(Editor’s Note. It seems that as soon as we report on an electronic commerce development it quickly changes. In spite of new developments and new technologies, EC will be a permanent feature of contracting with the government and those who want to do business need to keep abreast. We have wanted to provide our readers with some basics as well as an indication of where EC is headed and found such an article in the July 1998 issue of Briefing Papers by Jean-Pierre Swennen and John McCarthy, Jr. of the law firm of Crowell & Moring. We recommend contacting a local Electronic Commerce Resource Center where they provide frequent seminars and often offer good practical advise (usually free of charge) on what do to become EC capable.)

Definition

Electronic commerce is really a paperless process for accomplishing business transactions that rely on electronic mail, electronic bulletin boards, electronic funds transfer, electronic data interchange (EDI) and other technologies.

A Little History

Though used in the commercial sector since the late 1970s and early 1980s, the federal government did not take any unified efforts to implement EC until the early 1990s. The first comprehensive policy direction stems from the Al Gore-led 1993 National Performance Review Program report called "Reinventing Federal Procurement" where EC was touted as providing enormous cost savings to procuring government goods and services. The Report was followed by a 1993 DOD report and a Presidential Memorandum that restated the improvement potential of the procuring process, identified potential hurdles to be solved such as confidentiality and integrity of data and continuity of contracting operations, and called for such concepts as presenting "a single face to industry" through use of recognized data standards, single point of entry for contractor connection to the system and a centralized registration repository. Now, EC has gained widespread acceptance throughout the government and recent strategic plans call for customer-friendly electronic purchasing tools to be operational as soon as the end of 2001 for all 22 million purchases per year.

Although initial schedule goals were not met, substantial steps were taken toward implementing a standardized EC system in the establishment of FACNET. The Federal Acquisition Computer Network (FACNET) was to focus primarily on the acquisition of products and services with values between the micro-purchase threshold of $2,500 and the simplified acquisition threshold of $100,000. The system was designed to allow for electronic interchange of procurement information between government and contractors, use nationally and internationally recognized data formats and permit universal user access. Government buyers were to provide widespread public notice of solicitations, receive responses to solicitations, provide public notice of contract award with price, receive questions, make payments through electronic means and archive data. Sellers were to access notice of the solicitations, respond to them, receive orders when awarded a contract, access information on contract awards to others and receive payment.

While FACNET was being implemented the Internet was rapidly becoming the universally recognized vehicle in the commercial world. Some agencies perceived this trend and began bypassing the FACNET, relying on the Internet and electronic bulletin boards for its procurements. A 1997 GAO report addressed numerous operating problems associated with FACNET (e.g. poor registration, high cost for small business) and pointed out the availability of simpler and faster electronic methods such as the Internet, on-line electronic catalogs and purchase cards (government issued credit cards). Under the 1998 DOD Authorization Act, Congress and the Administration repealed the need to use FACNET exclusively and called for more flexible EC methods.

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