DOD to shut e-biz centers

Supporters anticipate void in market after expected autumn closings

The Defense Department intends to close the network of e-commerce centers that it established nine years ago to help small- and medium-size companies do business electronically with Defense agencies. There are 17 regional Electronic Commerce Resource Centers nationwide that offer training, outreach and technical support programs to help businesses adopt e-commerce, which DOD requires most of its suppliers to use. The centers also support government sites such as Navy bases.

DOD's Joint Electronic Commerce Program Office sponsors the ECRC program as a way to help the department's 300,000 trading partners and potential partners move to e-commerce. DOD finances the centers, so the services are provided to businesses at little or no cost.

However, in a May 16 letter to ECRC customers, DOD program director Linda Fowble said the ECRC program would end Sept. 30. "There are no plans to continue the program beyond this date," she wrote. Fowble gave no explanation in the letter for the decision, and DOD did not make anyone available for comment.

ECRC directors and others involved in the program said they were not sure why Pentagon officials decided to end it, although their suggestions ranged from lack of funding to change in departmental mission to lack of a program advocate. However, some centers may continue to operate by charging for their services.

Byron Toth, program director of the Cleveland ECRC, said that the center plans to stay in business by contracting with DOD organizations, which currently represent about half of the center's business base. Over the past eight years, the center has received about $16 million as a result of contracts with Defense agencies. It also received $17 million in appropriations over that span to train small- and medium-size businesses in a five-state area.

It will be those businesses that will lose when the program goes away, Toth said. Although they can continue to pay for the services they previously received for free, many companies served by the Cleveland ECRC won't be able to afford it. "I'm disappointed," he said. "We provide valued service to the DOD supply chain in helping them do business with DOD electronically."

The centers provide a needed service, supporters maintain. They "teach the small businesses how and where to go fishing as opposed to giving them a fish," said Michael LaBeau, director of the Palestine and San Antonio ECRCs in Texas. The entire ECRC network has trained almost 250,000 students in the past five years and has provided technical support to about 66,000 small businesses.

"If we go away, there will be a void for small businesses," he said.

LaBeau recommended that DOD continue the ECRC program and develop a longer-term strategy for continuing the services. Meanwhile, the Palestine and San Antonio ECRCs are considering the next steps.

"We are assessing our ability to offer our services in a conventional, commercial environment," he said, adding that no decision has been made. As with other ECRCs, the Palestine and San Antonio centers operate in partnership with other companies, in this case Getronics Government Solutions LLC.

The Defense Department operates the ECRC program through prime contracts with Concurrent Technologies Corp. and CAMP Inc. Max Morris, the ECRC integrator at Concurrent, said, "We have a lot of clients that like" the program. Despite the support, DOD elected not to renew the contracts beyond the 2001 fiscal year.

Michael Mestrovich, president and chief executive officer of Unlimited New Dimensions LLC and a former DOD e-commerce official, said he was surprised to hear that the ECRC program was coming to an end. "Particularly for the mom-and-pop shops, I think they were providing a real service. I think it's important they exist for purposes of keeping those entities in the government marketplace," he said.


Centered for extinction

All 17 Electronic Commerce Resource Centers will cease to exist at their

regional locations across the United States as of Sept. 30.

Some of the training they provide that will no longer be available

for free to businesses include:

* Using the Defense Department's online EMall to sell and buy products.

* Converting legacy data to electronic format.

* Processing payments electronically between suppliers and customers

in industry and government.

* Understanding electronic data interchange.


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