For the first time in 20 years the New Zealand Government has formally put up for tender its main banking contract that handles over NZ$448 billion of transactions annually. Westpac has held the main banking contract without having to tender for it and now faces an intensive competitive tender process over the next two months. The Ministry of Business Innovation and Employment released a 362 page request for proposal for an eight year 'all of government banking' contract on Monday. This is the culmination of a three year process of consultation and consideration about what parts of the Government's banking arrangements the tender would cover and what is excluded.Economic Development Minister Steven Joyce took the unusual step of formally announcing the release of the proposal on the Government's Electronic Tenders Service."An all-of-government banking solution is part of the wider Government Procurement Reform Program aimed at making government buying as efficient as possible, encouraging innovation, reducing costs and improving competition," Joyce said.The all of government contract is broken down into four sub-categories, including: transactional banking and Government cash management, low value foreign exchange transactions, merchant facilities and inward payment collection services, and card services including an expense management system.The Ministry said it expected one bank would be selected for transactional banking, but that panel arrangements were likely for the other sub-categories.However, the Inland Revenue Department has opted out of the contract for its main Crown Accounts and over-the-counter transactions because it is replacing its computer system in a NZ$1 billion project expected to last ten years.The request for proposal details 93 crown accounts, 78 departmental accounts and 175 trust accounts that are included in the tender. The accounts cumulatively handle NZ$448 billion worth of transactions annually. The low value foreign exchange transactions up for tender total over NZ$1 billion per year while the merchant services accounts handle over 820,000 transactions with NZ$718 million of payments.The RFP listed 40 card facilities and 7,811 cards in the tender.The Ministry said ten banks had initially expressed interest in October last year, including National Australia Bank's BNZ, ANZ, Westpac, Commonwealth Bank's ASB, Kiwibank, HSBC, Citigroup and Standard Chartered.Westpac has not disclosed how much the current banking services contract is worth.Banks have until October 10 to complete their tender applications.