Federal Government Electronic Commerce and – FACNET – 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 Governments 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 its 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 Governments 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 Presidents 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 governments 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 activity and is sent to a supporting Gateway (GW). After translation into an American National Standards Institute (ANSI) X12 implementation convention format, archiving, and other functions performed by the GW, the transaction is transmitted to Government-maintained Network Entry Points (NEPs). NEPs receive the EDI transactions and transfer them to Value-Added Networks (VANs) that have been certified and connected to the FACNET.
VANs distribute the information to their customers (TPs) in a mutually agreed upon format. EDI transactions are returned to the Government by TPs through this process to complete the business cycle. Electronic invoices are sent by TPs through the VANs to agency financial offices. For most of the Government, the Financial Management Service (FMS) and the Defense Financial and Accounting Service (DFAS) initiate electronic payments through the Automated Clearinghouse (ACH) network. The ANSI is the coordinator and clearinghouse for national standards in the United States. ANSI charters Accredited Standards Committees (ASCs) composed of voluntary representatives from industry, labor, consumer, and Government to prepare consensus standards.
The ASC X12 was chartered to develop the structure, format, and content of business transactions conducted through EDI. FACNET Status FACNET currently allows for FACNET capable government procurement offices to solicit bids from numerous sources, evaluate them, and process awards for procurements valued at greater than $2,500 through $100,000. When fully implemented, FACNET will allow the Federal Government to provide public notice of solicitations, receive responses to solicitations and associated requests for information, provide public notice of contract awards, and receive questions regarding solicitations, issue task and delivery orders, and make payments to contractors, electronically. FACNET Certification Levels Interim FACNET Certified A contracting office is certified as being “interim certified FACNET” by the senior procurement executive of the agency, or by the Under Secretary of Defense for Acquisition and Technology for the military departments and defense agencies. This certification is provided to the Administrator of OFPP.
Certification approval is contingent upon the contracting office being able to utilize EC/EDI for: 1. Widespread public notice of solicitations; 2. Issue solicitations; 3. Receive responses to solicitations and associated requests for information. Contracting offices must be able to perform these functions for contracts between $2,500.00 and $100,000.00.
Full FACNET Certified Full FACNET certification requires that the head of an agency, with OFPP concurrence, has certified to the Congress that the agency has: 1. Implemented all FACNET functions (as noted below), and 2. Used FACNET for more than 75% of eligible contracts between the micro-purchase threshold and the SAT during the preceding fiscal year. A full FACNET system means an agency can electronically: Provide widespread public notice of contracting opportunities, and issue solicitations. Receive responses to solicitations and associated requests for information. Provide widespread public notice of awards and issuance of orders (including price).
Receive questions regarding solicitations, if practicable. Issue contracts and orders, if practicable. Initiate payments to contractors, if practicable. Archive data relating to each procurement action. A full FACNET system means that vendors can electronically: Access notices of solicitations.
Access and review solicitations. Respond to solicitations. Receive contracts and orders, if practicable. Access information on contract awards and issuance of orders. Receive payment by purchase card, electronic funds transfer, or other automated means, if practicable.
FACNET Access Access to the Government FACNET for suppliers is through a commercial company called a VAN. A VAN, or Value Added Network, is a Government certified commercial company that provides EDI communications services expertise and equipment to communicate electronically with the Government FACNET system. Information concerning registration and current certified VANs is available from the DoD Electronic Commerce Information Center, 5111 Leesburg Pike, Suite 9104, Falls Church, VA 22041-3206, phone 1/800-EDI-3414. In addition to a obtaining the services of a VAN, a vendor would also need to complete a Trading Partner Profile. This profile establishes the agreed to standard formats and practices for electronic commerce with the Government. This information is then loaded to the Governments Central Contractor Registration (CCR) database, which contains a listing of all vendors approved for electronic commerce with the Government.
All Government procurement offices and other interested parties will have access to the Central Contractor Registration database. Once a company is EDI-capable, has selected a VAN, an EFT capable bank, and registered as a Trading Partner, they will have access to all solicitations electronically released by all Government procuring agencies using this architecture.