E-procurement stirs small-biz fears

The push for paperless government may do more than eliminate mountains of paper; it may exclude small businesses in the procurement process.

E-procurement initiatives suggested by the Office of Federal Procurement Policy may preclude small businesses from competing for government contracts, according to industry experts, members of Congress and agency representatives testifying at a Tuesday hearing of the House Small Business Committee's Government Programs Subcommittee.

"Most small businesses are started because someone who oversaw the production at a company decided to go off on their own," said Rep. Ruben Hinojosa (D-Texas). "They have a lot of experience in the production of widgets but are weak when it comes to administration experience and computer science. As government moves to a paperless process, small businesses will be left behind unless someone steps in to fill the void."

OFPP has suggested that procurement announcements and proposals be made electronically via a governmentwide single point of entry on the Internet. The electronic transactions save agencies labor and paper costs as well as time. The new system would eliminate the 15-day waiting period between the announcement of a contract and the acceptance of bid proposals.

"We must continue to look for ways to use e-commerce to strengthen the government's acquisition functions so that we can make our interactions easier, faster and less costly for both ourselves and our trading partners," said Deidre Lee, administrator for OFFP. "The 15-day waiting period was based on the old mail system. By using e-mail, we can immediately notify businesses and get a response."

But many small business do not have access to technology or are not equipped to handle electronic transactions, according to Jere Glover, chief counsel for advocacy at the Small Business Administration.

"Only 1.4 percent of Internet use among small businesses is directed to e-commerce sales," Glover said in a written statement to the subcommittee. "Costs, security concerns, technical expertise and customer service are the major roadblocks to greater small business participation in e-commerce."

But regardless of whether small businesses are prepared, e-commerce has already been implemented in the government procurement process. The Defense Department has implemented the Joint Electric Commerce Program Office, which serves as the executive agent for the application of electronic business practices. Since JECPO's implementation, DOD has raised its paperless procurement from 27 percent in 1998 to 78 percent as of Jan. 1, 2000.

Click here for audio recording of the subcommittee's hearing on e-commerce.