United States General Accounting Office

GAO Report to Congressional Committees

January 1997 ACQUISITION

REFORM

Obstacles to

Implementing the

Federal Acquisition

Computer Network

GAO/NSIAD-97-26

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272646 

January 3, 1997

Congressional Committees

The Federal Acquisition Streamlining Act of 1994 (FASA), Public Law

103-355, mandated the establishment of a Federal Acquisition Computer

Network (FACNET) architecture to enable federal agencies and vendors to

do business electronically in a standard way. FACNET is intended primarily

for purchases valued above the micro-purchase threshold ($2,500) up to

the simplified acquisition threshold (currently $100,000).1

 Federal officials

and others expected many benefits from FACNET, including expanded

contracting opportunities for small businesses, increased competition and

lower prices for goods and services, reduced contract processing times,

simplified procurement processes, and improved federal productivity.

As part of our ongoing work on FASA implementation, we reviewed the

federal government’s progress in developing and implementing FACNET.

Specifically, we ascertained (1) federal agencies’ use of FACNET,

(2) problems and benefits of using FACNET, (3) concerns relating to FASA’s

requirements for FACNET, and (4) management obstacles to effective

governmentwide implementation of FACNET. For this report we obtained

information from 18 federal agencies that in fiscal year 1995 accounted for

about 90 percent of both the number and dollar value of federal

procurement actions of $100,000 or less reported to the Federal

Procurement Data System (the governmentwide procurement database).

The Department of Defense (DOD) alone accounted for approximately

80 percent of the number and value of these reported actions. (A list of the

responding agencies is in app. I.)

Background On October 26, 1993, a presidential memorandum established a

governmentwide goal of streamlining acquisition through the use of

electronic commerce (EC). EC, the electronic exchange of the information

needed to do business, embraces many technologies, including electronic

data interchange (EDI), electronic mail (E-mail), computer bulletin boards,

and electronic funds transfer. EDI is the computer-to-computer exchange

of routine business documents using standardized data formats. To meet

the President’s October 1993 goal, a governmentwide program to develop

and implement an EDI-based architecture for federal acquisition was

initiated.

1

Both thresholds were established by FASA.

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Title IX of FASA, enacted on October 13, 1994, provided the statutory

framework for the governmentwide EC/EDI initiative.2 FASA mandated the

development and implementation of a governmentwide FACNET

architecture to expand small business access to the government

marketplace and simplify and speed the solicitation and award of

competitive procurements. FASA requires that FACNET provide

(1) widespread public notice of both contracting opportunities and

awards; (2) a means for vendors to electronically review, request

information on, and respond to solicitations and similar information; and

(3) recordkeeping on each procurement action. The act also requires that,

if practicable, FACNET provide other capabilities, such as issuing orders

under existing contracts and making payments.

FASA does not specify a particular governmentwide EC/EDI systems

architecture or design but does require FACNET to use commercial

hardware and software, provide universal user access, and employ

nationally and internationally recognized data formats. Throughout this

report, the term “FACNET infrastructure” refers to the communications and

computer systems that transmit EDI transactions to and from federal

agency procuring activities and vendors.

The Administrator for Federal Procurement Policy, who heads the Office

of Federal Procurement Policy (OFPP) in the Office of Management and

Budget, has responsibility for overall policy direction and leadership of the

FACNET program. The Electronic Commerce Acquisition Program

Management Office (ECA-PMO), co-chaired by the General Services

Administration (GSA) and DOD and reporting to the Administrator, has been

chartered to coordinate and oversee FACNET implementation throughout

the federal government. Several agencies have been tasked to lead specific

governmentwide FACNET projects. In particular, DOD has lead agency

responsibility for developing, operating, and supporting the FACNET

infrastructure and a new federal centralized contractor registration

database to be used with it.

Results in Brief Overall, the federal government has executed relatively few procurement

actions through FACNET.

3

 Available data indicates that in 1995 less than 2

percent of about 2 million federal procurement actions valued at $2,501 to

2

Essentially, the FACNET program merged with the ongoing governmentwide initiative.

3

Throughout this report, the term “procurement actions” includes purchase orders and other new

contract awards as well as task orders (for services) and delivery orders (for products) under existing

contracts, as reported into the Federal Procurement Data System.

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$100,000—FACNET’s target dollar range—were accomplished through

FACNET. DOD executed the vast majority of all FACNET procurement actions

that federal agencies have reported.

Difficulties doing business through FACNET have overshadowed the

benefits of using it. For example, lost, late, and duplicate transactions and

network interruptions have frustrated government and industry users and

delayed procurements. Officials from at least 14 of the 18 agencies we

contacted rated the lack of (1) a sound FACNET infrastructure, (2) effective

engineering and operational management, and (3) a well-populated and

fully functional centralized contractor registration database as great or

very great obstacles to effective FACNET implementation.

Officials of many federal agencies said the current FACNET approach is out

of step with new, cost-effective technologies and buying practices, such as

the Internet and electronic ordering from online catalogs. 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. 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 awards.

As mandated by FASA, FACNET implementation has focused primarily on

competitive contract awards, requiring agencies to exchange information

with multiple, often unknown vendors. Organizations with the most

success in using EDI technology for purchasing, however, typically use it to

transmit high-volume, routine, and repetitive transactions, such as delivery

orders under existing contracts and invoices, with a small group of known

suppliers. Federal officials have stated that FASA’s requirement to focus

FACNET’s implementation principally on competitive contract awards—a

government-unique application of EDI technology—may not have been a

good approach and has contributed significantly to FACNET’s problems.

In addition to this fundamental problem, agencies and vendors have

consistently cited leadership and management shortcomings as major

reasons for delays and unresolved problems in FACNET implementation.

The Administrator for Federal Procurement Policy, and other OFPP and

ECA-PMO officials have (1) acknowledged shortcomings in management of

the governmentwide FACNET program and (2) said that ad hoc funding and

staffing of the ECA-PMO has hampered effective program management

effort. Agency officials also expressed considerable uncertainty about

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what the governmentwide strategy for FACNET implementation is.

Currently, the federal government lacks a coherent strategy and

implementation approach for efficiently and effectively carrying out the

agencies’ requirements for the acquisition function using various EC

technologies and purchasing methods, where appropriate.

Limited Use of

FACNET

FASA requires, among other things, the head of each executive agency to

provide for implementation of full FACNET capability “as soon as

practicable” after FASA’s enactment.4

 An agency can be certified as fully

FACNET capable when more than 75 percent of its FACNET-eligible contract

awards valued at $2,501 to $100,000 were made through FACNET during the

preceding fiscal year.5

 However, FASA’s prescribed process for determining

what constitutes eligible contracts precludes such a determination until

October 12, 1997, at the earliest.6

 Therefore, the information needed to

measure progress toward meeting these FASA criteria for FACNET success

will not be available before that date.

Although the information needed to measure progress toward FASA’s

criteria is not available, federal agencies have reported executing

relatively few procurement actions through FACNET. For example, federal

agencies reported 113,000 FACNET procurement actions for 1995. Available

information indicates that (1) only about 25 percent of these actions were

valued at $2,501 to $100,000 and (2) such actions may have represented

less than 2 percent of all 1995 federal procurement actions in that dollar

range. The remaining 75 percent of the 113,000 actions were almost all for

$2,500 or less, and available information indicates that such actions may

have represented less than 1 percent of all 1995 federal procurement

actions in that dollar range.7

4

About 1 year earlier, the President’s memorandum set several milestones for the governmentwide EC

initiative, which included implementing a full-scale EC/EDI system by July 1995 and completing—to

the maximum extent possible—its governmentwide implementation for appropriate federal purchases

by January 1997. FASA provides various exceptions from the use of FACNET in cases where

individuals in specified federal positions determine that such use is not practicable or cost-effective.

