Federal Government
Electronic Commerce

Electronic Commerce

Electronic Commerce (EC) is a concept whereby the acquisition of supplies and services is conducted via a paperless exchange of business information through computers. This new approach to procurement activity requires agreed upon formats and standards by which computers can communicate to each other and transfer information back and forth. This exchange of information is defined as Electronic Data Interchange, or EDI.

The Federal Government?s recent attempts to streamline Government and reduce costs have focused on the potential of Electronic Commerce to help in achieving these goals.

A Brief History of EC, EDI and FACNET

FACNET stands for the "Federal Acquisition Computer Network". It is "the Government wide Electronic Commerce/Electronic Data Interchange (EC/EDI) systems architecture for the acquisition of supplies and services that provides for electronic data interchange of acquisition information between the Government and the private sector, employs nationally and internationally recognized data formats, and provides universal user access." FACNET, simply stated, is the EDI standardized format by which the Federal Government will proceed in it?s quest to establish electronic commerce for Federal Government procurements.

The groundwork for FACNET began with the National Performance Review, initiated on March 3, 1993. This six month intensive review of the Federal Government had as its goal the creation of a Government that worked better and cost less. The report generated by the NPR was the first in a series of steps to improve Government efficiency, and it described approximately 100 actions and recommendations by which to improve government. The Federal Government?s complex acquisition process, which procures over $200 billion worth of supplies and services each year, was identified as one area in which major, readily obtainable savings could be attained if a systematic reform of the acquisition process were implemented.

Benefits for the government and its suppliers, as noted in the NPR report, were:

Government Benefits Supplier Benefits
Lower Prices Improved profitability and cash flow
Increased competition Increased opportunity to participate in government acquisition
Increased buyer productivity Increased operating efficiency
Better management information Improved payment process
Reduced acquisition time and costs
Better inventory control

The President?s Executive Memorandum of October 26, 1993, "Streamlining Procurement Through Electronic Commerce", was issued as a result of the NPR recommendations. It noted that by moving to EC, the acquisition process would promote customer service and cost-effectiveness. Access to Federal contracting activity would also be increased for the more than 300,000 suppliers currently doing business with the government. Issued to the heads of executive departments and agencies, it established the objective of streamlining acquisition through the use of electronic commerce.

Specific objectives established by the President for EC were:

1. Exchange acquisition information electronically between the private sector and the Federal government to the maximum extent practicable.
2. Provide businesses, including small, small disadvantaged, and women-owned businesses, with greater access to Federal acquisition opportunities.
3. Ensure that potential suppliers are provided simplified access to the Federal government?s EC system.
4. Employ nationally and internationally recognized data formats that serve to broaden and ease the interchange of data.
5. Use agency and industry systems and networks to enable the government and potential suppliers to exchange information and access Federal acquisition data.

Implementation of EC was to be implemented via the following milestones, and was to be accelerated where practicable.

1. By March 1994 define the architecture for the government-wide EC acquisition system and identify executive departments or agencies responsible for developing, implementing, operating, and maintaining the Federal electronic system;
2. By September 1994 establish an initial EC capability to enable the Federal government and private suppliers to electronically exchange standardized requests for quotations, quotes, purchase orders, and notice of awards and begin government-wide implementation;
3. By July 1995 implement a full-scale Federal EC system that expands initial capabilities to include electronic payments, document interchange, and supporting data bases;
4. By January 1997 complete government-wide implementation of EC for appropriate Federal purchases, to the maximum extent possible.

FACNET Establishment

The Federal Acquisition Streamlining Act (FASA), signed into law on October 13, 1994, established the Government EDI network used for broadcasting solicitations. FACNET (Federal Acquisition Computer Network) was established as the government network to be used for broadcasting solicitations and information between the private sector and the Federal Government. In accordance with FASA, each Federal agency began developing their FACNET capability, led by the Electronic Commerce Program Management Office (ECPMO) of the General Services Administration, and the Department of Defense (DoD) Electronic Commerce Office.

FACNET Process Overview

A transaction (a request for quotation, or a delivery order) is electronically generated at a Government procurement