take that knowledge and use it to accomplish your goals.

And as you're going through this process, you, as users, will find that you're going to be bombarded with data from a wide variety of sources. You're going to have charge card data, you're going to have travel agency data, you're going to have expense reporting data. You may have data coming in to you from all electronic catalogs, and you have to decide, "Do I want to be the gatekeeper on this data, and do I want it all coming in to me? And I'm the one who will compile it." Or, "Do I want one of the suppliers to do that for me? And if I choose the latter, which supplier is the one that I want to perform these functions for me?" Because I can tell you from a supplier standpoint, each supplier wants to be the one who supplies the data to you because the perception in the marketplace is, the company that provides the data directly to the customer is the one that's having the most value. And so you're also going to have a variety of companies, each of which wants to be the one to consolidate that data for you. And you're going to need to think through, as users, how you want to manage that, and who you want to perform those functions for you, if that's the direction that you take.

MR. KLINK: Dan.

MR. GOREN: I would just add an additional view, from the history perspective, that not all of the card industry are bank card issuers. And there are segments of the issuer -- of the industry where the card issuer also has a relationship directly with the merchant. And what we've seen in the industry, as an experience, more towards looking into the future of the government. What we're seeing in the government, that perhaps, over time, the purchases will be bigger, dollar volume, a higher number, you know, of large purchases. And looking to what private sector has started to do, as an opportunity, is agree to have lesser number of merchants plus the number of suppliers. Then that allows them to say -- to go to the fewer suppliers to say, "Okay. Here is the customized data that I would like." This is not necessarily, you know, a way the government would have to go, but clearly, is a trend that's starting in the industry, and we see it starting where, in fact, there's a strong relationship, you know, with the card issuer and the merchant.

MR. KLINK: Okay. Anyone else? Okay. Karen, hold on.

MS. ALDERMAN: Just picking up on that idea, that the data capture, single data capture, as being value-added. And given the fact that the way government is trying to distribute cards, and then have our people use cards in purchase travel, or purchase goods and services on the open marketplace rather than a predetermined, you know, we used to have centralized supplier but we're trying to get out of it. It occurs that the incent is that the incremental cost of getting to level 1 and level 2 is such a low incremental cost, you'd be -- the charge card industry could affect that change, by giving differential vendor discounts based on whether they're getting level 1 or level 2 information. And that's a value added to the customer, even that helps.

MR. KLINK: Bruce.

MR. KUHLE: Those issues are being addressed today. Master Card and Visa are both taking steps in the future to address the idea that there will be preferred rates, if you will, for the vendors who are upgrading their systems and moving to these levels. And that is something that, maybe in a sense, has been a long time coming but they are definitely taking those steps, and merchants will see that value. But we have already gone out to this merchant community, and put a lot of demands on them for data capture, just in the normal course of doing business. And so there were some resistances or hesitancies to go about that but I think you'll see, definitely, within the next few months, announcements about the different programs that are going to impact vendors having these upgraded systems, and they will be a value to them.

MR. KLINK: Okay. Vicki.

MS. COOK: I think it really is important that the card companies work directly with the merchants. But it's equally important that the end customer express their need to have that information because that forms the multitiered partnership that will allow the merchants then to understand that they are going to lose market share potential -- revenues potential, if they don't provide the data.

MR. KLINK: All right. Are there other questions? Dennis.

MR. FISCHER: One of the things that we're interested in is the hotel arrangement for travel, when an employee checks out. It can affect separating that hotel bill, that which is the basic room charge which we'd like to directly bill to us. And the other charge is billed back to the individual's card. I was curious as to what your sense of a future capability would be to do that kind of thing because that seems very interesting to me.

MR. KUHLE: I can't say that I can answer that one for you. I'll pass that along. We have some folks in the audience that may be able to address it or folks here at the table.

MR. KLINK: Vicki and Bill and Chris.

MS. COOK: I am going to somewhat address what the industry is doing later.

MR. KLINK: Okay. I'm sorry. Bill.

MR. CATELOTTI: Since I'm not 100 percent sure of what Vicki's vision of the industry is I think that that folio information that you're looking for, and segregating the information about your trip and your travel, we look at that and we talk a bit about one card, and how that might do it. And the way we look at one card is a little different than one card, it's one piece of plastic. But really what we look at is data and managing the data, and really we'd like to look at one platform. So that if you manage the data through one platform, and use some of the typical industry commodity coding, SIC coding, NCC coding to manage the data, and move it around so you can separate folio information like you're talking about, that the hotel, from purchase transactions, will be enabled even further through the Internet when we do electronic commerce to capture that kind of data.

MR. KLINK: All right. Chris and then Dan.

MR. PIEROTH: I also think it's important to find out that today all of the issuers at the table have the ability to capture that data. We've already programmed in our system, in our platforms to get that detailed information. And what we need to do now, is really work with the individual hotel companies to make sure that their systems are able to pass it on to us. And there are varying stages of how far we are along in that process, depending upon which hotel chain you are talking about.

MR. KLINK: Dan.

MR. GOREN: I would concur but I think it's almost to the subject on the level 3 data, where we're talking about the hotel industry and the type of data that they pass through the card companies. So as we all know, when the hotel bills come in, it's not just a tax issue, it's all the charges that were associated with the hotel. You know, that perhaps may want to be separated, other than just the room nights. So it clearly becomes the issue of the hotel industry capturing specific data when you have the card.

MR. KLINK: Bruce.

MR. KUHLE: To the issue of level 2 and level 3, today, it is clearly recognized that the airline industry, rental cars, and hotel industries have led this because of corporate America's need for that kind of information. So they really are out there on the forefront.

MR. KLINK: All right. Questions?

MR. WATSON: Gene Watson of Social Security. I have a quick question. When we're talking about preferred rates and going to level 2, have you found anything at all about preferred rates based on the dollar amount that the individual purchased.

For example, it costs you, I think, the same amount as a supply level purchase as it does the cost of a $100,000 purchase, as far as the electronic process is concerned. And what we're kind of looking for is the possibility, in the future contracts, from having either a sliding scale, or a maximum processing amount based on the dollar amount of purchases. We did a lot of purchases this year in the $50,000, $60,000, $70,000 range, and that's a heck of a big discount for merchants to pay to have that one purchase done on a purchase card.

MR. KUHLE: Yeah. I don't want to make the press announcement for MasterCard and Visa. Those kinds of things are being addressed in their plans, so you will hear about those things pretty soon.

MR. KLINK: Okay. Frank.

MR. TUFANO: One comment. As far as -- if anything happens, if any kind of announcements occur or changes are made, that's really industry -- that's selling us back to kind of piggybacking the government's program to private industry. In any kind of RFP, I don't think would be a practical suggestion to require a sliding scale of that nature for a segment of the market. I think that would be something that would be driven by the industry for anyone who uses that commercial card.

MR. KLINK: Chris.

MR. PIEROTH: I also think that that ties into what Dennis Fischer had said earlier about squeezing the float component out of the transaction costs. As long as there is a float component to that cost, it will vary on a transaction size. But if we can get rid of that, then I think it is possible to get down to, really, a pure transaction fee basis.

MR. KLINK: Okay. Any more questions for Bruce. Okay. Bruce, thank you very much.

(Applause)

MR. KLINK: All right. Our next topic is Electronic Data Exchange and Reports. And I'm pleased to introduce Vicki Cook from Citicorp Diners Club.

MS. COOK: Good afternoon. I really appreciate having the opportunity to be part of today's forum. And the topic area that I have is, as has been expressed, is Electronic Data Exchange and Reports. And I think the flow of today is very appropriate because it ties into some of the comments that Bruce was just making. And hopefully, what I'll be sharing with you will be useful as we all try to meet the government's needs.