5

FASA also requires that governmentwide, before January 2000, at least 75 percent of FACNET-eligible

contracts in this same dollar range be awarded through FACNET during a preceding fiscal year.

6

In addition, data on the total number of contract awards within the $2,501 to $100,000 dollar range is

not collected governmentwide. DOD, however, does collect such information.

7

We based these statements on the best information available. This included a DOD-funded study by the

Logistics Management Institute, which estimated that 12 percent of DOD’s fiscal year 1994

procurement actions were for $2,501 to $100,000 and 85 percent were for $2,500 or less. Assuming

these estimates are reasonably accurate for governmentwide use, we applied them to the 18 million

procurement actions federal agencies reported to the Federal Procurement Data System for calendar

year 1995.

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According to OFPP, the number of FACNET awards can be expected to

remain relatively small unless FACNET proves to be a better, cheaper, faster

purchasing technique than traditional small purchase methods.

DOD made the vast majority of the 113,000 FACNET procurement actions,

while civilian agencies made few. For example, DOD reported 97 percent of

the FACNET procurement actions reported by federal agencies for 1995.

(See table II.1 in app. II for data on 1995 and table II.2 for data covering

January through March 1996.) According to DOD, (1) it has inserted EC/EDI

enabling technology into 300 sites over the past 2 years, and (2) these sites

generate 80 percent of DOD’s procurement actions of $100,000 or less.

Several agencies reported that their EC implementation plans call for using

a number of different EC technologies. OFPP indicated that (1) each agency

was asked to develop its own implementation plan to integrate EC into its

internal processes and (2) since EC technologies are evolving, OFPP allowed

the agencies a high degree of discretion in how they applied EC. According

to DOD, its approach from the outset has been to utilize any and all

technologies that were appropriate for a given business transaction. In

figure 1, we show that officials of the agencies we contacted cited most

frequently the Internet, electronic catalogs, and FACNET, in that order, as EC

tools or methods they expected to have great or very great importance to

their agencies through 1999. (For details on agencies’ responses regarding

this, see table III.1 in app. III.)

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Figure 1: Agency Views on Relative

Importance of Various Electronic

Procurement Methods

Internet

Catalog

FACNET

Some alternative

Bulletin board

Agency unique

0

2

4

6

8

10

12

10

8

7

5

3

2

Electronic procurement methods

Number of agencies

Source: Our analysis of 17 agencies’ responses. One agency, the Department of Commerce, did

not provide its views on this topic.

Problems Using

FACNET

Since the inception of the FACNET program, government agencies and

vendors have identified operational problems with the infrastructure and

the centralized database for contractor registration. Our review indicated

that, as of September 1996, these problems had still not been resolved.

Also, agency officials expressed preferences for EC purchasing methods

other than FACNET, and many vendors found few incentives to participate

in FACNET. Agencies and vendors reported that FACNET has resulted in lower

prices and expanded markets in some cases but, more generally stated

that FACNET was not providing the benefits expected.

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Background on FACNET DOD began developing the current FACNET infrastructure in response to DOD

and governmentwide EC initiatives preceding FASA’s enactment. DOD has

operated and continued to develop the infrastructure with the stated

purpose of enabling all federal agencies to implement both FACNET

requirements and the goals of the governmentwide EC/EDI program. The

following simplified description illustrates a business transaction moving

through the current FACNET infrastructure. A buyer at a procuring activity

electronically prepares and transmits Requests for Quotations or other

solicitation data from the activity’s automated procurement system

through the infrastructure, which performs several functions. These

include translating the data into standardized EDI formats and relaying the

information to privately owned, participating Value-Added Networks

(VAN).8 VANs distribute the information—in a mutually agreed-upon

format—to vendors that subscribe to their services. Vendors, in turn,

transmit their quotations through the network back to the agencies. After

the buyer selects the winning vendor, a purchase order is transmitted to

the vendor. Then, a broadcast notice announcing the winning vendor is

transmitted to the VANs for distribution to vendors.

A key goal of FACNET is to present a “single face to industry.”9

 Among the

critical elements of the single face concept are that vendors, by registering

once in a governmentwide Central Contractor Registration (CCR) database,

have access to and can respond to government solicitations and similar

information through any single point of entry, using a single set of

standards. Ideally, this would give a vendor easy access to information on

numerous proposed contracts and awards including, for example, federal

contracting opportunities up to $100,000 that previously would have been

either listed in the Commerce Business Daily or manually posted at the

procuring activity. And, the vendor could respond to government buyers in

any agency using a single electronic system, as opposed to dealing with

numerous different agency or procuring activity-unique systems.

Operational Problems

Reported Throughout

FACNET Infrastructure

There was a broad consensus that FACNET has had operational problems.

For example, government and industry FACNET users reported hundreds of

malfunctions in sending and receiving FACNET transactions. Lost, late, and

duplicate transactions and network interruptions frustrated agencies,

8

Participating VANs must be tested and certified by DOD.

9

According to DOD, this means that all government agencies would conduct EDI using American

National Standards Institute X12 standards, common implementation conventions, a common

telecommunications infrastructure, and a common set of business practices. (See Introduction to

Department of Defense Electronic Commerce, a Handbook for Business.)

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VANs, and vendors and delayed procurements. ECA-PMO officials and users

stated that these problems were significant.

Most of the 99 contracting offices responding to a recent Army-wide

survey of the effectiveness of FACNET reported problems with the FACNET

infrastructure.10 Feedback from Air Force and Navy operational

contracting activities reported to the Under Secretary of Defense

(Acquisition & Technology) in July and August 1996 also stated that FACNET

often had not worked well. Similarly, at least 14 of the 18 agencies we

contacted cited the lack of a sound FACNET infrastructure and the lack of

effective engineering and operational management as great or very great

obstacles to efficient and effective implementation of FACNET. (See

table III.2, in app. III, for details.)

Buyers and vendors have been reluctant to do business through FACNET, in

part, because of operational problems. For example, in April 1996, a senior

contracting official at the Army’s Training and Doctrine Command stated

that FACNET did not function well enough to support the Command’s

requirements in a meaningful way. He noted that outgoing FACNET

solicitations had been lost or received by vendors as late as 2 weeks after

transmittal and responses vendors had sent out soon enough to be on time

were received at the Command several days after the closing date. He

added that (1) vendors were frustrated about spending time and money to

become FACNET-capable and then discovering that their quotes did not

make it through the system and (2) vendors often faxed their quotes to

Training and Doctrine Command buyers, in addition to transmitting them

through FACNET, to ensure receipt. Another Army contracting activity

reported that its buyers routinely mail out copies of FACNET award notices

because vendors complained that they were not receiving them through

FACNET.

In July 1996, an official with the San Antonio Electronic Commerce

Resource Center who works with small businesses and government offices

in introducing EC into their business practices told us that FACNET has had

its share of growing pains. In particular, he noted that lost and duplicate

transactions and a general instability of FACNET have caused many vendors

to question the wisdom of participating on FACNET.

For vendors, problems in transmitting and managing transactions through

FACNET can result in lost business opportunities and additional

10Information Paper on Survey of U.S. Army Contracting Offices conducting Electronic Data

Interchange through the Federal Acquisition Computer Network, May 1996.

