A11:
USE ELECTRONIC COMMERCE TO STREAMLINE GOVERNMENT BUSINESS PROCEDURES

Imagine this: Jane Sawyer, a Forest Ranger in Oregon, needs 75 shovels delivered before fire season. Through the Internet, she accesses a central electronic catalog system available on the Acquisition Reform Network (ARNet). After filling in ARNet's electronic form, she clicks her mouse on the "Start Search" icon to check multiple federal agency catalogs. Because several agency and vendor catalogs carry shovels, Jane uses ARNet's sorting capability to find the least expensive ones, including freight costs.

Jane electronically places her order. After her computer's card reader scans her smart card, her identification information is forwarded to verify that she is an authorized buyer. The purchase card and transaction information are also sent. The system then electronically transfers the purchase order to the vendor, and the shovels arrive within a week.

Today, it is possible to perform some of these transactions on the Internet. Over the next several years, the government should be able to purchase and pay for most of its goods and services electronically. The September 1993 National Performance Review report specifically identified achievable savings from the systematic reform of the federal government's business processes. Electronic commerce facilitates that reform, generating benefits to business, government, and taxpayers. Electronic commerce allows the government to make more informed procurement decisions quicker and cheaper.

Business benefits through better information about government requirements, more opportunities to sell to the government, and a more accurate and efficient electronic payment process. Taxpayers benefit from lower government operating costs. The federal government's implementation of electronic commerce has these key objectives:

Use commercial products and practices as much as possible; and

Use electronic commerce to eliminate unnecessary business processes and to reengineer and automate remaining business processes.

The last four years have produced numerous actions:

In 1993, the President issued milestones for federal agencies to establish electronic commerce capabilities.

In 1993, the Office of Management and Budget created the federal Electronic Benefits Transfer Task Force to transform the paper-based benefit delivery system to an electronic benefit delivery system. In 1994, the task force began a federal-state partnership to create a smart card that would deliver a wide range of benefits.

In 1993, the General Services Administration (GSA) and the Department of Defense jointly established the Electronic Commerce Acquisition Program Management Office to implement a governmentwide electronic commerce implementation plan.

In 1994, Congress passed the Federal Acquisition Streamlining Act. In 1995, Congress passed the Federal Acquisition Reform Act. Those Acts established the Federal Acquisition Computer Network (FACNet) and made it easier to use purchase cards and to purchase commercial products.

In 1996, Congress passed the Debt Collection Improvement Act, which requires the delivery of all federal payments and benefits using electronic funds transfer by January 1, 1999.

As a result of those actions, the introduction and use of new technology, and major reductions in agency acquisition and finance personnel, federal agencies are starting to buy and pay for goods and services in new ways:

Automate purchasing and finance functions through electronic data interchange (EDI).

EDI is used to send out public requests for quotation, purchase orders, invoices,and payment order/remittance advice. The major supply agencies -- Defense Logistics Agency, GSA, and the Department of Veterans Affairs -- have begun using EDI to create a full electronic procurement cycle. A governmentwide committee is helping to coordinate federal adoption of national and international EDI standards.

Advertise government procurement opportunities on the Internet.

Today, many agencies post solicitations on their Web sites. In 1997, the Department of Commerce posted the Commerce Business Daily on the Internet (http://cbd.savvy.com). Increasingly, vendors have real-time access to helpful information for doing business with the government.

Post electronic catalogs.

During the past few years, several federal agencies have posted their electronic catalogs on the Internet, allowing agency buyers to browse items, compare prices, and place an order using a government purchase card. For example, the General Services Administration provides on-line access to GSA Advantage, an electronic catalog that lists 145,000 products (https://www.fss.gsa.gov/cgi-bins/advwel). By October 1997, this catalog will list all of the 4 to 5 million items originally found in GSA's Federal Supply Schedules.

Increase the use of purchase cards.

