American Management Systems, a Fairfax company that supplies financial accounting systems to federal, state and local agencies, has teamed up with one of the nation's largest electronic-commerce firms in a bid to handle billions of dollars of government purchases over the Internet.

AMS's partner, Ariba Inc. of Sunnyvale, Calif., specializes in business-to-business e-commerce, providing companies with software and secure networks for making purchases on the Internet.

The two companies said they will offer governments access to Ariba's online ordering system, including products and services from thousands of suppliers, together with AMS software that can give government budget officers and comptrollers better control over their agencies' fast-growing Web purchases.

AMS, which supplies financial systems for 65 federal civilian agencies and departments and is developing a similar system for the Pentagon, hopes to create several pilot projects early next year to demonstrate the system's potential and will seek orders from agencies by the second half of 2000, said Paul Brands, AMS's chairman and chief executive. No revenue goals were disclosed.

Initially, the companies will focus on purchases of $25,000 or less, which account for about one-third of the federal government's $200 billion-plus in annual procurement spending but generally do not require full-fledged competitive bidding.

Another target market is federal purchases of $2,500 or less on government credit cards.

"Government credit-card purchases are $12 billion a year and growing," said Richard White, founder of, an Internet portal that links government procurement offices with suppliers. "There are thousands of credit cards in the hands of federal, state and local officials. There's a tremendous need for budgetary controls over what they're buying."

As the federal government continues to streamline its purchases, with increased reliance on electronic commerce, there's a "real challenge to understand what is actually being spent," Brands said. "How do you control it? How does it relate back to [an agency's] budget?"

That scrutiny will be offered by AMS as part of the partnership, for an upfront licensing fee.

The companies are offering state and local governments access to Ariba's vendors through a Web site on a pay-per-use basis.

Ariba's commercial network also gives government agencies a new way to auction or exchange surplus property, said president and chief executive Keith Krach. Last month Ariba spent $400 million in stock to acquire another California company whose software is used for business-to-business Internet trading of goods and services.