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transmission fees paid to VANs. For the government, such problems cause

delays in getting needed supplies and services, reduce productivity, and

lead to bid protests. In June 1996, for example, our office considered a

protest concerning a FACNET acquisition in which three quotes submitted

through FACNET were lost.11

DOD has recently made major design changes to enhance the FACNET

infrastructure. Officials responsible for the redesign stated that the new

infrastructure should reduce the operational problems that have been

identified, including an inability to track transactions through FACNET, and

lost and late transactions. The DOD Inspector General recently reported

that the proposed redesign, referred to as the Electronic Commerce

Processing Nodes, should reduce the recurring problems related to lost

and late transactions, the inability to track transactions, and the lack of

acknowledgment for transactions.12 In a separate report, the DOD Inspector

General recommended that DOD verify that implementation of the

Electronic Commerce Processing Nodes corrects technical problems

associated with FACNET.

13

CCR Database Is Not

Operating as Intended

Effective implementation of the CCR database is fundamental to the current

FACNET strategy and to achieving a single face to industry. The goal is to

provide (1) contractors with a one-time registration process for doing

business with all government procuring activities and (2) government

buyers with one central database to query for contractor information.

Vendor registration in, and agency use of, the CCR database is mandated in

the governmentwide Federal Acquisition Regulation (FAR) implementing

FASA’s requirements for FACNET. The database, however, has been

experiencing significant problems, is far behind schedule, and is still not

performing its intended role of operating as the single federal contractor

registration system.

DOD reported in October 1996 that only about 4,000 of an estimated 300,000

government contractors had validated registrations in the database.

Currently, agencies must award contracts to unregistered vendors because

the CCR database does not have enough registered vendors to supply the

11S.D.M. Supply, Inc., B-271492, June 26, 1996, 96-1 CPD para. 288, aff”d., Department of the

Army—Recon., B-271492.2, Nov. 27, 1996, 96-2 CPD para.

12Defense Information Systems Agency Management of Trouble Tickets For Electronic

Commerce/Electronic Data Interchange (DOD Inspector General Report No. 97-010, Oct. 28, 1996).

13Vendor Participation in the Federal Acquisition Computer Network (DOD Inspector General Report

No. 97-002, Oct. 4, 1996).

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full range of products and services needed. Sixteen of the 17 agencies from

which we obtained information on this matter cited the lack of a

well-populated and fully operational CCR database as a great or very great

obstacle to efficient and effective implementation of FACNET. (See

table III.2, in app. III, for details.)

Agencies Are Opting for

Other EC Methods

According to agency officials, one of the more significant factors limiting

the usefulness of FACNET is that other electronic purchasing methods are

available that are simpler and faster. For example, purchase cards

(government-issued commercial credit cards);14 the Internet; online

catalogs, including the GSA’s automated supply schedule contracts; and

other commercial alternatives have been introduced into government

contracting and their use is growing rapidly. Use of the purchase cards for

contract payment, combined with electronic ordering from online

contracts, and/or new, more flexible procedures for the use of federal

supply schedule contracts provides agencies with readily available

alternatives to meeting their procurement needs that were not available

just a few years ago, when FASA was being written. Moreover, technology

developments are expected to continue to offer opportunities to improve

federal purchasing methods.

These developments have led some agencies and many federal officials

involved with FACNET implementation to question whether—especially for

small competitive acquisitions, such as those under $25,000—the use of

the current FACNET infrastructure makes good business sense. National

Aeronautics and Space Administration (NASA) officials said that NASA

intended to concentrate its EC efforts on Internet-based acquisition

services and not FACNET. Some Air Force and Army contracting activities

have also suggested using the Internet instead of FACNET. Officials of 15

federal agencies are working together to pursue Internet-based initiatives.15

The DOD Inspector General reported that DOD officials responsible for

FACNET had (1) acknowledged that the evolution of new technologies was

14In 1995, purchase cards were used at most federal agencies for over 4 million purchases—worth

more than $1.6 billion—and in 1996 purchase card sales were $2.9 billion. Most of the 1995 purchases,

however, were valued at less than the FACNET target dollar range, and this emphasis is expected to

continue. See our report, Acquisition Reform: Purchase Card Use Cuts Procurement Costs, Improves

Efficiency (GAO/NSIAD-96-138, Aug. 6, 1996).

15The Interagency Acquisition Internet Council was established May 22, 1996, to seek and promote

ways to optimize use of the Internet in streamlining the federal acquisition process and increasing

communications of federal acquisition-related information.

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creating alternatives to DOD’s original concept of FACNET as the single

mechanism for EC/EDI procurements and (2) indicated that alternatives

were being analyzed that would still maintain the single face to industry

goal.16 In a July 1996 memorandum, the Assistant Secretary of the Air

Force stated that while the DOD procurement community has recognized

that the current network for FACNET needs changing, there is no current

solution. In November 1996, DOD expressed the belief that in conducting

competitive procurements, the requirements to be FACNET-compliant,

particularly the single face to industry goal, are critical. For other than

competitive transactions (which includes noncompetitive awards and

orders under existing contracts), DOD added, it may not be necessary to

meet FACNET requirements.

ECA-PMO officials observed that with agencies now viewing direct buying

(through ordering from online catalogs or other existing contracts) as

more efficient, the current FACNET infrastructure is becoming “less

relevant.” OFPP and the ECA-PMO officials said they are moving away from a

one-size-fits-all approach to FACNET implementation in favor of allowing

agencies the flexibility to employ the best technology for a particular

acquisition. As part of this strategy, they are encouraging agencies to use

all types of EC, including FACNET, the Internet, purchase cards, and online

catalogs—whichever tool makes the most business sense.

Vendors Find Few

Incentives for Participation

Many small businesses have stated that the lack of clear and consistent

FACNET policy, procurement procedures, and specific business information

are major disincentives to FACNET participation for them. For example,

some FACNET vendors said that inconsistent and, in some cases, directly

opposite practices were used at different procuring activities. They

pointed out that

• some buyers accept fax queries for more information and send faxes to

clarify FACNET solicitations, while other procuring activities no longer

permit use of faxes and will ignore any incoming fax messages;17

• there seems to be no consistent policy covering procurements exempted

from use of FACNET;

18 and

16DOD Implementation of Electronic Commerce in Contracting for Small Purchases (DOD Inspector

General Report No. 96-129, May 24, 1996).

17The proposed FAR Part 13 restructuring rule (published in the Federal Register on Sept. 13,

1996) stated that if an acquisition was conducted through FACNET, agencies need not respond to

telephone or fax inquiries from vendors unless they are unable to receive inquiries through FACNET.

18DOD’s policy memorandum, dated June 23, 1995, to its FACNET-capable activities required that all

simplified procurements be issued via FACNET, unless exempted.

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• the number of days a solicitation remains open is highly variable.

Vendor commitment to FACNET is influenced by the lack of consistency in

procurement procedures and policies like these.19

Some vendors complain that they are unable to get the information they

need on agencies’ and procuring activities’ current and future FACNET

business opportunities. Vendors point out that they need such information

to determine whether FACNET will generate sufficient revenues to justify

the investments needed to participate in FACNET. Last year we testified

that, depending on the volume of transactions and types of services,

businesses could incur costs ranging from about $70 to several thousand

dollars monthly for VAN services alone. The use of VANs is a key component

of the current FACNET infrastructure.20

Agency officials also stated that FACNET can be expensive for vendors to

implement. According to one agency official, vendors are unwilling to

make the investment in time and money to participate, because of the

problems the government is experiencing with FACNET. More than

40 percent of the contracting activities in the Army’s 1996 FACNET survey

said that there were insufficient numbers of vendors participating in

FACNET. EC program managers at other agencies told us that FACNET

solicitations often had to be canceled because of little or no vendor

response. According to officials of several agencies, few vendors,

particularly small businesses, are EDI-capable and the current FACNET

implementation approach offers few incentives for these businesses to

participate.