As organizations move to automated expense reporting, providing detailed data for business travelers has become more critical for the business travel industry. This information is the key element in developing end-to-end travel management solutions. It is clear that there must be multitiered partnerships, and that was my comment when I said I would address it. It's a partnership that includes the travel coordinators, merchants and the payment vendors. Equally important, a universal reporting standard needs to be developed. And from a technology standpoint, such a universal standard is deliverable today. However, this effort is very complicated by the need to gain support from all suppliers. When considering the standard industry practice on reporting data, you must first start with what data is available in the marketplace now. In other words, what data is currently being sent by merchants to payment vendors.

On an overall basis, payment vendors can pass on to customers all data sent by merchants. The question becomes how detailed is the information being provided by the merchants. Recent articles have discussed the industry trend to have hotel night and car rental data information electronically reported to payment vendors. In the case of hoteliers, charges for meals, lodging, and other charges would be categorized separately which would assist in organization -- the government or corporate, it really doesn't matter, it would assist in the entire accounting function, and the analysis of that data. Which is really, that's the direction we're all going in. It's not just information stated, but how do you analyze it.

Taking a leadership role in developing the industry standard of hotel folio data fee are the National Business Travel Association, NBTA; and the Association of Corporate Travel Executives, ACTE. These two primary associations of business travel buyers and suppliers have formed a joint task force to develop a format for the data, and explore required changes for hotels' back office systems, to provide the appropriate data and modifications to payment vendors' data flexion fields. And I would suggest that all card companies, all other suppliers in the travel industry are part of the task force and forum, to make sure that everyone's interest are expressed as they get together to discuss this area.

Enriched airline data is another topic that continues to surface in the industry. The concept of this is to take traditional data stream, and lay on additional data. For example, dates of departure and arrival, true origination and destination, travel agency number, project identification number, and travel authorization number. For this information to be through to the end customer, and in this case we're talking about the government, it must first be entered into the record where the transaction is originated. And then be passed through to the payment vendor, who must then match the enriched data to the airline transaction detail for distribution to the end customers.

As the industry moves forward and addresses the need to provide enhanced data, payment system vendors are recognizing the importance of having a proprietary operating system and database. If they have not put such systems in place already, payment vendors are doing so, as they recognize the advantage to having a closed loop process, where they control the transaction as closed, directly from merchant to payment provider to cardholder, without any third-party intermediaries. A closed loop system allows a more active capture of the merchant classification code, MCC, and the rights to control it at both ends of the charge process, from acquisition and support of merchants, as well as, card issuance and customers.

The industry does a lot of talking about data and access to data. However, deliberate information, as someone had already said, is the key today, allows for better travel management. The evolving trend is moved from data fee to information reporting capabilities. There are several initiatives underway. An important one is developing a multinational platform with processing centers for chief positions around the globe for true multinational data capture, and information delivery to meet management information needs.

Customization is another key initiative. Data reporting, itself, is standardized. However, having the ability to customize, summarize, provide supplemental detail, trend in graphical representation of information allows the end customer to exception manage the travel program, which streamlines the internal administrative process.

Real time access to data is somewhat misleading since the payment vendor industry, overall, primarily performs daily batch processing, collecting and posting transactions each day. On the other hand, the industry has evolved to provide some on-line access to data through the payment provider's proprietary file. Similarly, unbilled or posted data is available today through management information software programs provided by vendors. Dial access is standard in the marketplace today, and security measures need to be in place. And I think that needs to be underlined. Access to that data has to, definitely, be controlled by security measures.

And, in summary, the electronic exchange data is a major contributor to creating that paperless office environment that we're all waiting for. Technology is a strategic tool in improving the flow of information and reducing administrative efforts in cost. The ultimate goal is to deliver, enriched and enhanced transaction data which can be used for benchmarking, ensuring that an organization is using those practices and to ensure that proper policies are appropriately focused, in light of evolving internal needs and industry trends. That really concludes my comments.

MR. KLINK: Would the panel care to add? Mike.

MR. McCORD: Yeah. I agree with what Victoria said there. One of the things I want to amplify is that we need to understand that whatever the data is, enriched or otherwise, it's gathered at a particular type of POS terminal, which is often dependent upon the type of merchant that that POS terminal is located. And however much data is passed on to the processor from then, can only be processed and moved on further.

So it becomes a scenario where the chain is only as strong as the weakest link. You've got to be able to capture all of the data that you want ideally, pass it on, and have the person catching onto that data be able to process it, and pass it on as well. Then it becomes critical to you, I believe, to get just the data that you're interested in having delivered to the level where you have personnel directly managing those programs.

If I'm a person that's responsible for 500 cards, I want to have data just on my 500 cards. If I'm a person that has five supervisors that work for me that each have 500 cards, I ought to have access to the data for all those people that directly report to me and everybody underneath them. And that ought to be delivered timely, and I think the technology that we're going to talk about more here in a little bit, is such that that can be delivered in a variety of modes, now.

MR. KLINK: All right. Panel, anyone else? All right. Questions from our customer agencies?

SPEAKER: I work for DOD. I have a question about security. How are you all attacking that cost, because that's a real high payment?

MS. COOK: As an industry, it's a key area, limiting access to certain levels of data. So for example, the person who is managing a 500-card program would not have access to the entire portfolio cards. They would only be limited to that access where they strictly have management responsibility.

SPEAKER: Are you doing any encryption?

MS. COOK: Certainly that's done, as well. I don't know if anyone else wants to talk about it further, in terms of encryption. That's part of the process.

MR. KLINK: Chris.

MR. PIEROTH: I think, as I said before, you know, we're all banks. But I should correct myself. The distinguished gentleman from American Express is not.

(Laughter)

MR. PIEROTH: But when you talk about data encryption and security, that is really a -- more of a software-type function. So I think that what many of us are doing in the industry is trying to work with those companies, the IBMs, the Microsofts, and really kind of leverage their expertise in that area, as to ways that we can try to secure that data.

MR. KLINK: Mike.

MR. McCORD: Recently encountered here, we had CardTech/SecurTech. I don't know if any of you were able to go by and visit that. But there is a variety of different security applications that are available out there right now, ranging from the central pin number that we have, to things that require you to punch in more than one number, to things that require both the physical presence and custody of this piece of plastic, be it a Smart Card or otherwise. To knowing the pin number and combination to that, to combining the third element which requires you, physically, in your person, with your retina scan, or your handprint, or your fingerprint, or any one of the other biometric devices out there to be incorporated together, which makes it almost foolproof from that particular standpoint.

But what you need to consider here is there would be some applications that require, justify that sort of security, and that sort of expense at that one level. There is also another level of security that we're talking about when we get into the software, such as Lawrence Livermore Lab has been doing them and sending secured financial transactions over the Internet. And a few other things out there, the Interscape, Internets of the world, we have SSL and on and on. But there is different levels and the question is how important is the data, how much exposure is there on that particular application, and what is it worth to you to institute those different levels because they don't come without a cost.

MR. KLINK: Okay. Other questions? Yes, sir.

MR. SULLIVAN: Bruce Sullivan, Army. Many business applications are used in X-12, the NCX-12 transaction sets, for example, defensive scanners. Has there been any development for this in the industry?

MR. KLINK: Victoria.

MS. COOK: In terms of the standards, I really would have to defer to someone on the panel.

MR. KLINK: Bill, do you want to --

MR. CATELOTTI: To my knowledge, NCX-12 is the standard for Internet transactions typical with purchase acknowledgment and purchase order and acknowledgment and delivery. To my knowledge, nobody's going to develop a different standard, use the same standard with a different transaction set is what -- is one of the ways to get security through the Internet using EDI. Same standards.

SPEAKER: I was wondering were there any sets that have been established for transmission of credit card information? Purchasing cards?

