Feds make little headway buying online

Federal agencies have moved little of their buying power to the Internet, despite online auctions, the GSA Advantage Web site and a general e-procurement push during the Clinton administration, according to a private research organization.

Agencies spent $13.8 billion in 2000 buying goods and services online — about 1 percent of their total procurement spending — according to Jupiter Media Matrix Inc., a research company based in New York City.

"Adoption of Internet-based [procurement] technologies has lagged," the company said in a report released last month.

Jupiter's gloomy findings correspond with those of the Coalition for Government Procurement. The coalition found that online buying accounted for only one-half percent of the goods and services federal agencies bought through the General Services Administration. In an effort to boost online procurement, GSA will require its vendors to list their products on GSA Advantage, the agency's online procurement site, starting in July. That will increase the number of GSA suppliers offering products via the Internet from 4,000 to 9,000, and it could double the amount of buying that government agencies do online. Even so, Jupiter researchers estimate online buying by government agencies is likely to increase only to 2 percent of all purchases this year.

The amount is surprisingly small considering the "high-profile efforts by the Clinton administration to push federal e-procurement," the researchers said.

E-procurement has made even less progress at the state and local level, the Jupiter report stated.

"For state and local agencies, including schools, e-procurement adoption has been even slower because agencies' budgets, including allotments for technology spending, are smaller than the federal government's," according to the report.

The dearth of online buying doesn't surprise Larry Allen, director of the Coalition for Government Procurement. Online buying is best suited for "commod.ity-type products," such as pens, pencils, paper and other supplies the government consumes regularly, he said. Those are relatively simple, low- dollar items, which keep online procurement totals low.

Online buying is not well suited for more costly and complex items, such as high-end computers, servers or office furniture, Allen said. The various alternatives and multiple configurations of those items often require personal contact with vendors.

"The $64,000 question is whether services should be able to be bought online. GSA would like to think so," but the coalition doubts it, Allen said. The complexities of buying most services probably preclude buying them online, he said.

For companies hoping to sell goods and services to the government, vending via the Internet has proven cumbersome. Sometimes agencies require approved prices, and other times they want competitive bidding. Different agencies require different formats for online catalogs, and software to convert catalogs from one format to another is "generally lacking," Jupiter researchers said.

The federal government should adopt common standards for federal agencies, the researchers said. It is likely that those adopted for the federal level would be picked up by state and local agencies as well.

Difficulties notwithstanding, Jupiter researchers estimate that government online buying will balloon to $286 billion by 2005, about 17 percent of total government procurement.

That's unlikely, Allen said. Although e-procurement may increase, "17 percent is not realistic," he said.