The Administrator for Federal Procurement Policy acknowledged that VAN

costs create major problems for small businesses. He added that a small

business has to sell a lot to the government to make the investment

worthwhile, which could have the effect of concentrating work among a

class of EDI-capable vendors that specialize in doing government business

over FACNET.

19In an audit on vendor participation in FACNET, the DOD Office of the Inspector General surveyed

100 vendors, of which 85 identified one or more of the following major impediments to using FACNET

to conduct small purchase transactions with DOD. The vendors said they were not participating

because (1) they were not aware of FACNET, (2) FACNET was not an appropriate procurement

method for some small- and medium-sized vendors, and/or (3) FACNET was unreliable. (See DOD

Inspector General Report No. 97-002, pages i, 5, and 7.)

20Implementation of the Federal Acquisition Streamlining Act of 1994 (GAO/T-NSIAD/AIMD-95-190,

July 20, 1995).

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DOD acknowledged that there is a cost to small businesses associated with

VANs’ processing FACNET transactions but stated that the cost of doing

business manually often meant the small business had to use an agent to

review physical bulletin boards—at potentially 1,400 separate DOD

sites—the only places where contracting opportunities under $25,000 were

posted.

Expected Benefits Not Yet

Being Realized

In 1993, the National Performance Review stated that exchanging

acquisition information with vendors electronically could result in

governmentwide savings of up to $500 million per year, due to increased

competition and reduced federal paperwork. On the basis of agencies’

reported experiences to date, FACNET has not resulted in the significant

benefits that were expected from using EC—savings in time and money

and increased federal productivity.

For some FACNET procurements, agencies are reporting direct benefits,

such as reduced contracting leadtimes, improved price competition, and

an increased vendor base. More generally, however, government buyers

have found that using FACNET to award contracts of $25,000 or less takes

longer and requires more resources than traditional methods. They

attribute this, in part, to the frequent need to communicate by telephone

and fax with vendors to verify the receipt of a quote, answer questions, or

investigate a vendor’s capabilities and those of its products. Further, they

noted that their efforts have been hampered by a lack of guidance on how

to evaluate vendors’ responses, particularly when a substantial number of

quotes are received and how to determine the timeliness of vendors’

quotes.

The results of a U.S. Army Missile Command comparison of 179 FACNET

actions and the same number and types of non-FACNET (and non-EDI)

actions were that the use of FACNET prolonged the procurement process for

purchases of $2,501 to $25,000 from an average of 3 days to more than 7

days and required extra resources and effort. The Command official

responsible for the comparison concluded that for this price range, the

cost in time and effort far overshadows any small savings FACNET

produces. The Department of the Interior performed a similar test at five

buying locations and got comparable results.

The Administrator for Federal Procurement Policy told us that the

problems reported by frontline procurement staff trying to implement

FACNET prompted his office to recommend several policy changes last year.

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The FAR Council adopted many of these recommended changes, as part of

the proposed FAR Part 13 restructuring rule.21 The proposed rule would

give agencies greater flexibility in using FACNET, as OFPP recommended,

including the authority to describe requirements using multiple brand

names for purchases under $25,000 and conduct more expedited

evaluation of vendors’ quotes or offers. Additionally, the proposed rule

states that agencies need not respond to inquiries (1) by telephone or fax,

unless they are unable to receive inquiries through FACNET or (2) through

any medium (including FACNET) if doing so would interfere with their

ability to conduct the procurement in an efficient manner. The

Administrator said these changes were intended to address procurement

offices’ complaints that FACNET had increased both the resources needed

to evaluate quotes and procurement leadtimes, compared with traditional

solicitation methods. He said the changes were also intended to enhance

FACNET’s viability and increase agencies’ use of it.

Key agency officials responsible for FACNET implementation at the 18

agencies we contacted cited indirect benefits—such as lessons learned

that will likely benefit the government in the future—as the most

significant benefits being realized from FACNET. (See table III.3 in app. III

for details.) The benefits of FACNET being realized to a great or very great

extent, as reported by federal agencies, are shown in figure 2. These

results did not differ substantially for DOD and its components, compared

with the civilian agencies—which use FACNET much less than DOD.

21The proposed rule was published in the Federal Register on September 13, 1996.

Page 14 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

Figure 2: Reported Benefits of

FACNET Realized by Federal Agencies

Technical lessons

Promoted EDI

Enhanced skills

Policy lessons

Saved money

Saved time

Higher productivity

0

2

4

6

8

10

12

9

8

7 7

3

2 2

Benefits

Number of agencies

Source: Our analysis of 17 agencies’ responses. One agency, the Department of Commerce, did

not provide its views on this topic.

Concerns About

FASA’s Requirements

for FACNET

Federal officials responsible for FACNET stated that the basic concept

underlying FACNET may not be sound. As mandated by FASA, FACNET focuses

primarily on competitive solicitations and new contract awards,22

requiring a federal agency to provide widespread public notice and

exchange information with multiple vendors—not just one. As previously

noted, FASA requires that FACNET provide (1) widespread public notice of

contracting opportunities and (2) a means for private sector users to

22FASA’s 75-percent criteria for a successful FACNET program, previously discussed, excludes orders

under existing contracts—because such orders are not contract awards.

Page 15 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

electronically access and review executive agency solicitations and

respond to them.

Federal officials said the concept, using EDI technology to focus primarily

on relatively low dollar value competitive contract awards to small

businesses, may not be the best solution for the procurements targeted.

These officials noted that the concept was developed and pilot tested by

the executive branch and formed the basis for the FASA approach. The

concept emphasizes the use of EDI, a technology that has been used

primarily to support a high volume of routine “one-to-one,”23

computer-to-computer business transactions between organizations that

have established a close working relationship. Examples of such

transactions include delivery orders under existing contracts and invoices

exchanged between a company and its regular suppliers. Commercial

companies and some federal agencies have found that EDI technology can

be very effective when used in this way.

Three federal agencies that are using EDI successfully for one-to-one

transactions—the Defense Logistics Agency, GSA, and the Department of

Veterans Affairs—reported transmitting a total of about 840,000 delivery

orders and 517,000 invoices in 1995.24 The Administrator for Federal

Procurement Policy stated that a lot of progress has been made in federal

agency use of EDI technology for acquisition—but outside of FACNET—as

shown by these three agencies’ efforts on one-to-one transactions.

According to DOD, (1) the organizations currently processing these

one-to-one transactions are primarily utilizing proprietary solutions, or

noncompliant standards, and do not present a single face to industry at

this time and (2) maintaining and sustaining such actions are outside DOD’s

Information Infrastructure—“a FACNET compliant system.”

Because the technical and business requirements for such one-to-many

transactions differ significantly from one-to-one transactions, agencies

using FACNET have not been able to benefit fully from the lessons learned

and from long-term familiarity with electronic delivery orders and invoices

on the part of commercial companies and the Defense Logistics Agency,

GSA, and the Department of Veteran Affairs. Moreover, the use of FACNET

for one-to-many transactions is essentially a government-unique business

23In a one-to-one transaction, information is exchanged between only one company (or organization)

and another.

24The three agencies reported transmitting through their own EDI (non-FACNET) systems the

following numbers of delivery orders and invoices, respectively, in 1995: the Defense Logistics Agency

(325,586 and 93,735), GSA (157,351 and 37,999), and the Department of Veterans Affairs (357,443 and

385,016).

