Two firms buying piece of govWorks

American Management Systems Inc. and eOne Global LP, a developer of Internet-based payment technologies, announced Wednesday that they have signed a letter of intent to buy govPay, the transaction-processing business of embattled govWorks Inc.

GovPay provides state and local governments with the tools for online payment of taxes, utility bills and parking violations, as well as for securing recreational and other governmental permits using the Web.

GovWorks was in the news in November when it laid off employees as part of a restructuring effort, according to David Camp, vice president of marketing for the New York City-based company.

Under the terms of the letter of intent, eOne and AMS will jointly acquire the govPay payment processing software and related assets from govWorks. Also, eOne will operate the govPay business — including servicing existing contracts — and will assume responsibility for about 35 govWorks employees.

"We have expanded our capabilities to serve the needs of customers at the state and local levels," said Garen Staglin, president and chief executive officer at eOne. "In places like New York City, people can now pay traffic tickets online thanks to govWorks and govPay," and there are more than 20 similar systems in place throughout the country.

The eOne Cashtax operation has been handling electronic payments for local, state and federal governments for more than 15 years, including for the Internal Revenue Service, California, New York and Texas, Staglin said. Each year, Cashtax processes more than 36 million payments for more than 2 million taxpayers, totaling more than $1 trillion in federal, local and state taxes.

AMS and eOne have a joint marketing agreement, and in addition to cash, AMS also will contribute all of its current investments in govWorks as part of the purchase price.

The sale of govPay is to be completed in the context of the Chapter 11 reorganization process being pursued by govWorks. The parties anticipate that eOne and AMS will assist in funding govPay business operations pending the closing of the sale.

"We're waiting on the formality of a bankruptcy proceeding and expect that to be a four- to six-week activity," Staglin said, adding that the parties have begun account planning and technology integration.

Linda Morse, chief operating officer of govWorks, said the sale of govPay was a "wonderful opportunity for us to speed up the growth of eOne and govPay."