MR. CATELOTTI: There's one -- I'm sure there's one -- when we go through the emerging technology, if I -- I can't really do justice to that question but I have someone in the audience that I think can answer you, if you want, if you'd like to follow up on that.

MR. KLINK: Anyone else? Other questions? Okay. Vicki, thank you very much.

Nice job.

(Applause)

MR. KLINK: All right. Moving right along now, we will now take on the topic of Emerging Technology. We've given you a lot of sneak previews of this topic already, so we'll ask Bill Catelotti from GE Capital to talk to us on this category.

MR. CATELOTTI: Thank you. And I see I'm just short enough to make this microphone this time. I'm actually very excited to be here. My background is in purchasing, however, I've had some experience with the technology through the people at GE Capital. I'm glad we got -- we drew Emerging Technology so I have an opportunity to talk about some of this. What I tried to do is talk to some experts in the industry, talk to some people that have developed -- that are working on different standards with technology in MasterCard within GE's company, and with that information try to develop for you a vision of what we see as -- what's emerging for technology in the marketplace for -- and, specifically Internet purchases is what I was asked to cover. And that included some of the SET or Secured Electronic Transaction standards, Smart Cards, how they might be applied in various different applications, technology issues associated with Smart Cards. And to frame that for you, what I'm going to try to do is talk about the technology as we understand it, and explain when that technology might be available for people to use in the marketplace. And the last part of that, I guess, is I want to talk about some of the roadblocks that will prevent some of that from happening for us in the near term.

On the Internet, it was actually hard to try to deal with just Smart Card and purchasing on the Internet because there's so many different technologies. There's so many different field trials with -- my colleagues and lots of others in the industry are working on different field trials to make things happen. To push the technology to give us more access and more electronic reporting. However, on Internet purchases, what typically is being talked about and tried -- on trial in a lot of different venues is electronic catalogs, on electronic models, and being used in electronic storefronts.

There's a lot of things on the horizon, but typically, there's three types of models out there that are being discussed, if you want to think of it as a server that's out in the Internet in that environment. And the three types that are available are one that the server might be set up by a specific supplier, maybe an office supplier. And that you would access that server and use any number of vehicles in that secured environment, and I'll talk a little more about that, to purchase from that supplier and have an open-door policy, if you will, so that lots of different individuals will buy from that supplier. And I guess we could call that model a seller's server.

In a buyer's situation, a specific company might set up a server with access on the Internet, and invite different office suppliers or other merchants in to list their catalogs in that environment so that internally, folks can get to those catalogs, and use that server to order different supplies and services. And in the third scenario, it's a third party that might be, heck, it could be GE, and you might want to buy appliances from GE by going into the Internet, and finding the server for GE and buying appliances. Sorry about the commercial. But the means to get there, we think, is from the desktop to the server. And in order to do that, there's certain technologies that we have to have in place, and frankly, some are right around the corner about --there's announcements that are soon to be had in the month of November, some that I can't share right now. But in order to do that, you would use a browser from your desktop, go out on the Internet, find those servers that you want, enter it through the stores and the malls, and do the transactions using the browser on the Internet. You would be able to capture some data.

We've talked about level 1 and 2 and 3 data here. My friend Charlie DeLaSantos, in the audience, likes to talk about level 4. I'm not really comfortable, that's why I'll defer questions on that one to him. But that's more enhanced data that you could actually do line item detail, and have different tax situations on that line item so that you could have exempt items and non-exempt items be taxed different ways in that environment, using the Internet through these models. Custom catalogs could be available for all of those types of scenarios so that your prices, in those particular environments, could be accessed by your employees to get the price that you need to -- the discounts that you negotiated and the price you want your people to pay.

Some of the issues with security, and I think I have an answer to the fellow from Social Security on how you pass that data back and forth. In order to get into the environment in the Internet, you're going to need a server on your end. You're going to need that browser, but you're going to need a server to set up things like directory services, where you authorize folks to use your vehicles to get out into that market. And that information should be easily transportable so you'll be able to get the information, back and forth, using the Internet.

SET is something that I was specifically asked to address. In Secured Electronic Transactions and those standards, and standards are what really is going to drive the use of the Internet and give us the productivity that we need through Internet transactions, is right around the corner. The use of those SET standards, I think because of competition and it's a great thing, we're going to have several problems. And we're going to, probably -- it's probably going to roll out to a couple that will work for everyone, where a couple that will work in a lot of the markets so that everyone has secured transactions. And for those of you that don't understand what it is, in layman's terms I can tell you that it's a certificate that you'll get that will register you as an authorized user of the Internet for your particular organization. And rather than put information about your charge card or about your finances out on the Internet, that certificate will go out and authorize the transaction, and enable you to do the secured transaction.

So I think, one thing -- and basically what that is, is that it's on your hard drive in your PC. You've established that certificate on your hard drive, and the limitation, I guess, for non-Smart Cards is that SET certificate would be impressed on your hard drive so you couldn't move it around unless you have a laptop, and you could take it with you. Network -- something else that we've been asked to speak about, out of the box thoughts. And if you think about what we're talking about here is getting out onto the Internet to use some of these standards, and some of the capabilities. Well, some of the things that we've thought about include a network terminal that would have a connection to the Internet. That way, even though we want to process some financial transactions back through the banking business, we could use network terminals in the Internet to circumvent some of the restrictions and limitations that we have in what, basically, is our consumer card, transactional processing data processing capabilities that we have in the industry. But basically when we're able to get by those hurdles using the Internet, we'll be able to use traditional purchase orders with those secured transactions.

We'll be able to use electronic data interchange with the standards that exist, the process and we'll be able to our charge cards, however, probably, not exclusively. And I guess that sounds like heresy for this crowd. On Smart Card applications, the things that everyone hears about, has interest in, covers a broad range of things. It starts with health care, where you can have your health profile on your Smart Card, and you can go to the doctor and your history is there. Loyalty programs that let you swipe your card at the airport and credit your frequent-flier programs. In some cases, it can be used and has been used for green stamps or coupons. Green stamps, I think, probably dated me a little. But coupons that would give you some value where you could take your Smart Card pack, and get the value out of your card. There's certainly some applications that are underway and being tried for home banking. And there's some real interesting ones in the European market with wireless and cellular phones, where you use your Smart Card to do access and authorization on a rental car that has a cellular phone in it. So there's lots of applications.

I think, in our vision, the applications that we focused on, really focused on T/E and purchasing card transactions. I know we're not here to talk about Fleet, but there's certainly some applicability there as well. And I really looked at three different areas. On the Internet, purchasing cards using Smart Card technology could be a source that would remove the limitation of having that certificate on your hard drive. If you had that certificate information on your Smart Card, and you had the hardware capability on your PC, you could swipe your card on your PC, and you could go out and use that certificate from your Smart Card to authorize the sale, and go ahead and put the security on that transaction. And the travel and entertainment side of the business transactions could be used for airline tickets. And I heard some conversation about that today, and there have been some things in the paper recently about airline tickets. And the big rub is that you never get a receipt. And if they cancel your flight, you can't take the ticket to another carrier and have him change it in for something to get you back home.

So the challenge is there, I think, with electronic ticketing would be a means to load your card up, go to the airport, swipe it, or go to another airline, if you will, and plug your card in, transfer that value to the other carrier to get you back on the plane. And the last one that I think is important that we need to think about, in this venue, is a combination card that may be a debit and/or a credit card with Smart capabilities with the chip technology that you use to run around town, and do small dollar transactions. That would be refillable and you could take it on a trip, like, so many people have used drafts and petty cash in the past.

