Playing by the rules

Deidre Lee, a top government procurement official, is pleased that so many

companies are offering electronic procurement solutions. But in the move

to e-government, she doesn't want to leave government contracting rules

in the dust.

That's why Lee, director of Defense Department procurement and former

head of the Office of Federal Procurement Policy, challenged industry to

prove it can incorporate government-unique activities — such as ensuring

fair and open competition and meeting socioeconomic requirements for small,

disadvantaged and minority-owned business participation — with the online

model.

"We are trying to make it simple, but it isn't simple," Lee told industry

representatives Nov. 2 at the Government Electronics and Information Technology

Association's conference to announce the five-year forecast for the government

IT market.

DOD and the General Services Administration are experimenting with new

methods of conducting acquisitions online, such as reverse auctions, aggregated

purchasing and quick requests for quotations. GSA has created Buyers.gov,

a portal that links federal buyers to all three types of commercial purchasing

solutions, and DOD is the first agency to conduct a private auction.

The government cannot conduct large acquisitions online until e-procurement

systems satisfy the "back-office" requirements that are already in existing

contract vehicles, such as the GSA schedule and governmentwide acquisition

contracts, Lee said.

Federal procurement is guided by specific principles:

* Fairness and responsibility: The government has a public responsibility

to encourage maximum participation and to fairly evaluate proposals.

* The Competition in Contracting Act of 1984: This ensures full and

open competitive procedures in accordance with the Federal Acquisition Regulation.

* Socioeconomic provisions: The government requires statements that

companies are equal-opportunity employers and that a firm is a certified

small, disadvantaged or minority-owned business.

* Remedy or protest procedure: The government must provide a method

for appealing an award.

"When we try to go to e-government, e-business, help me with my fundamental

tenets," Lee urged leaders in the e-procurement industry. "I think it's

solvable in chunks."

For instance, Lee said she is working with the DOD E-Mall to ensure

the items available already have the "back room" work complete, which will

speed the buying process. Interfaces between customers and sellers must

also be standard so that a disadvantaged or small business with limited

technology resources will still be able to participate, she said.

"The government has to roll out solutions that would allow the smallest

8(a) or the largest giant to participate in the e-procurement solution,"

said Tom White, vice president for IT reseller iGov.com. Any e-procurement

solution should use open standards and should not require vendors to register

in multiple places or with multiple offices, he said.

Initially, the govern—-ment's contracting requirements could be incorporated

into the e-procurement process with codes on records or purchase cards.

Later, government agencies can seek relief from some requirements via Congress,

Lee said.

The technology available for auctions and online purchases accommodates

any of those functions, said Bob Woods, president of Business Applications

Solutions at ACS Government Solutions Group Inc.

"We've got to be sensitive to [government requirements], but I don't

see it as a hang-up. I don't see it as a place where we're going to run

amok," Woods said. Companies that design online auctions are not overwhelmed

with suppliers at this point; they use agencies' lists of suppliers to invite

participation, he said.

Another inhibitor to e-procurement is the $2,500 limit on federal purchase

cards, according to Lee.

Federal employees are becoming more comfortable using purchase cards,

as evidenced in the rise in the number of purchase cards distributed, said

David Drabkin, deputy associate administrator for acquisition policy at

GSA's Office of Governmentwide Policy.

Purchase cards are better for managers because they make tracking employee

purchases easier and more accurate, he said. The next step is to raise the

$2,500 limit, he noted.

Most orders that would resemble those made on existing vehicles are

for larger amounts, Lee said. But before purchase cards can be used for

large online orders, government must find a way to move the back room to

the card, she said. "We can try to get merchant banks sponsoring the cards

to collect the certificates and put a code on the card that says you are

a qualified vendor," she said.

ACS' Woods, a former commissioner for GSA's Federal Technology Service,

said he doesn't know if coding the cards is the answer but thinks the government

will probably end up with a registry that uses codes to verify contractors'

status. "The idea of a credit card is that it is fast and efficient. If

you have to fill out a bunch of paperwork, then you'd have little incentive

to do it that way," Woods said. A registry would help verify vendors' categories

for online auctions as well, he said.

FreeMarkets Inc., which conducts GSA's reverse auctions, has its own

database of suppliers, which the federal government would like to access,

said Ted Carter, FreeMarkets' public sector director. The company has an

organization that finds qualified suppliers and organizes them in the database,

he said.

That type of database provides the opportunity to incorporate certificates

and other forms required to meet federal acquisition regulations, he said.

"We still need to solve the access, identification issues, but we also

have some real challenging business issues that we have to solve," Lee said.

Diane Frank contributed to this story.