Rules must be relaxed if federal EC is to succeed

The drive to move the federal government to electronic commerce is not working out quite the way it was planned. Agencies may be accomplishing a healthy number of electronic purchases, but they aren't following the script laid down for the Federal Acquisition Computer Network (FACNET), the electronic commerce architecture.

The Electronic Commerce Acquisition Program Management Office (ECAPMO) has described a FACNET scheme in which an office that wants to initiate a procurement action—say, a purchase order—would send it electronically to an agency gateway. The gateway would automatically translate the action into the American National Standards Institute's X12 standard for electronic data interchange, archive the action and then transmit it to the network entry points. The NEPs, in turn, would transmit actions to value-added networks, and the VANs would distribute actions to individual trading partners or vendors to complete the cycle.

If a vendor sent an invoice, the action would flow back the other way, from trading partner to VAN to NEP to agency gateway to the purchasing office.

Wrapped up in this scheme is the notion that the federal procurement community should present "a single face to industry." Vendors should not be forced to cope with different rules, procedures and software for each federal procurement office, and one standard way of doing procurement business should fit all cases. This should especially hold true for one-to-many transactions, such as requests for quotations (RFQs).

It is mainly because of this single-face concept and the one-to-many transactions that the model insists on using NEPs and VANs.

The trouble with the current FACNET model is that very few agencies are using it. Less than 10 percent of federal procurement actions currently go through NEPs.

This is perhaps due in part to teething problems with the new ways of doing business, but it is also because single-face, one-to-many transactions are not where the crying need exists for electronic commerce. Since the Federal Acquisition Streamlining Act (FASA) came along, agencies can accomplish the bulk of their purchases with the simplified acquisition rules and have far less need to issue RFQs.

Where agencies and vendors have the strongest incentive to switch from paper to electronic ways of doing business is chiefly in the single large contract, with hundreds of orders and invoices flowing back and forth between one buyer and one seller. A one-to-one arrangement between agency procurement office and vendor here makes the most sense.

This is what seems to be happening. By and large, agencies are not complying with the FACNET model in any significant numbers.

A survey carried out last summer by the Industry Advisory Council queried federal contracting officers and their industry counterparts for the 30 largest indefinite-delivery, indefinite-quantity information technology contracts. The results showed that the majority of federal personnel professed some knowledge of electronic commerce and federal EC plans in general, but less than half knew about federal X12 rules, the vendor registration system for EC and the standard trading partner agreement. The overall level of awareness and implementation for EC among feds was significantly lower than for industry.

ECAPMO adopted the praiseworthy strategy of trying to insist on EC standards from the outset. But the lesson seems to be that it's more important to loosen up and just get the feds doing some kind of EC in high volume first. Once they're hooked on the advantages of going electronic—and industry already seems pretty well convinced—then standards can be introduced, and everyone can be brought under the more rigorous FACNET umbrella.

That appears to be the direction federal EC is headed. ECAPMO is likely to encourage agencies to work out one-to-one EC with their largest contractors so the agencies will get used to doing business electronically. Once agencies achieve a relatively high volume of electronic transactions and recognize the efficiencies to be gained, ECAPMO will nudge them in the direction of single-face standards.

This is a laudable approach. Either we relax the FACNET rules slightly, or we admit that the EC targets set by the White House and FASA cannot be achieved. The important thing is to get the agencies moving toward EC, however defined.

But the federal procurement community accepts change reluctantly. Getting those folks to move from paper to electronic ways of doing business will be slow going all the way.

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Sprehe is president of Sprehe Information Management Associates, Washington, D.C. He can be reached via the Internet at jtsprehe@intr.net.

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