Page 16 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

application of EDI, involving different business and technical

considerations than one-to-one delivery orders and invoices. Several OFPP,

ECA-PMO, GSA, and other agency officials said that focusing FACNET’s

implementation on competitive procurements has contributed

significantly to FACNET’s problems and the skepticism that surrounds the

existing infrastructure. The Administrator for Federal Procurement Policy

and other agency officials also told us that FASA’s requirement to focus

FACNET principally on awarding relatively low dollar value contracts

competitively may not have been a good idea.

Leadership and

Management

Problems

Implementation of FACNET on a governmentwide basis is a substantial

undertaking that requires effective leadership and management to be

successful. Since FACNET’s inception, significant technical, business, and

policy issues have confronted the FACNET program, many of which have

not been resolved, delaying FACNET implementation. Agencies and vendors

have consistently cited the lack of clear leadership, direction, and

adequate program management governmentwide as major reasons for

delays in problem resolution and implementation of FACNET.

FASA requires the Administrator for Federal Procurement Policy to

(1) establish a program to develop and implement FACNET; (2) assign a

program manager for FACNET; and (3) provide for overall direction of

policy and leadership in, among other things, the development,

coordination, and completion of FACNET implementation by executive

agencies. DOD is the lead agency responsible for implementing the FACNET

architecture and the CCR database, including providing policies,

procedures, standards of operation, and day-to-day network management.

The ECA-PMO, co-chaired by DOD and GSA, was tasked to develop,

coordinate, and integrate the programs and tasks needed to implement

FACNET and the presidential memorandum.

A governmentwide strategy for FACNET implementation has not been

clearly and convincingly communicated. Officials responsible for FACNET

implementation in their agencies stated that the governmentwide program

has been fragmented and uncoordinated. Neither OFPP nor the ECA-PMO

operates as a focal point of central guidance and governmentwide

accountability for FACNET. In effect, each agency is left to pursue its own

FACNET strategy.

In addition, OFPP and the ECA-PMO have not systematically integrated and

managed the total framework of projects and functions necessary to

Page 17 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

develop, implement, and use FACNET and other EC technologies in a manner

that reflects the single face goal. As a consequence, the development and

use of key components of FACNET, including the architecture, the CCR

database, operational procedures, business information to attract vendors,

and policy guidance on the use of FACNET for agencies and the private

sector have not been clearly linked. Another consequence is that

governmentwide priorities for FACNET have not been clearly established,

communicated, and linked.

Since the early stages of implementation, agencies have consistently cited

the lack of clear leadership and governmentwide program management as

major sources of problems and delays in the program. The results of a

February 1995 EC roundtable (in which over 20 federal agencies were

represented) showed that the most significant concern of the participants

was leadership and support.

We found that little progress had been made in resolving concerns about

leadership and program management of FACNET. Of the 18 agencies we

contacted, 12 cited the lack of effective policy leadership outside their

agencies; 13 cited the lack of effective governmentwide program

management; and 14 cited the lack of effective FACNET engineering and

operational management as great or very great obstacles to efficient and

effective implementation of FACNET. (See table III.2, in app. III, for details.)

The key organizations responsible for FACNET—OFPP, DOD, and the

ECA-PMO—have not developed and put into place an effective

governmentwide management approach that includes (1) a clearly defined

program structure; (2) multiyear planning that clearly establishes

governmentwide implementation plans, anticipated results, and resource

requirements and priorities; (3) systematic review and approval of key

FACNET projects; and (4) feedback and evaluation that identifies the

progress made and corrective actions needed. Information was also

unavailable on the total estimated costs of FACNET implementation—or its

major components (such as the infrastructure or CCR database)—or the

governmentwide EC program.

The Administrator has acknowledged that there have been shortcomings

in management of the governmentwide FACNET program. Officials in OFPP

and the ECA-PMO told us they were aware of the agencies’ concerns about

the leadership and overall management of FACNET implementation. They

acknowledge that the kind of program management and reporting

described above has not been developed and is needed. However, they

Page 18 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

observed that ad hoc funding and staffing of the ECA-PMO from executive

agencies has hampered effective program management efforts.

The Administrator told us he had concluded by the summer of 1995, on the

basis of discussions with frontline contracting officials, that there were

extensive and persistent problems with FACNET implementation. He said

that over time he became convinced that (1) FACNET’s basic concept

(discussed in the previous section) was not sound and needed to be

revisited and (2) improved program management would not remedy this

fundamental problem. He added that there was not, and still is not, a

consensus among agencies’ senior procurement executives that these

problems were so fundamental that a major redirection of FACNET was

needed.

The shortcomings in governmentwide management of the FACNET program

have left important issues unresolved. For example, no convincing

business case has been made for governmentwide reliance on the current

FACNET infrastructure. Similarly, the lack of resolution of questions

concerning the CCR database has impeded its implementation. DOD officials

responsible for the database told us that even if better processes were put

in place for gathering vendor information, benefits expected from sharing

this information across government procuring activities would still be

contingent on policies and procedures being established concerning

access to and ownership of the data gathered. OFPP, ECA-PMO, and DOD

officials responsible for FACNET and the CCR database told us that the

following obstacles to governmentwide EC must be resolved:

(1) unanswered questions on who should have access to the CCR data and

how such data should be used by both the government and industry,

(2) the absence of policy and procedures for implementing such a

governmentwide database, and (3) database security problems.

DOD officials responsible for the FACNET infrastructure, contracting

officials, VANs, and vendors stated that many operational problems stem

from the lack of clear requirements for the acquisition function and

operational procedures that are needed to direct the development and use

of the FACNET infrastructure and manage FACNET data. For instance,

requirements for archiving data, accessing data, recording critical

acquisition information, and auditing FACNET transactions have not been

established, and both buyers and vendors have frequently cited the need

for an electronic date/time stamp, as well as clear requirements and

procedures to record receipt of vendors’ quotes by the government.

Page 19 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

With respect to VANs, FACNET implementation has been hindered by

uncertainties regarding the government’s certification process, lack of

clear data management policies and procedures, and unresolved questions

about VANs’ financial and technical responsibilities. VAN representatives

and DOD officials responsible for VAN certification and oversight told us

that VANs have been operating without a clear understanding of the

objectives and requirements of the system. DOD is taking actions to address

some of these issues. Specifically, DOD recently issued a revised VAN

Licensing Agreement; and some testing and procedural changes reflected

in this revised agreement may improve the VAN certification process.

In addition, GSA and OFPP officials stated that the lessons learned in

creating a governmentwide EC program, new technology developments,

and broader policies affecting EC, such as the requirement to make all

payments to vendors electronically by 1999, have made it necessary to

take a fresh look at the government’s approach to EC in contracting and

how best to implement and manage it.25 OFPP officials said the government

intends to make more than 95 percent of its purchases under $100,000

through EC by the year 2000 in coordination with making electronic

payments to vendors.

Conclusion In the short time since passage of FASA, alternative electronic purchasing

methods have become readily available to the government and its vendors.

This factor, concerns about FASA’s requirements, and the problems

associated with the existing FACNET implementation raise important

questions concerning whether and to what extent use of the current

FACNET infrastructure makes good business sense.

A related issue is how to integrate FACNET and other EC technologies and

purchasing methods into a coherent EC strategy and implementation

approach for effectively carrying out agencies’ acquisition functions and

achieving a single face to industry. Clear functional requirements, a

coherent strategy, effective governmentwide leadership and program

management, and accountability are lacking.

