In response to language in last year's Defense Authorization Act, the Office of Management and Budget's Office of Federal Procurement Policy has released two reports about electronic commerce in the federal government. While those reports accurately reflect the state of EC in the federal marketplac
In response to language in last year's Defense Authorization Act, the Office of Management and Budget's Office of Federal Procurement Policy has released two reports about electronic commerce in the federal government. While those reports accurately reflect the state of EC in the federal marketplace, they fall woefully short of providing the specific guidance needed by agencies and industry to make EC work.
Congress gave OFPP the authority to direct and coordinate EC solutions within the government. Congress gave OFPP this charter because federal EC is, in many ways, in disarray. The purpose of the two reports (see policyworks.gov/org/main/me/epic/opendocs/) was for OFPP to assess the progress in federal EC and to chart a course for the government. Over the past few years, EC in the federal government has grown very unevenly, and it has suffered some spectacular failures.
In 1994 Congress and the Clinton administration took a giant step forward with the launch of the Federal Acquisition Computer Network through the Federal Acquisition Streamlining Act. However, FACNET was doomed from the start.
Congress and the administration structured FACNET so it could be used primarily for small purchases— those less than $100,000. That was precisely the wrong market for FACNET's architecture.
FACNET carries electronic data interchange messages, which are, in essence, highly complex business forms converted into electronic messages. Those EDI messages are carried over FACNET's Defense Department-based architecture, which is a closed, largely proprietary system. To reach the government, contractors transmit their EDI messages through private value-added networks.
To participate in FACNET, contractors had to learn how to use EDI, and they had to pay steep fees to use the private value-added networks. But cost was not the only problem with FACNET. Even when contractors were able to clear the cost hurdles, their messages often were lost en route to their government customers.
OFPP's recent reports candidly acknowledged FACNET's failures. "Agencies remain frustrated with FACNET's architecture," OFPP conceded, and it pointed out that FACNET is too complicated and expensive for the small transactions it was intended to handle. As a result, OFPP noted, agencies are looking to other solutions for EC.
As the OFPP assessment report noted, there have been some important successes in federal EC. A number of agencies have placed "electronic catalogs" on the World Wide Web. Through these online catalogs, agency customers can purchase directly from the Internet, using government purchase cards. Probably the most prominent of these catalogs is the General Services Administration's GSA Advantage service, which posts many of the GSA supply schedules on the Internet. The government also has scored important gains in publicizing its procurements electronically and in making electronic payments to vendors.
The next step is to integrate these efforts. That is where OFPP's strategic plan falls short, probably inevitably. OFPP clearly was concerned that the technology and the marketplace are changing too rapidly to wed the government to any one solution. Having survived the FACNET fiasco, the last thing the government wanted was to tie itself to another dying technology. As a result, the OFPP reports really do not commit the government to any overarching solution.
OFPP's strategic plan instead speaks in sweeping terms of "fostering partnerships," "stakeholders" and "managing change." OFPP makes very few concrete suggestions; instead, in many ways, its strategic plan is to plan some more and to watch where the market goes. Even in areas that should be relatively straightforward— for example, how the government will allocate legal risks with its vendors— OFPP stops short of either embracing or rejecting existing commercial models.
OFPP's reluctance to commit is unfortunate, although certainly understandable. However, as a simple matter of economics, until the government makes its direction clear, contractors will not invest an optimal amount in EC with the federal government.
The OFPP strategic plan dwells long on the need to bring EC to the agencies through "change management," but OFPP largely ignores the huge investment that contractors will need to make in order to integrate their electronic transactions with the government's transactions.
The OFPP strategic plan maps out an ambitious schedule for further planning and trial implementation. Over the coming months, the government will reach many milestones in that schedule, and OFPP is due to report to Congress again a year from now. By then, the direction that EC is taking should be clearer in the commercial marketplace, and OFPP, following the commercial lead, needs to provide clearer guidance to agencies and the contractor community in order to realize the true benefits of EC.
-- Yukins is a partner in the government contracts group at the law firm of Holland & Knight LLP, Washington, D.C. He has written and spoken extensively on EC in the federal marketplace.
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