Government EDI plan fails to sell

Washington, D.C. - Three years ago, the U.S. government passed a law that forced federal agencies to make small purchases electronically. This way suppliers could compete openly for approximately $20 billion in government business by sending bids to an electronic data interchange-based network called the Federal Acquisition Computer Network (FACNET).

Built two and a half years ago, the network handled $226.19 million in awards that involved 457,133 electronic commerce transactions in fiscal 1997.

But the Clinton Administration, once an enthusiastic supporter, now is set to axe the existing FACNET requirement, leaving the future of this ambitiousnetwork very much in doubt.

The culprit is the innocuous-sounding Defense Authorization Bill, which includes an amendment to eliminate the FACNET mandate. President Clinton is expected to sign the bill.

Web through the heart

Twenty-nine value-added networks (VAN) are certified to deliver FACNET bid information. They retrieve it from two hubs managed by the Defense Information Systems Agency.

But officials in charge of the government's electronic commerce program say the World Wide Web has made the EDI-based FACNET obsolete. "FACNET was established two and a half years ago when the Web was just a glimmer, but now the Web is emerging as a solution," said Mark Adams, director of the Life-cycle Information Integration Office, based in Falls Church, Va., where the government is revamping its electronic commerce strategies.

While mandatory use of FACNET will end, agencies that want to can still send requests for quotes through it, Adams said.

A government panel called the Electronic Processes Initiative Committee plans to come up with a plan on how electronic commerce in the government will be accomplished by March of 1998.

However, there has been open rebellion in the government ranks against FACNET. The Defense Logistics Agency (DLA), which each year buys $9 billion in goods, would rather continue using its own network, called the Defense Automation Addressing System Center (DAASC).

"We were already doing DAASC when FACNET started," said John Christensen, procurement systems chief for DLA's C/EDI team. He added that DLA would feel "restricted" using it because so few vendors are registered in the FACNET contractor database. More than 300,000 suppliers do business with the government, but only 19,000 are registered with FACNET.

One VAN provider claimed FACNET's open bidding makes some people in government uneasy. "The federal government doesn't really want to be held accountable, especially when they're playing games with the money," said George Chisa, president of Simplex, Inc.

With mandatory FACNET use ending, agencies are likely to move further into Web-based procurement - a blessing and a curse to VANs and their subscribers. "FACNET is relatively convenient, and if we have to search the Web for business this will be a full-time job by itself and cause a lot of inconvenience," said Gene Chafe, general manager at Senske Pest Control, Inc., a company that has won two substantial contracts using FACNET.

All's fair

FACNET bid information is only available through VANs that charge service fees. "I don't know if FACNET is fair and equitable to everyone," said Claudia Holtz, a sales assistant who uses FACNET at Mitchell Lewis & Staver Co., a Wilsonville, Ore.-based wholesale distributor of pumps, compressors and agricultural equipment. "But I hope whatever they come up with next is fair," Holtz said.