Recommendations We recommend that the Director, Office of Management and Budget,

ensure that the Administrator for Federal Procurement Policy, in

consultation with the Secretary of Defense, the Administrator for General

25The Debt Collection Improvement Act of 1996, section 31001 of Public Law 104-134, generally

requires all federal payments to be made electronically by 1999.

Page 20 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

Services, the NASA Administrator, and the heads of other major federal

procuring agencies, develops a coherent and integrated federal

strategy—and implementation approach—for using, where appropriate,

various EC technologies and purchasing methods, including FACNET, for

effectively and efficiently carrying out the agencies’ requirements for the

acquisition function. The strategy and approach should incorporate

consideration of the need to achieve the single-face-to-industry goal.

We also recommend, if executive branch officials conclude that statutory

requirements for FACNET—such as focusing it on providing widespread

public notice of contracting opportunities and exchanging information

with multiple vendors—are impediments to the implementation of the

governmentwide EC strategy, that the Director of the Office of

Management and Budget seek legislative relief.

Agency Comments In commenting on the draft of this report, NASA, GSA, OFPP and DOD

generally agreed with our findings and recommendations, but DOD

indicated that—since the completion of our audit work in

September 1996—it was no longer experiencing operational problems with

FACNET and the CCR system.

NASA stated that it agreed that a mandated FACNET approach, based solely

on EDI, does not make the best business sense for federal EC. NASA stated

that it was encouraged by our recommendation that NASA join with other

agencies in developing a coherent strategy and implementation approach

that takes advantage of available EC technologies.

GSA stated that our findings are correct in targeting leadership

improvements. GSA stated that there have been leadership challenges in the

implementation of FACNET as well as technical and procedural problems

with the use of EDI for public requests for quotation. GSA specifically noted

that (1) civilian agencies, in many cases, have not provided adequate

resources, training, and vendor outreach required to successfully

implement FACNET or EC in general and (2) the ECA-PMO has been hindered

by a lack of funding and staffing.

OFPP stated that our report was very helpful in focusing its

governmentwide EC efforts. To help focus on solutions, OFPP stated that a

committee of the President’s Management Council has been established to

assist agency heads to manage the transition from paper to electronics,

focus resources, increase management efficiency, accelerate

Page 21 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

implementation, and connect resources to results. OFPP said it is

continuing to pursue the development of FACNET for use, where

appropriate, to streamline acquisition processes. OFPP said it is also

concerned that FACNET and all procurement policies offer real

improvements in serving the user and meeting the important missions

entrusted to government in a cost-effective way.

Both GSA and OFPP stated that they are working together and with other

agencies, which includes participation by the President’s Management

Council, to address the leadership and policy direction concerns raised

and to develop a new EC management framework. OFPP also stated that it

has taken steps to develop and implement that framework to better

integrate EC throughout government. In addition, GSA said this new

management structure will be put into place over the next several months,

will bring a better focus and problem resolution to the program, will be

cross-functional, and will be able to better review EC programs and

provide more long-range planning.

DOD described recent enhancements it has made to FACNET’s infrastructure

and the CCR system and stated that it was no longer experiencing

operational problems. These enhancements included implementing (1) the

Electronic Commerce Processing Nodes on November 1, 1996, to improve

the FACNET infrastructure’s throughput and accuracy and (2) a World Wide

Web site and dial-up modem capability on October 1, 1996, which allows

vendors to register for free in the CCR database. DOD added that it is in the

process of developing a strategic plan to increase the CCR population in

1997.

In addition, DOD described other enhancements. For example, it stated that

it has recently completed an EC Strategic Plan that encompasses all

functional areas within the Department (procurement, finance, logistics,

transportation, personnel, medical, etc.) and includes all forms of EC (EDI,

fax, bar coding, etc.). According to DOD, this approach will provide a single

face to industry and allow the maximum exchange of data between

functional areas. DOD also said it is finalizing an EC directive that

establishes roles and responsibilities throughout the Department

pertaining to the implementation of EC in all functional areas.

DOD stated that it will continue (1) to execute its FACNET implementation

plan and (2) increase the volume of transactions through the

infrastructure over the next three fiscal years. Finally, DOD stated that it is

ready to work with the OFPP, GSA, and NASA Administrators and the heads of

Page 22 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

other major federal procuring agencies to assist them in their development

of independent strategies and the overall federal EC strategy for federal

procurement.

The comments from NASA, GSA, OFPP and DOD are reprinted in their entirety

in appendixes IV through VII, respectively. We have made some changes in

the report, where appropriate, based on these comments.

Scope and

Methodology

To address our objectives, we asked EC program managers and

comparable agency officials at DOD, its four major buying components, and

18 federal civilian agencies to give us information and observations on

their agencies’ efforts to implement FACNET. We sent a Data Collection

Instrument (DCI) to 23 federal organizations; 18 responded to our questions

from late March through May 1996. The DCI specifically asked for agency

data and information related to (1) current FACNET operations, (2) current

and potential FACNET procurement transactions, (3) benefits from using

FACNET, (4) obstacles to governmentwide implementation of FACNET,

(5) potential use of FACNET for simplified acquisitions, and (6) changes

needed in the FACNET development and implementation strategies. When

necessary we conducted follow-up interviews with respondents to clarify

DCI responses and obtain additional information.

In addition, to assess federal agencies’ use of FACNET, we asked the

agencies to verify their FACNET transaction data (e.g., number of

solicitations, responses received, purchase and delivery orders, and

amount of awards) for the periods January through December 1995 and

January through March 1996, which was the latest complete data reported

by the ECA-PMO. We also obtained supplemental FACNET transaction data

from the Departments of Commerce, Defense, Energy, Housing and Urban

Development, Health and Human Services, and Labor; the Defense

Logistics Agency; GSA; and NASA. We did not independently verify the

agencies’ data submissions.

To address the problems and benefits of FACNET, FASA’s requirements for

FACNET, and obstacles to its implementation, we assessed FACNET guidance,

implementation plans, and agencies’ reports indicating the status of FACNET

implementation. We also compared the government’s overall FACNET

strategy and implementation approach with (1) the EC/EDI implementation

strategies and practices of other public and private organizations and

(2) the goals, objectives, and milestones established for FACNET by FASA and

established for the governmentwide EC program by the October 26, 1993,

Page 23 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

presidential memorandum on streamlining procurement through EC. We

reviewed FACNET guidance, implementation plans, schedules, transaction

data, and status reports prepared by OFPP, the ECA-PMO, the DOD EC Office,

and the Defense Information Systems Agency. To further assess progress

and obstacles, we interviewed VAN representatives; FACNET vendors; and

senior OFPP, DOD, and GSA officials responsible for the governmentwide

FACNET program or key components, such as the architecture, the CCR

database, and FACNET policy and procedures.

Our audit work was performed between October 1995 and October 1996 in

accordance with generally accepted government auditing standards. We

performed our work primarily in the Washington, D.C., area at OFPP in the

Office of Management and Budget, the DOD EC Office in the Office of the

Deputy Under Secretary of Defense (Acquisition Reform), the Defense

Information Systems Agency, and the ECA-PMO.

We are sending copies of this report to the Director, Office of Management

and Budget; the Administrator for Federal Procurement Policy; the

Secretary of Defense and the Deputy Under Secretary of Defense for

Acquisition Reform; the Administrator for GSA; the NASA Administrator; and

other officials at the agencies included in our review. Copies will also be

made available to others upon request.

Please contact me at (202) 512-4587 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix VIII.

