Hamre pushes DOD to paperless contracting

In what would be a massive re-engineering of how the Defense Department purchases the $118 billion in goods and services it buys every year the Pentagon may soon approve a plan to rid itself of all paper and move to a digital contracting process by the end of this century.

DOD is expected in the next two to three weeks to approve the blueprint for the plan which was drawn up after John Hamre DOD comptroller and nominee for deputy secretary of Defense issued a memo in late May requesting the undersecretary of Defense for acquisition and technology to develop a plan for paperless contracting.

Under the high-level document which was developed by a team chaired by the Continuous Acquisition and Life Cycle Support office DOD's contract writing administration finance and auditing processes would be electronically linked by Jan. 1 2000 so that no paper would change hands and information would flow between various systems.

The plan would affect the entire process from end to end and would help DOD manage its contracts better Hamre said. "In the contract payment world we have 15 linear miles of shelf space for storing contracts " he said. "We want to get into electronic commerce imaging technology and we would like to get more work done with" government purchase cards which will help simplify the process he said.

DOD will rely on electronic commerce (EC) electronic data interchange (EDI) electronic catalogs imaging purchase cards and other technologies.

Wayne Wittig electronic commerce team leader at the Office of Federal Procurement Policy said the plan would likely encourage other agencies to go paperless. "Once DOD comes out with something like this I think other managers will think this is the way to go " he said. "Re-engineering the procurement process is a big goal but government is not the only one doing it. The marketplace is gobbling up technology to satisfy customers."

Some civilian agencies have adopted electronic commerce to streamline portions of their contracting systems but the use of EC is typically limited to a contract and for certain processes. NASA uses EDI in a paperless order-processing system for the Scientific and Engineering Workstation Procurement contract. The National Institutes of Health conducts most transactions on its multiple governmentwide contracts using e-mail and plans to make available new electronic purchasing features for agencies to obtain price quotes from vendors. Automating order processing reduces procurement times.

DOD which is responsible for about 70 percent of the federal government's procurement actions hopes to see the same benefits but on a larger scale. "We're trying to cut down on the cycle times of how we get things and how we pay for them " said Michael Mestrovich executive director of DOD's Electronic Commerce Integration Organization. "The quicker we can turn things around the better off we are."

An electronic environment also would be easier to manage and it will be more accurate sources said. It also should solve the problem of the large number of unmatched disbursements which is the inability to match expenditures to appropriated funds or to reductions in previously recorded obligations.

The EC Integration Organization is registering contractors in a central database and ensuring that they have electronic funds transfer capability to conduct business electronically. The office also is working on plans to add an electronic mall front-end to the Standard Procurement System to allow DOD users to order without going through a contracting shop. SPS scheduled for rollout this year will provide a standard procurement application that takes advantage of commercial off-the-shelf software and open systems.

The plan is an "ambitious goal " said a source familiar with the project but added that electronic interfaces to systems should be in place by 2000. DOD would likely consolidate some systems and upgrade others although many processes are already done electronically the source said.

Vendors that do business with DOD are pleased with the plan which should disburse payments to contractors more quickly. "We're a small company but for any company cash flow is a major issue " said Jim Goodridge group director of management consulting at Soza Corp. "In the electronic world our payment is almost immediate. The turnaround will be accelerated tremendously. Once the process is working it's fairly seamless."

Soza is one of eight vendors working with the General Services Administration Federal Systems Integration Management Center on a paper-free task-order pilot system which allows task orders to be approved in two days vs. two weeks and allows customers to pay electronically.

DOD's real challenge will be to get people to accept the change said Eben Townes senior vice president Acquisition Solutions Inc. "From a technology perspective it's doable " he said. "It's the people end of it that will be the challenge. The work force will tend to resist it."


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