And there are some things that have been tried in Europe and Australia, and soon to be in New York City, on that. Now, when is all this available? I try to frame this several different ways. And because travel is in here, I thought I might make some analogies about the road. and then I found out I couldn't use overheads. So what I said was, there's some things that we can look at with the technology that were discussed this afternoon, and talk about the fact that they are in view, and we can see them coming. There's others that are right around the corner, and still others that are virtually on the horizon. And what we can see, we can't really distinguish. So when is the technology available that we talked about this afternoon? When we talked about Internet purchasing, and SET, and those transaction standards, we believe that those technologies are in view. And November is tomorrow, and I think before November gets too old, they'll be some significant announcements that will help us get closer to Internet and transactions for purchasing.

Smart Cards, in some situations, the financial pieces that would blend financial and library access, and some of the other capabilities of Smart Cares are out on the horizon. However, some of them with petty cash and draft replacement are certainly right around the corner. Somebody made a comment about how long will we do it? Would the government be a good place to do trials? We certainly need to try other stuff. And in some cases, Smart Card would be a great venue to do trials, but it needs to be tried.

Under roadblocks, some of my colleagues today spoke about specifics when it came to reporting, being able to sort specific reports. And when I heard it, I had to think real close and listen real close because what I want to tell you is that roadblocks are standards. SET is one that's a great example. But at the point of sale, hardware and software at the point of sale, that will allow you to use a Smart Card for example, is going to limit the amount of capability we can do. Again, it's that cost to the end supplier. It might be a marginal cost but it's something that they don't have to stand if they're doing business with you now. So there's lots of problems with standards at the point of sale. Electronic security and issues like SET are roadblocks in the industry that are going to hold back some of the progress that we hope to make. And at the point of origin, you might think about standards that hold you back, and I'm talking about swipe cards on PC terminals.

MR. KLINK: Bill, I was wondering if we could ask a perspective from the other panelists, at this point.

MR. CATELOTTI: Right.

MR. KLINK: Anybody? Dan, and then Bruce.

MR. GOREN: I would amplify on that, and say that Smart Card technology really is on the rise in this meeting here today. I think the issues that you raised about adaptability in the POS terminals is a major issue. But there are activities and tests going on today, for example, at airports, where readers have been installed and customers can take their charge card, and get their itinerary and see, you know, if that becomes an electronic ticket.

So I think the issue we have to focus on, whether it's, you know, a reader at a merchant or a swipe machine at your PC is for you to get that equipment in.

And I would say the second issue is people's willingness to adapt. There's a lot of discussion regarding using other multiple applications for Smart Card. But then it's also out of concern that we will have a one card application -- one card that has your medical records, your financial history, and all of these activities on it. There's is no right answer to it, but that whole issue of industry and consumers and the business world's willingness to adopt it, is also what is probably moving it more slowly. But clearly the technology is out there today.

MR. KLINK: Okay. Bruce.

MR. CATELOTTI: To some degree, I wish I had a very motivating and elegant speech here for you on the idea, once again, of leaving yourselves open to the idea of technology being a part of this proposal. If you will think about this RFP process, and allow us to, you know, use emerging technologies as a part of this, and give us the opportunities, I think that's going to really benefit you. The more you try to establish what today's criteria is going to be, and hold us into that, I think the more you're going to miss out on this future opportunity to use technologies. And once again, I would just leave with you the idea of leaving that open for us to be able to move into those areas because they really are going to add a tremendous value to you, at some point.

MR. KLINK: Mike.

MR. McCORD: Well, what an exciting time we live in, especially as it relates to the technology that's out there now. And we've talked about Smart Cards, they're three and five years out. We've talked about different things that are still long-term. Each time we make a comment about something, we think about what's important to us. We also talked today about how the acceptance of these cards is very much dependent upon the devices being out in the merchant locations before they're going to be everywhere and be able to be used. Very, very, true.

We've talked about how you have to motivate the people that are going to have to make the expense, to show them a way that they can recoup their money, and we've addressed some of those issues. But there are applications out there, right now, that are being used everyday. And I don't even know if you're aware of it, but the U.S. Treasury just published a nice little book, about an inch thick, of all the different applications of Smart Card technology that's being used throughout the different governments, state governments and the federal government, as well. And some of those Smart Card are mag stripes, and some of those Smart Card are chips.

But the thing that's being used right now, predominantly, today, is chip cards or nonfinancial applications such as storing data, as we talked about, health applications and others. And there's a wide variety of others being pursued at the moment. It won't be that far away before we can use a laptop PC at home as an ATM, meaning that we can already do all the banking transactions that we want over the ATM, as far as transferring balances and paying some bills and all that good stuff. But what your one-stop short function right now, and that's the ability to withdraw cash.

(Laughter)

MR. McCORD: Well, that's not that far off because they now have PCMCIA. Insert a little credit card-type thing, to go in your level 2, level 3 slides that allow you to put in chip cards, that would allow you to transfer balance under your chip cards. Well, that's great. And it would be like a souvenir from the Olympics right now, from all the stored value things they had down there. I understand a lot of those were good souvenirs and a lot of them got used, and it was a good introduction. But until you have the ability to off-load that data, even if it's something that you want to purchase, you have to, like, close the whole cycle there.

The technology is there. There are different ways to skin different animals, cards are but one piece of the whole system. You have to have the process. You can do things through the POS chain, and how that data is delivered, however much of it gets delivered until the level 3 data capture is available out there, you can do things afterwards. You can do things by subcontracting out, and you can do things yourself.

As always nothing's free, and you have to waive the costs and benefits to this, and what it can offer to you. But there is just going to be a tremendous decrease in the number of hours and arms and legs that all of us, collectively, are sending and processing this information because we'll be able to have a lot of this customized for us, the way you want to have it deliverable. I'm excited about living in these times, quite frankly.

MR. KLINK: Okay. Let's go the audience. Customer questions? Yes, Karen.

MS. ALDERMAN: (Inaudible)

MR. KLINK: Would you mind repeating the question. We couldn't hear.

MR. CATELOTTI: The question that Karen asked, she called in a security token that would identify you and your ability to buy a level -- your ability to buy for whom and whatever. She wondered if that was something that you put in your PC yourself. And that certificate that I talked about with SET, as far as we can tell, you're going to buy that. You're going to buy that. You might buy it at the post office; you might buy it at Comp USA. But you're going to buy that certificate from someone that has that standard, so that you're identified by that standard out on the network. So someone's going to -- it's almost like registering at Motor Vehicle. You'll register yourself and get a certificate that people will identify you by, like a registration tag.

MR. KLINK: All right. More questions? The gentleman from NASA, did we answer your question here? Did you want to follow up on that?

MR. HAWKINS: Yes, I would. I'm still waiting on the answer to the question. I heard the gentleman who spoke about the Impact card. I think he mentioned that was available in the commercial sector, that it was not available in the government sector simply because the government had not asked for it. And then the gentleman from Bank of America says, "Leave the window open so that as technology emerges, we're going to depend upon you, the vendors, to tell us about it." That being the case, if I look at current charge cards that we have in the government --

MS. KOSES: Again, we do not want to focus on current cards, please.

MR. HAWKINS: I have seen no improvements to the current cards based upon emerging technology during the life of this contract. Why should I think you're going to do that in the future?

MR. KLINK: All right. I think that was the whole idea, trying to get everybody together here was to try to build up a program that would allow us to be able to do that. And I think we certainly heard that from customer work that it has been done. And I think, from the panel today, I think we've heard lots of information, lots of ideas. Our goal, now, is to try to put that together into something that will do exactly that. That's certainly our desire. More questions on emerging technology?

MR. WEBBER: I'm Michael Webber and I'm from the Air Force. This may not be an emerging technology question but I'll ask it. And that is, right now, we are using ATMs to collect cash. And that is expensive. We spend about 2.75 percent for each dollar we put on the ATM. I'd like to hear from the panel, what are some of the thoughts you have for improving that in the future?

MR. CATELOTTI: Than taking cash out of the ATM?

MR. WEBBER: Taking cash, sure. A way of regulating that, or overseeing that, is there a better way of doing it than the way we're doing it now?