Louis J. Rodrigues

Director, Defense Acquisition Issues

Page 24 GAO/NSIAD-97-26 Acquisition Reform
B-272646 

List of Congressional Committees 

The Honorable Ted Stevens

Chairman

The Honorable John Glenn

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

The Honorable Strom Thurmond

Chairman

The Honorable Sam Nunn

Ranking Minority Member

Committee on Armed Services 

United States Senate

The Honorable Christopher S. Bond

Chairman

The Honorable Dale L. Bumpers

Ranking Minority Member

Committee on Small Business 

United States Senate

The Honorable William F. Clinger, Jr.

Chairman

The Honorable Cardiss Collins

Ranking Minority Member

Committee on Government Reform and Oversight 

House of Representatives

The Honorable Floyd D. Spence

Chairman

The Honorable Ronald Dellums

Ranking Minority Member

Committee on National Security 

House of Representatives

The Honorable Jan Meyers

Chairwoman

The Honorable John J. LaFalce

Ranking Minority Member

Committee on Small Business

House of Representatives

Page 25 GAO/NSIAD-97-26 Acquisition Reform
Contents

Letter 1

Appendix I 

Respondents to Our

Data Collection

Instrument

28

Appendix II 

FACNET Transactions

29

Appendix III 

Agency Responses to

Our Questions About

FACNET

32

Appendix IV 

Comments From the

National Aeronautics

and Space

Administration

35

Appendix V 

Comments From the

General Services

Administration

36

Appendix VI 

Comments From the

Office of Federal

Procurement Policy

38

Page 26 GAO/NSIAD-97-26 Acquisition Reform
Contents

Appendix VII 

Comments From the

Department of

Defense

40

GAO Comments 45

Appendix VIII 

Major Contributors to

This Report

46

Tables Table II.1: FACNET Transactions, January-December 1995 30

Table II.2: FACNET Transactions, January-March 1996 31

Table III.1: Responses Concerning Future Use of Various EC

Tools or Methods, Including FACNET

32

Table III.2: Number of Responses Concerning Obstacles to

FACNET Implementation

33

Table III.3: Responses Concerning Benefits of FACNET 34

Figures Figure 1: Agency Views on Relative Importance of Various

Electronic Procurement Methods

6

Figure 2: Reported Benefits of FACNET Realized by Federal

Agencies

15

Abbreviations

CCR Central Contractor Registration

DCI Data Collection Instrument

DOD Department of Defense

EC electronic commerce

EDI electronic data interchange

ECA-PMO Electronic Commerce Acquisition Program Management

Office

FAR Federal Acquisition Regulation

FASA Federal Acquisition Streamlining Act of 1994

FACNET Federal Acquisition Computer Network

GSA General Services Administration

NASA National Aeronautics and Space Administration

OFPP Office of Federal Procurement Policy

VAN Value-Added Network

Page 27 GAO/NSIAD-97-26 Acquisition Reform
Appendix I 

Respondents to Our Data Collection

Instrument

We sent a data collection instrument to 23 federal organizations. We asked

electronic commerce program managers and comparable agency officials

at Department of Defense, its 4 major buying components, and 18 federal

civilian agencies to give us information and observations on their agencies’

efforts to implement the Federal Acquisition Computer Network (FACNET).

Eighteen of the 23 federal agencies responded to our questions from late

March through May 1996. The 18 agencies were

Defense Logistics Agency,

Department of the Air Force,

Department of the Army,

Department of Commerce,

Department of Defense,

Department of Education,

Department of Energy,

Department of Health and Human Services,

Department of Housing and Urban Development,

Department of the Interior,

Department of Justice,

Department of Labor,

Department of the Navy,

Department of Veterans Affairs,

Environmental Protection Agency,

General Services Administration,

National Aeronautics and Space Administration, and

Office of Personnel Management.

Five other agencies were sent data collection instruments but did not

respond. According to data provided by the Electronic Commerce

Acquisition Program Management Office and several individual federal

agencies, these five agencies accounted approximately 0.3 percent of

FACNET procurement actions in fiscal year 1995. (See app. II.) The five

agencies were

Department of Agriculture,

Small Business Administration,

Department of State,

Department of Transportation, and

Department of the Treasury

Page 28 GAO/NSIAD-97-26 Acquisition Reform
Appendix II 

FACNET Transactions

Table II.1 shows, for calendar year 1995, the number of FACNET

transactions in the following categories: public Request for Quotations

(RFQ) or similar information, other solicitations or similar information,

responses received from vendors, agency purchase orders, and agency

delivery orders. Also, the last column shows the total dollar value of

FACNET purchase and delivery orders most of the agencies (but not DOD)

reported for calendar year 1995. Table II.2 shows similar data for the first

quarter of 1996.

Page 29 GAO/NSIAD-97-26 Acquisition Reform
Appendix II 

FACNET Transactions

Table II.1: FACNET Transactions, January-December 1995

Contract solicitations Procurement actions

Agency Public RFQs

Other than

public RFQs

Responses to

solicitations

Purchase

orders

Delivery

orders Value of orders

Agriculturea,b 92 10 64 49 0 $529,017

AIDa,c 0 0 0 0 27 f

Commerced 456 0 2,891 184 0 2,558,250

Defensed 66,116 41,057 478,894 105,217 4,698 f

Education 66 0 253 21 1 55,686

Energyd 117 149 762 186 13 1,078,968

EPA 42 0 18 0 0 0

FEMAa,c 0 0 0 0 0 0

GSAd 5 0 2 0 0 0

HHSd 148 10 166 32 1,635 118,722,728

HUD 0 0 0 0 0 0

Interiore 1,682 87 6,566 577 20 4,479,054

Justice 83 0 139 17 0 45,501

Labord 0 10 0 0 0 0

NASAd 12 17 0 0 0 0

OPM 27 0 11 0 0 0

SBAa,b 0 0 0 0 0 0

Statea,b 81 10 180 28 0 163,483

Transportationa,b 67 0 102 43 0 347,957

Treasurya,b 299 0 1,462 242 1 3,240,276

VAd 0 0 0 0 0 0

Total 69,293 41,350 491,510 106,596 6,395 $131,220,920f

aData not verified by agency.

bAgency did not respond.

cAgency not sent a data collection instrument.

dCorrected data provided by agency.

eInterior did not have data from the Defense gateway to report for October-December.

f

DOD and Agency for International Development did not report the value of their orders.

Consequently, the total value of orders reported is underestimated, most likely significantly.

Sources: Electronic Commerce Acquisition Program Management Office and supplemental data

from the Departments of Commerce, Defense, Energy, Housing and Urban Development, Health

and Human Services, Labor, and Veterans Affairs, Defense Logistic Agency, General Service

Administration, and National Aeronautics and Space Administration.

Page 30 GAO/NSIAD-97-26 Acquisition Reform
Appendix II 

FACNET Transactions

Table II.2: FACNET Transactions, January-March 1996

Contract solicitations Procurement actions

Agency Public RFQs

Other than

public RFQs

Responses to

solicitations

Purchase

orders

Delivery

orders Value of orders

Agriculturea 17 0 2 0 0 $0

AIDa 0 0 0 0 0 0

Commerce 58 0 639 21 0 284,000

Defensea 22,335 28,987 363,932 17,069 0 — c

Education 0 0 0 3 0 23,649

Energyb 86 20 776 60 2 631,983

EPA 13 0 16 0 0 0

FEMAa 0 0 0 0 0 0

GSA 0 0 0 0 0 0

HHSb 73 7 282 12 736 53,396,540

HUD 0 0 0 0 0 0

Interior 645 0 1,883 222 0 1,584,508

Justice 18 0 0 0 0 0

Laborb 0 6 0 0 0 0

NASAb 2 0 60 1 0 — c

OPM 2 0 0 0 0 0

SBAa 0 0 0 0 0 0

Statea 31 0 189 10 0 99,554

Transportationa 12 0 79 13 1 94,716

Treasuryb 55 84 101 17 0 234,478

VA 0 0 0 0 0 0

Total 23,347 29,104 367,959 17,428 739 $56,349,428c

aData not verified by agency.

bCorrected data provided by agency.

cDOD and NASA did not report the value of their orders. Consequently, the total value of orders

reported is underestimated, most likely significantly.