In less than a decade, the government has significantly changed its purchasing habits through the use of the purchase card. For example, in Fiscal Year (FY) 1989, the government purchased less than $1 million in goods and services using purchase cards, while in FY 1996, the government purchased more than $3 billion using purchase cards.

Automate the federal grants process.

In FY 1996, the federal government provided approximately $300 billion in grants to governments, universities, tribal governments, non-profit organizations, and individuals. The grants process can be improved and speeded up using electronic commerce, and ten federal agencies have joined together to form the U.S. Electronic Grant Project. This will provide a "one-stop shop" for federal grant applications using World Wide Web and EDI technologies; users will be able to choose which safe secure method they want to use.

NEED FOR CHANGE

Notwithstanding considerable progress, more improvements are needed. As implementation continues, there are several specific areas that should be addressed:

Improve coordination among government electronic commerce programs.

More coordination is required across program areas, e.g., electronic benefits transfer, information technology organizations, logistics, acquisition, grants, and finance.

Improve coordination of procurement and payment functions.

The federal government spends more than $1.7 trillion annually. Additionally, the government transfers more than $400 billion between government agencies.

Payment processing involves many parties. The process includes obligating funds, conducting reconciliations, and providing accurate, timely reporting of payment information to the core financial system. In parallel, during the acquisition process, payment and procurement systems interact to check the availability of funds, record obligations, and report acceptance of goods and services.

Improve electronic commerce security.

It is essential that Internet transactions be secure. Digital signatures can ensure that transactions and communications between parties are authenticated and have not been altered during their transmission across open networks. A functional public key infrastructure would provide the means for verifying digital signatures.

ACTIONS

1. Develop standard trading partner data.

The President's Management Council has created the Electronic Processes Initiatives Committee. An early task for that Committee should be to develop a minimum set of trading partner data to enable the agencies to conduct electronic commerce at minimal cost and burden. This data set should be established by November 1997.

2. Update the Electronic Commerce action plan.

At the same time, the Committee, in conjunction with the Government Information Technology Services (GITS) Board, should review the status of electronic commerce and its continued implementation. The review should determine how to ensure that the latest developments in electronic benefits transfer and smart card technologies are integrated in the overall electronic commerce management plan. The Committee should work closely with private sector organizations such as CommerceNet to ensure that the government is adopting the best practices.

3. Continue the momentum in procurement and payments.

Initially, the Electronic Processes Initiatives Committee should focus primarily on procurement and payment functions. Each year, the federal procurement system conducts about 20 million transactions amounting to around $200 billion. The Federal Acquisition Computer Network has made substantial progress linking procurement and payment functions. The Committee should ensure that procurement and payment functions are integrated into all governmentwide electronic commerce initiatives.

4. Build a consolidated electronic federal grants application system.

Many of the current "electronic grant" initiatives are developed for specific agencies, programs, or activities, and are based on federal forms which vary from agency to agency. Additionally, most of the these electronic applications apply to partial steps of a process without a comprehensive plan for implementing modules to manage the entire process electronically.

By April 1997, the GITS Board should establish an interagency working group to expand the U.S. Electronic Grant Project into a comprehensive system and business model for streamlining grant processes, improving efficiency, and cutting long-term costs for federal agencies and grant customers. The working group should include the existing Electronic Grants Intergovernmental Partnership (the Departments of Transportation, Energy, and Education, the U.S. Coast Guard, the Environmental Protection Agency, the Small Business Administration, and the General Services Administration), the Department of Health and Human Services, the Department of Agriculture, the Department of Education as well as other interested parties.

A comprehensive grants system will require the development and implementation of administrative modules which, through partnership, will enable agencies and customers to manage the entire grant business process. This process includes steps for grant solicitation, application, and award. The modules should integrate key "electronic grants" approaches currently under development into a governmentwide grants business model that will provide a common interface for customers. Specifically, ties are needed to the payment reengineering efforts underway at the Department of Treasury.

The application module should be available for testing by October 1998.