Agencies opt out of FACNET

To overcome FACNET's problems with transaction delays, network interruptions and an
unreliable contractor database, GAO urged the Office of Management and Budget, General
Services Administration, DOD and other leading federal procurement shops to devise a new
integrated electronic commerce strategy based on clearer functional requirements and
stronger leadership.

 "Although FACNET has, in some instances, resulted in lower prices and expanded
access to vendors, agency officials and vendors often said that FACNET is not producing
the benefits expected," the GAO report said. "Moreover, agencies' analyses have
concluded that using FACNET to award contracts of $25,000 or less often takes longer and
requires more resources than traditional simplified purchasing methods for such

 Steven Kelman, administrator of the Office of Federal Procurement Policy,
acknowledged FACNET's flaws and said the administration has revised its electronic
commerce strategy to stress all aspects of automated procurement ranging from credit card
buys to full electronic data interchange transactions [GCN, Jan. 13, Page 1].

 The White House created two new executive committees to chart policy and standards
development for governmentwide electronic commerce, while the General Services
Administration's EC Program Management Office will coordinate interagency initiatives.

The government's original electronic commerce plan stressed a FACNET infrastructure
based on federal conventions for ANSI X12 electronic data interchange transaction sets.

 But in a letter to GAO, Kelman said the administration wants to improve FACNET and
give agencies greater choice in their electronic commerce tools.

 "This relatively small number of FACNET awards will hold unless FACNET proves
to be a better, cheaper, faster purchase technique than the three-phone-call method,"
Kelman said. 

"In coordination with making electronic payments to vendors, the administration
intends to make more than 95 percent of its purchases under $100,000 through electronic
commerce by the year 2000."

 In its report, Acquisi-tion Reform: Obstacles to Implementing FACNET, GAO
reviewed comments from agency electronic commerce managers about FACNET's effectiveness,
its ability to handle sim-ple procurement transactions and its management and technical

 Besides lost and late transactions, FACNET users said they had problems with the
vendor registration database. DOD officials reported last October that only 4,000 of about
300,000 federal contractors had valid registrations in the government's central vendor

 Civilian agencies also cited difficulties in getting money and staff for building up
their electronic commerce operations.

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