The federal government announced plans yesterday to hand out 380,000 MasterCards to federal employees who buy $19 billion annually in goods and services for the government.
"We estimate that the use of the bank card could save the government over $100 million during the first full year," said Katherine M. Bulow, assistant secretary in the Commerce Department.
The savings come from eliminating the payment of state and local sales taxes, wiping out the huge amount of paperwork involved in processing the antiquated carbon copy forms, and reducing petty cash funds for purchases ranging from picks and shovels for fighting forest fires to staplers and computer software, Bulow said.
Individual agencies will determine who is eligible for a card and for what purposes it should be used. Purchase of travel, food and lodging is prohibited.
D. Dale Browning, president of Rocky Mountain Bankcard System, the winning bidder for the contract, said the Commerce Department will settle accounts in full daily, eliminating one of merchants' biggest complaints about dealing with the government -- slow payment.
The government will pay $5 annually per card and no interest. Browning said his firm will profit from the discount the merchant gives the government.
About 13,000 cards are already in use in government agencies.