MR. CATELOTTI: Smart Card -- I think Smart Card seems to be a real obvious answer to having a change purse, that you can go to a machine and fill up when you need that cash. And again, as I said, I think it's out on the horizon, a bit. There are some products available that all of us provide in some form or another, that would give you a convenience check that you could use, and you could use the level 2 data that is available. You could put a customer code or an accounting code with a draft, or a convenience check that would pass that back to your account and your charge card part, on your statement.

MR. KLINK: Chris.

MR. PIEROTH: I think when you're talking about ATM transactions in cash, the component that makes it so expensive is the fact that the moment the cash is withdrawn from a particular ATM, the bank or other organizations that have issued that card is again, you know, I keep going back to the floats, you end up paying the float. And I think what we have to do is look at mechanisms to really take that component out. Because, again, I think that the government is, by far, the best organization, you know, in this country, when it comes to borrowing money. And so it doesn't make sense for you, as the government, to be paying higher costs of funds to another organization. And I think over the next, probably, several years, certainly within this RFP, you're going to see some radical changes in the way business is conducted. So we really are conducting business, more on a transaction basis, then we are on a financial basis.

MR. KLINK: Dan.

MR. GOREN: I would agree that one of your cost of funds are -- there are products out there today, the stored value arena, that would be much less expensive than the cost of funds of having the government pay the 2.75 percent of withdrawing cash on the machine. Those products are available now.

MR. KLINK: Other questions? Yes. Karen.

MS. ALDERMAN: I understand the cost of funds of cash, but I think one of the issues behind the government employees and military personnel using cash is accepting the card technology, and all the places it has to go. And a lot of folks go to low-end places. They eat at McDonalds, you know, down the road there. It's not a high end. Can you comment on that? I mean, a lot of the issues, in terms of what -- where our people have to use cards is acceptance. And it's an international as well as a national issue.

MR. KLINK: Bill, you want to take a shot at that one?

MR. CATELOTTI: Yeah, I'll take a shot at that. I think when we talked about level 1, 2 and 3 data, we talked about supplier sign-up. McDonald's probably isn't the best example to take for me to explain it. But if you are doing a volume business with any supplier, the advantages of using the -- taking the card, or taking the cash -- I guess it doesn't seem like an advantage to them, except that it might keep their business. So I think if you can sign up suppliers to take cards, even though its low-end, small dollar transactions, you could use the advantage of stored value or charge card.

MR. KLINK: Okay. Dan, Chris and Mary Ann.

MR. GOREN: I think to answer the question, I would still go back to the cost of funds, Mr. Webber's question was as it relates to the 2.75 percent. In a stored value arena, you still have the ability to take cash out, it is now your money. So when you're in an environment where, you know, there are establishments that don't even accept plastic, as an example, you can have that capability. The subject is what is the cost to the government? And someone said earlier, the government borrows at the cheapest rate. So having the government put money in a stored value group, may be less expensive than what you're paying today. It would still gives you the flexibility of the cash, you know, in an environment where you're going to need to have that.

MR. KLINK: All right. Chris.

MR. PIEROTH: I think there also has to be a paradigm shift in this. There are certain types of transactions that people just, historically, have not used charge cards for. And a number of tests have been run in various fast food restaurants, to use an example you gave, where charge cards and credit cards were accepted. And quite candidly, the tests just did not go well because even though those locations accepted the credit card, people just, I don't know, feel uncomfortable using a credit card at that type of an establishment. And so, as a result, you don't have the transaction volume, you know, to really make it economical. And I think until people kind of adjust their behavior patterns, you are always going to have certain types of establishments where cash is the medium of exchange.

MR. KLINK: All right. Mary Ann and then Bruce.

MS. FRANCIS: Hi. Thanks for letting me sit in. While emerging technology is something we all care a lot about, and as you've heard, you've invested a lot of time and energy across the industry in working with them, we go back to this morning's discussion of what is it that you want to accomplish, what is it that you're trying to do, what your goals will be in 3 to 5 years from now? We would really like to hear on the RFPs, your discussions of what is it that you need to be able to do. And from there, we can then talk about the tools for solutions, for technologies, what processes that enable us to work together and get there. What you're hearing, too, is that some of the technologies are almost there, in various, different phases.

What I'm hearing from you, in an RFP, on what you would need to be able to accomplish -- to allow us to do, is force the issue. Is take the individual pilot programs, which are in place, to go back to the suppliers and say, "We have a huge government and/or corporate end users that might be able to do this. And we can give you our business and you work with us to take this information." Or if you are more adaptable to changing your equipment at the point of sale so you can take additional types of cards, but that's where the word "partnership" kind of comes into play as well because what we do then is together, through the course of time, that horizon, is force all these entities that are now looking at cases individually, enable us to work together. And it may take a couple of years. Now is part of the plan that we work together for this. And that partnership is kind of important because in, maybe, some places today, it's not every place you'd like it to be. So that's the kind of goal that this effort is really good for.

MR. KLINK: Thank you. Bruce.

MR. KUHLE: I think that was addressed there.

MR. KLINK: Okay. Anyone else? There's a lady in the back.

MS. SPICER: Marilyn Spicer, Federal Engineering. My question has to do with the airline industry, the government travel card, the travel agents. The problem we have is the airlines are not giving the credits back. Half the airline tickets have been canceled. It takes anywhere from 120 days to do that. What technology is available to resolve that?

MR. KLINK: Is your question, in the future, how would you see that kind of problem resolved?

MS. SPICER: Yes.

MR. KLINK: Okay. Bill.

MR. CATELOTTI: I don't know how to manage the airline industry. So I don't -technically, I don't know how -- if I have an answer for that.

MR. KLINK: Anybody want to take a crack of that? Let it go? Okay. Other questions? Yes.

MS. HENDLEY: Hi. I'm Cheryl Hendley, USIA. My question is about the international agreement that was brought up. And it's great that the panel is discussing emerging technology, but will you comment on how it's going to work overseas. You talk about an investment that vendors have to make here, $400, $500, whatever, where it's even less there. So we have to cope with people traveling to those places where technology is not emerging. What are we going to do, internationally, with those other vendors?

MR. KLINK: Bill.

MR. CATELOTTI: With technology associated with the Internet, there's a lot of capabilities that will be built into transactions on the Internet that will allow you to do foreign currency, that allow you to do VAT tax, if you, in fact, have to pay tax, as part of the transaction overseas. There are technologies available to -- besides currency exchange, it will be able to do it in foreign languages, in the not-too-distant future. So yes, Internet will help you do that overseas. Certainly, Smart Card could be considered as another vehicle that could be programmed to allow you to do a lot of things overseas in different currencies, and languages.

MR. KLINK: Panel? Mike.

MR. McCORD: When you talk about overseas, you've just taken on the world. And there's a lot of overseas locations. I've personally lived overseas in the area of Europe for more than a decade. And I can tell you that over in Europe, they are more advanced in the area of Smart Card, and some of these technologies than what we are here. I think what we're going to find, at least, for the short term, is that the multi-application card that was brought up earlier today, that still uses all of the base technologies that are known, proven, we're all very familiar with, very comfortable with are working over there right now. And there's an ability to enhance the back process to give you additional information, that was -- is transferrable over there right now, wherever those cards are accepted to get into that network in the first place. When we get into different particular functions overseas, you may be able to use, I think what you're going to find is pockets of technologies in different countries right now. You go to Germany, you can get a GSM global satellite telephone system with a chip in the thing, that has all sorts of storage, and satellite systems with Smart chips, and quite a variety of things. But you could pick any number of other countries, and find that none of those exist. And so, as far as international travel goes in acceptance, I think, at least, for the near-term future, we're going to be best to stay with the technologies that are known, and improve and enhance additional functions on those that are current.

MR. KLINK: Okay. More questions on emerging technology? All right. If not, let's give Bill a hand. Thank you very much.

(Applause)

MR. KLINK: I'd like to suggest, at this point, that we take a short break, 15 minutes. And then we'll come back, and we'll go to the open comment period, and we'll wrap up. Thank you.

(Recess)

MR. KLINK: All right. Again, if you can take your seats so we might get started. All right. At this point in time, what we'd like to do is "throw the floor open." We would like to provide an opportunity for those partners in this process who have been patiently waiting, to throw out their comments on what they have heard. Is there any additional questions from our customer agencies? We'd like to take the opportunity to deal with those questions as well. Basically, this is an open period here. We'd like to continue the dialogue. Yes, down in front. Please identify yourself and the organization, if you would, please.

MS. STUCKY: I'm Valerie Stucky from NASA. I was wondering how likely we are to get complete women-owned business or minority business data?

MR. KLINK: Anybody?

MR. TUFANO: The key word there, I guess, is "complete." And it's a challenge for the industry, in that, the data that we -- we have to get the data from various sources. Ultimately, either from sources we can buy data from -- data packages, and to the extent we supplement that with information we get directly from the suppliers. So as someone mentioned, the number of merchants who accept purchasing cards, or corporate cards is ever increasing. And what that does is make the problem exponential. So as the percentage -- as we think of percentage moving up, more and more merchants are starting to accept cards to keep the percentage down. So realistically, as we continue to make the product more available to more vendor locations, it's going to continue to be a challenge. And I think -- I don't see for any date it said, you know, "By the end of '97, it will be 100 percent complete." I think it's something that we've taken a serious look at, the 1099 reporting data, it's something we have to deliver. And we're putting a serious effort against that in industry. But I still think since the acceptance isn't as widespread as it could be, that that's going to be an evolving process over the next few years.

MR. KLINK: Bruce, did you want to comment on that?

MR. KUHLE: Once again, the issue, I think, centers on you working with the merchant community, the supplier community today to educate them on what information it is that you need. The services: MasterCard, VISA, American Express, Diners, all of us are looking for, getting as much information as we possibly can from these suppliers, merchants, and we're going to attempt to give them, you know, any incentive to provide that information. But it also helps, from your perspective, to let them know that, in the right context. Not a demand, but an asking for it, letting them know that that's a value that they can provide for, you know, providing customer service.

MR. KLINK: All right. Next.

MS. PRESLEN: Thank you. I'm Karen Nicole Preslen from Dollar Rent-A-Car. I'd like to ask one question, and talk about two recommendations. One has to do with the issue of having the supplier getting collected data that you might like to have. And that incentive to the suppliers to upgrade their systems and provide that to you. Just as you are eager for information about the travel systems, we are eager to know about those systems as well. So how about a trade? If I give you my information, how about you sharing with me some market share information. Let me know where your travelers go; let me know what services they use. And that's a viable trade-off. I would be happy to make that investment, if you will share some of that data back with me, that it's virtually impossible for me to collect at this time. So that might be one of those incentives that you would want to consider.

MR. KLINK: This is for the customer agency, correct?

MS. PRESLEN: This is for the customer agencies or for the government agencies, you know, from the headquarters level.

MR. KLINK: Right.

MS. PRESLEN: From all levels. For those of us in the supplier community, it is nigh to impossible to get market share data, and to get viable travel user pattern information. And that's what helps you to determine what products and services I need to supply, where, when and what costs. So let's trade. How about? The other recommendation that I might have goes back to that issue from earlier this morning, where we were talking about credit cards, and use of them, and the accountability, and the delinquency issues and nonpayment and whatnot. We in the supplier community, whether it's the hotels, whether it's the airlines, or whether it's the rental cars, find a fair percentage of abuse of the government official credit card. So far, when we have instances of those abuses, and we go to the government agency that authorized the card, the general attitude is one of, "Well, we'll take disciplinary action with the employee." Or, "We'll slap their fingers," or, "We'll pull their card." And that's fine for you. But for those of us who have provided services that we ought not to have had to provide, under the government programs, we would encourage the government agencies to take some responsibility, and have some accountability for the actions of their employees.

And if that's not possible, then at least, allow us an easier mechanism for recouping our costs. At this point, we have no way to do it. And that's a very serious issue. And as we look to spreading the credit card use among multiple card companies, this is going to become a more serious issue for the suppliers. Those are my two recommendations. The question goes back to the point of the rebates and the cost of rebates. Now, I'm wondering, as I listened this morning, it sounded as though there's a certain level of pressure for the credit card companies to give rebates back to the government agencies, recognizing that there is a cost to do that. I'm wondering if any of the card companies might be thinking that there might be a higher transaction fee from the supplier for those government charges, and that's the way you fund the rebates. Because if that's the case, what's going to happen is the cost of the services you're buying is automatically going to have to go up. There's no free lunch. So I would encourage you to factor that in there.

MR. KLINK: Okay. Thanks. Chris, do you want to comment?

MR. PIEROTH: Yeah, I guess I wanted to make two comments. The first is with respect to the comment that you made on the data. I think it's an interesting one, but I can tell you from a First Bank perspective, we ask for the enhanced data from suppliers and vendors, so that we can gather that data and pass it on to our customers. We don't actually use that data for any other purpose, other than to provide it to the customer. So when you ask, for example, for me to provide that data to you, my response would be, "I don't necessarily think it's my data to give." The data belongs to the government and to the agencies, and if you want that market share data, I think the appropriate place to request that, at least, with respect to the government sector, would be from GSA. As far as the rebates go, I can tell you that the interchange rates or discount rates don't change from a government card to a commercial card, so it's not something that U.S. suppliers are funding.

MR. KLINK: Okay. In the back. The gentleman in the back.

MR. METCALF: Hi. I'm Al Metcalf with the Joint Systems Solution data, and I have a question.

MR. KLINK: Hang on, sir, I pointed to the gentleman in the back. My apologies.

MR. HARRIS: My name is John Harris. I'm with Thompson CFS. I'm with a vendor company. We provide Smart Card products and biometrics. The first thing I want to say is that I think there's been a lot of concern about acceptability. When we go to new technologies, there's always concern about who's going to take the card, which is the Smart Card. And I think one thing has to be examined, real carefully, is if you look at a hybrid card, and that is using a magnetic stripe, for now, or making sure it was a Smart Card with the capability to put a chip into that card, we can't use it now, we can't use that data. But when the time comes, when that evolution does happen, then you can start putting that data into the card. So that we don't buy -- we can't stop flexibility, right now, by us choosing the mag stripe option.

You have to make sure that -- I think because of the time and length of this contract, I think GSA and the government agencies that are here will have to look carefully at the long-term effect of choosing one or another technology, that over 9 million stripes are acceptable now in most countries around the world, Smart Cards in some places. But it appears that the Smart Card is really coming into use now, in places like Manhattan and Atlanta. And I think that if we don't -- if the government does not choose to put a Smart Chip, or software to carve a solution, then you really, you're really just grinding your wheels. That's just one comment.

The second point is I want to know if the government agencies are still here. The audience has thinned a little. I was wondering how many of you have thought about using Smart Cards for your requests, you know, input into the GSA's Statement of Work, has that come to a -- has anybody come to any conclusions on that?

MR. KLINK: Sir, could you kind of move this along a little bit? We have some other comments, here.

MR. HARRIS: I know what my question is. Has there been any thought about what the technologies are, when they're used, because I haven't heard much yet?

MR. KLINK: I think the idea, at this point in time, is to consider the possibility that a number of technologies could be included, if there was a sufficient interest. We certainly haven't precluded that option at this point in time. There's a number of possibilities that are being looked at, at this point in time.

MR. HARRIS: Okay.

MR. KLINK: Thank you. Okay. This gentleman, and then this gentleman over here. I apologize.

MR. METCALF: Are you sure?

MR. KLINK: Yes, I'm sure.

(Laughter)

MR. METCALF: Thank you. I'm Al Metcalf from the Department of Engineers and we're representatives from the Joint Systems Solution Team. I have a question on how each of the agencies is going to be implementing a card system, and I another question about the reconciliation side of accounts. Several of you have mentioned that we should look to the commercial prevailing practices, rather than duplicate our current government practices. Would any of you like to talk about what you can provide, or how you can approach the card management reconciliation process, rather than the government duplicating itself?

MR. KLINK: You're talking about future applications?

MR. METCALF: That's correct.

MR. KLINK: Frank.

MR. TUFANO: Well, the industry has a number, and obviously, different issues have different solutions. But just in general, some of the reconciliation approaches have been to take automated feeds of the data, distribute it using a distributed platform, directly to the cardholder, and allow the cardholder, on-line, to review their statements. And either pass it on to a manager, in an electronic form, so that they could then make some changes to the allocations, if that's required, for general cost allocation, and then submit that back to be uploaded into a general ledger. That's kind of like a 30,000-foot look of how, some of the more advanced techniques are being used to automate the reconciliation process. I'm sure someone like Howard has other examples, but that's some of the more -- some of the corporate entities that are doing a more advanced technique, are using things like that to achieve a back-end reconciliation.

MR. METCALF: I would make that a government practice.

MR. TUFANO: Well, I think the way you turn it into a government practice is to kind of replicate some of the best practices. So those companies use certain software that the industry could provide, to get the data and to distribute it. It also requires certain distribution network within the government agency to get data to the private sector. It could be an e-mail system; it could be a browser-based system. So I think it's just looking at, again, it's sitting down, deciding on, you know, together, looking at what the best solution is and what the tools available are, and putting that solution in place. But I think by putting it on the backbone of private practice, private industry, it allows the providers to look at other companies they have created solutions for, and replicate them for a specific agency. It just provides us with more points of reference back to the agencies, and allowing them to find solutions.

MR. KLINK: Bill, do you have a comment on that?

MR. CATELOTTI: Yeah. In relative to -- because we're trying to focus on emerging technologies, and what can be developed for use by government and industry, I think that if you ask us for what technologies we might produce in the RFP, that we might be able to work with you on developing something that's -- that would be a standard for both business and government, to enhance some of the things that are already out there. There's capabilities out there now that allow back-end debits, and back ending some of the information prepared for upload to accounts payable, and other financial systems. But on the Internet that should be a relatively doable process, to take that information and pass it to your accounts payable records, or financial records, I should

say.

MR. KLINK: Chris, do you want to add?

MR. PIEROTH: Yeah. In addition to the various software package, and technology solutions that are out there, you also need to keep focus on the reengineering process because one of the things that we have found in the commercial sector is that reconciliation problems, in many cases, are solved through decentralization. Because there is a tendency for some corporations, when they come on to a purchasing card program, as an example, is that they want to try to consolidate invoices. And the next thing you know, the corporation is getting one invoice through the entire company, which creates problems, a large reconciliation problem. But you can still receive a lot of the benefits, if you receive, say, 50 invoices a month. If you've got the bill going up to 50 different locations, it may be 75 locations, because you push the billing out at least to the point where the people who are processing that know enough about what's going on, to minimize the reconciliation issue. So, again, I would just say process reengineering is something that, you know, you also might want to take a look at, and try to solve some of those issues.

MR. KLINK: Mike.

MR. McCORD: Just to try to combine what both these gentlemen just said, and I think you asked, how do you go about getting what we're saying is available? How do you get it through the process you have right now? Well, you've got the opportunity. You've been given the framework, right now. The way this solicitation is being lined up with the core requirements, and then the added-value on by agency basis, opportunity knocks by agency basis.

Just as Chris was saying a minute ago, some organizations may very well want to have a full report of all the transactions that took place through the cards for that one company. Some agency in the government may want that, but another one may want something totally different, where they want it broken down by naval base, or by whatever regional office, one thing or another. So you're just going to have to say, the way we run our business now, and the way you can help us run our business -- remember what this is all about, this is a service contract to support the government. And how you can help us run our business is to provide us this level of data at these points. Now, I'll ask you to keep one other thing in mind. Let's -- nobody's faulting anybody. We're all in business to be in business, okay? And the more time -- the more you ask to be -- the more you ask the data to be divided, sorted, delivered to different data end points through electronic modes or otherwise, those are going to come with some incremental costs. So if you have an ability to deliver to a point in your organization, and deliver that information the way you want to slice and dice it further, that's a flexibility that's also available to you, within your direct control. Or you can ask that to be done by subcontractors as part of the business.

MR. KLINK: Okay. I've got another question over here.

SPEAKER: I appreciate getting the data back, but there's also the -- I'd just as soon not have to have a person look at every transaction. What we're missing, seems to be a transaction a level higher, even all the way up to level 3. What I'd like to do is when I make a purchase, coordinate it in our system, so that the charge is tied in.

MR. KLINK: Anybody want to comment on this? Bruce, and then Bill.

MR. KUHLE: Well, I hope I don't get specific to individual providers, but I believe we have those capabilities today, of being able to match up purchase order systems, to be able to match up with our information coming in. This is all software-related activity, and it's going to be using features like what I referred to, customer coding or accounting numbers. Those kinds of things we can tie together today, to be able to tie into something that you have. Many of our systems work off of spreadsheet formats or database systems. All of those things can be integrated today. But that's where customizing features come in, and customizing capabilities came in. And that may mean consulting fees, or it may mean other kinds of activity. You need assistance there. Maybe some of those things you'll be able to provide on your own.

MR. KLINK: Bill, do you want to --

MR. CATELOTTI: There are some methods, as Bruce explained, currently, where you can take the data regarding the transaction, and you can point the data, based on the SIC code that the transaction was tied to, to match an accounting code, or a project code or something on your accounting system or financial system, that will direct that to the right default code that you want to use. As we go off on emerging technology, and use more and more Internet applications, some of that should come back to you in more detail because there will be an ability to pass more data about that transaction. It may circumvent what we typically know as the bank card network, but you should be able to get that data back through EDI or other means.

MR. KLINK: Gentleman, I finally got to you.

SPEAKER: Is this working?

MR. KLINK: Yes.

SPEAKER: My question is, is there some specific off-the-shelf software that's available for either corporations, as well as for agencies to use that reflects your doing something on your side, in terms of the purchase transactions, travel transactions? And doing something on our side -- on the agency side, specifically, in terms of card management and reconciliation functions?

MR. KLINK: You're looking for card software, of opposed to something -- the card of the future?

SPEAKER: Yeah. Is that out there? Is the technology there?

MR. KLINK: Okay. Frank.

MR. TUFANO: The product I had described, or just the general process I had described is -- are things that we are all doing for specific customers today. So while taking out a box, and plugging it in may be an oversimplification, it is readily available to be implemented within a company, and within an agency.

MR. KLINK: All right. Anybody else want to -- Bill, you want to comment?

MR. CATELOTTI: And I agree that we have specific applications for each of our -- in each of our businesses that you can use for those capabilities that you're looking for. But the off-the-shelf concept might be a browser that gets you out into the Internet, to get you to the malls with the standards that you need to use electronic catalogs and electronic storefronts. So if there's a standard, I think that's the only one I can think of, off the top of my head.

MR. KLINK: Mike.

MR. McCORD: Just two quick comments, one to the last two gentlemen. Depending on what it is that you want to do, it's readily available today. But the customization is the issue here, and it can be defined in so many ways. That -- we go back to the conversation that we've had many times this morning, or today already about making sure that you first define what that end point is that you want to arrive at, and then you back into what software package you want to use. Because there's a variety of offers out there right now. Okay. On the other gentleman's comment about not wanting to sort through and validate every one of these transactions, another thing in the "for what it's worth category," is you're probably well aware that most of the systems today allow you to put in flags or filters. They will allow you to generate out reports that are exception reports. And you set those parameters. You may not want to look at 100,000 transactions, but you may find some very small subsets of those that are worthy of your attention, to give the eyeball scan on each one of those things.

MR. KLINK: Okay. I've got a question here, and one in the center.

MR. ROHRER: Mike Rohrer from the Air Force. The Air Force has over 4,000 cards in different bases around the world. My question to you is do you all provide your commercial vendors or commercial people, like ourselves, access to information or reports on travel cards, internationally? The Air Force has over 4,000 cards in different bases around the world, and all those bases tie in. Is there something that's available now? And, if it is available now, is it capable of handling our size?

MR. KLINK: So, hypothetically, is that capability there now?

MR. ROHRER: Yes.

MS. COOK: The capability, definitely, is there. And since most of us have multinational programs in place, customers are accessing that information on an international basis. So there are sites set up at different office locations to be able to access the reports, through the Windows-based program.

MR. KLINK: The lady in the center.

MS. LABBEE: Yes. Jeannette Labbee from the Department of Commerce. I have sat here today and watched you all interact with each other. So my question is, out of curiosity, seeing that all this information is now available to us in different spots, what are our chances of having you, all together, work on some kind of system that would be good for everyone in the future, like a team effort?

(Laughter)

SPEAKER: What? Are you crazy?

MR. KLINK: They've actually been a very good team. That was one of the ground rules for today. And they've done very well, I might add.

MR. CATELOTTI: I think that SET is one of those things, the standards for how we will secure electronic transactions on the Internet which is something that we all need to agree on, so that we have a standard that everyone can use. So we are, in fact, going to have to -- if we work against each other, it's not going to be to our benefit to do that. It's to our benefit to work together. I know that probably most of us are talking together about that. Just standards.

MR. KLINK: Gentleman.

SPEAKER: I like the idea of working together. I've been hearing from the panel that the -- you're asking the government to define what their requirements are, and also let the vendors choose the best option, the best solution practice. Do you have specific ideas, in order to close the gap, on how you can educate or exchange ideas, or perhaps develop a sort of training for the agencies?

MR. KLINK: Go ahead.

MR. CATELOTTI: I don't know. I think what you're asking is how we're going to educate the government to use the commercial product so they get the best advantage, is that what you're asking?

SPEAKER: Yes.

MR. KLINK: And clearly understand what it is that they're doing.

MR. CATELOTTI: Well, when I read the copy of the requirements, I think we're going to need to do a lot of training manuals. And as far as our requirements to bid on the business, and be awarded the business, we're required by government requirements that deliver those services. So other than that, I don't know the answer.

MR. KLINK: Anybody else? Chris.

MR. PIEROTH: I guess it depends on, when you say "training," what level you're talking about. If you're talking about, I think, just sort of an exchange that, you know, rather than asking for solutions that are specific by requirements, but rather try to adapt commercial standards within the government sector. I think that's already happening, as evidenced by this RFP process GSA is going through, to get industry feedback. If you're talking about, you know, on a more specific level, in terms of actual information of the programs, then, I think, Bill is absolutely right. There is, you know, a whole series of communication strategies, training strategies, et cetera, that would have to be implemented, as far as this program.

SPEAKER: (Inaudible.)

MR. PIEROTH: I think if you're talking about, in terms of actual technology applications, there are certain types of applications: EDI, for one; Electronic Security, and again, Smart Card where it is in everyone's best interest, whether it's through associations or business forums, for the industry to come to some agreement on set group of standards. And I mean, I always equate it back to the old VCR days when you had, you know, BETA and VHS. You know, we don't want to be the ones ending up with the BETA machines, at the end of the day. And I think in those situations, the industry will work together to try to come up with lists of standards.

MR. KLINK: Dan, do you want to add something to that?

MR. GOREN: I was going to add that a lot of us in the industry are participating in forums, like the Smart Card forums. And, you know, there seems to be increasingly more government participation and attendance at those forums. It's those types of activities that government agencies would benefit by, as the technology is coming out, so they can determine what application they're going to use.

MR. KLINK: Mike, do you want to comment?

MR. McCORD: Yeah. Two points to hitchhike on what Dan was just saying. There's also a Smart Card federal users' group at the last meeting held here, in conjunction with CardTech/SecurTech. It had over 200 participants from government agencies, which says there's a real interest in getting together with industry to find out what's really there. And committees are formed, working on different projects right now. So that's going to help some. The other thing is the three principles, and correct me if I'm wrong on this, that these competitions are being run are: partnership, technology and competition. And when you're talking about a 5-year base contract to begin with, with potential options to extend well beyond that, partnership in making sure that you are definitely in sync, providing the solutions to your customer, and delivering the technology that will aid that customer in performing the functions that they need to do to get their job done, are definitely key. Otherwise, that third leg of the triangle called competition is going to kick in, real quick, and kick you right out the door for another alternative, which may very well be sitting at this table.

MR. KLINK: All right. More questions? All right.

MS. McIVER: I think Mike McCord earlier talked about being excited about being involved this one time. And I can only say that I also, am excited about being involved in this program from the government perspective, as well as seeing everybody from industry to stakeholders participate today. I'd like to thank all of you for coming, and especially our panel. This is a service that's above and beyond the call of duty, from my perspective. I think they've done well in their individual presentations, and in responding to the specific questions, and issues that were raised by the attendees today. And I'd like to give them all an extra round of applause.

(Applause)

MS. McIVER: I think it's this kind of partnership, as it were, that will help us move this program forward. I'd also like to thank the members of the steering group. I've been up here today, and we've been working together since January on this project. Donna Bennett, who you met earlier, who wrote the -- this forum is an active participant. And I know I'm going to blow this because I'm going to miss somebody who's here. But I'd also like to thank the two people who are from my contracting staff, Darlena Birkowski and Rebecca Koses, who have been wielding microphones today, for their participation. As well as Garlette Jordan, and Susan May from the Travel Program Office. And Donna Gray, who was here earlier, but I don't see her now, who is also from that area. Harry Butler and Amanda Weller who are from our marketing staff. George May, who's from our Information Technology, and Bill Webster, who's from our Fleet Area. As you can see, we've pulled people to our steering group from a broad base of offices within Federal Supply Service and GSA. We also have people on the staff who sit in, at various times, from our General Counsel's office, as well as our Public Relations, and our Technology Area -- the area of governmentwide policy relative to technology. And it's that kind of working together, within our organization, I think is going to move this program forward.

Where do we go next? We've had this forum here today, and based on the information that we've been gathering over the summer, as well as what we've heard today, we'll be putting the final touches on a draft Statement of Work. And I do emphasize the word "draft." We see this as a strawman. We need to put something out on the street because it's a whole lot easier, when you have something around to talk about. Something to sort of put a framework to those fuzzy thoughts that you might be having about what you want, and what you can do. So we really want our customers, our stakeholders, and industry to review it carefully, and provide your written comments. You responded so well to our request in July, that we look forward to some of the responses when we put this on the street. We anticipate this going out sometime at the end of November, or the first part of December. We'll then take our feedback and information that you get on that, that you provide to us on that. And in the spring, we're going to release a draft solicitation, again, for comments. And I'm serious when I say we really are looking for active comments and feedback from all of you. That would follow up in late spring or early summer, with the release of solicitation. And we hope your continued participation in this process will lead to an excellent procurement, and an ongoing program that will meet all of our current models, and exceed our expectations. So I thank you all for coming today, and I look forward to your continued participation.

(Applause)

(Whereupon, at 3:00 p.m., the meeting was adjourned.)