Sources: Electronic Commerce Acquisition Program Management Office and supplemental data

from the Departments of Energy, Health and Human Services, Labor, the Treasury, and NASA.

Page 31 GAO/NSIAD-97-26 Acquisition Reform
Appendix III 

Agency Responses to Our Questions About

FACNET

We asked EC program managers and comparable agency officials at DOD,

its 4 major buying activities, and 17 federal civilian agencies to give us

information and observations on FACNET implementation. Officials from 18

agencies responded. Their responses to our questions about future use of

various EC procurement tools, obstacles to FACNET implementation, and

benefits of using FACNET are shown in the following three tables.

Table III.1: Responses Concerning Future Use of Various EC Tools or Methods, Including FACNET

Question: To what extent do

you expect these EC “tools”

to be important to your

agency through 1999?

To little or

no extent

To some

extent

To a

moderate

extent

To a great

extent

To a very

great extent

Do not

know Total

A. FACNET 0 4 4 4 3 2 17a

B. Some Alternative

Government EC Solution

2 3 3 1 4 4 17a

C. Internet 1 2 3 4 6 1 17a

D. Agency-Unique System(s)

or Architecture

10 0 2 2 0 3 17a

E. Your Agency’s Electronic

Bulletin Board

8 1 2 2 1 3 17a

F. Electronic Catalogs 1 0 7 4 4 1 17a

G. Other 0 0 0 0 2 0 2b

aOne agency did not reply to this question.

bAgency officials not required to respond.

Source: Our analysis.

Page 32 GAO/NSIAD-97-26 Acquisition Reform
Appendix III 

Agency Responses to Our Questions About

FACNET

Table III.2: Number of Responses Concerning Obstacles to FACNET Implementation

Question: To what extent, if at all, is each

an obstacle to your agency’s efforts to

implement FACNET?

To little or

no extent

To some

extent

To a

moderate

extent

To a great

extent

To a very

great extent Total

A. Lack of funding needed 7 7 0 1 3 18

B. Lack of other resources needed 3 7 3 3 2 18

C. Lack of effective leadership within your

agency

14 4 0 0 0 18

D. Lack of effective policy leadership

outside your agency

2 2 2 5 7 18

E. Lack of effective government-wide

program management

1 2 2 7 6 18

F. Lack of effective FACNET engineering

and operational management

1 2 1 2 12 18

G. Lack of a sound FACNET infrastructure

that works “end to end”

0 0 3 3 12 18

H. Lack of a CCR database that is well

populated and operational

0 0 1 4 12 17a

I. Lack of a clear definition of “single face to

industry”

3 1 5 3 6 18

J. Lack of a well-defined federal strategy for

use of FACNET

3 4 6 1 4 18

K. Lack of well-defined FACNET strategy in

your agency

16 2 0 0 0 18

L. Lack of consistent, helpful, or practical

outreach information for vendors

2 5 3 3 4 17a

M. Lack of integration of FACNET into your

agency’s systems

13 3 1 1 0 18

N. Lack of data security 10 4 3 1 0 18

O. Use of EDI has made the FACNET

development or simplified acquisition

processes more difficult

7 4 2 4 0 17a

P. Fragmented standards implementation 3 4 5 3 3 18

Q. Obstacles caused by the statutory

requirements for FACNET

7 4 3 2 2 18

R. Other management, operational, legal, or

policy problems

0 0 0 1 2 3b

aOne additional response was marked “unknown.”

bAgency officials not required to respond.

Source: Our analysis.

Page 33 GAO/NSIAD-97-26 Acquisition Reform
Appendix III 

Agency Responses to Our Questions About

FACNET

Table III.3: Responses Concerning Benefits of FACNET

Question: To what extent is each a

direct/indirect benefit that has been or is

being realized in your agency from federal

efforts to implement FACNET?

To little or

no extent

To some

extent

To a

moderate

extent

To a great

extent

To a very

great extent Total

A. Saving money 7 4 3 1 2 17a

B. Reduced processing time 8 3 4 1 1 17a

C. Increasing competition/small business

opportunities

5 5 2 3 2 17a

D. Better management information 10 3 2 1 0 16a,b

E. Improved payment process 13 2 0 1 0 16a,b

F. Increased productivity of agency

personnel

8 4 1 1 1 15a,c

G. Policy lessons learned that will likely

benefit the government in the future

4 3 3 5 2 17a

H. Technical lessons learned that will likely

benefit the government in the future

2 3 3 5 4 17a

I. Enhanced EC-related knowledge, skills,

or abilities of federal personnel that will

likely benefit the government in the future

2 2 6 4 3 17a

J. Fostered better cooperation and/or

coordination between the EC and

acquisition organizations

5 6 4 0 2 17a

K. Forced or encouraged federal agencies

to better manage EC efforts

3 4 4 2 4 17a

L. Promoted EDI in the government 1 7 1 4 4 17a

M. Other 0 0 0 0 2 2d

aOne agency official did not respond.

bOne additional response was marked “unknown.”

cTwo additional responses were marked “unknown.”

dAgency officials not required to respond.

Source: Our analysis.

Page 34 GAO/NSIAD-97-26 Acquisition Reform
Appendix IV 

Comments From the National Aeronautics

and Space Administration

Page 35 GAO/NSIAD-97-26 Acquisition Reform
Appendix V 

Comments From the General Services

Administration

Page 36 GAO/NSIAD-97-26 Acquisition Reform
Appendix V 

Comments From the General Services

Administration

Page 37 GAO/NSIAD-97-26 Acquisition Reform
Appendix VI 

Comments From the Office of Federal

Procurement Policy

Page 38 GAO/NSIAD-97-26 Acquisition Reform
Appendix VI 

Comments From the Office of Federal

Procurement Policy

Page 39 GAO/NSIAD-97-26 Acquisition Reform
Appendix VII 

Comments From the Department of Defense

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Now on page 2.

See comment 1.

Page 40 GAO/NSIAD-97-26 Acquisition Reform
Appendix VII 

Comments From the Department of Defense

See comment 2.

Now on page 3.

See comment 1.

Now on page 4.

See comment 1.

Page 41 GAO/NSIAD-97-26 Acquisition Reform
Appendix VII 

Comments From the Department of Defense

Now on page 6.

See comment 2.

Now on page 9.

See comment 2.

Now on page 11.

See comment 1.

Now on page 11.

See comment 3.

Page 42 GAO/NSIAD-97-26 Acquisition Reform
Appendix VII 

Comments From the Department of Defense

See comment 1.

Now on page 12.

See comment 1.

Now on page 20.

See comment 1.

Page 43 GAO/NSIAD-97-26 Acquisition Reform
Appendix VII 

Comments From the Department of Defense

Page 44 GAO/NSIAD-97-26 Acquisition Reform
Appendix VII 

Comments From the Department of Defense

The following are GAO’s comments on the Department of Defense’s letter

dated November 27, 1996.

GAO Comments 1. We made changes to the report to reflect DOD’s comments.

2. Through the completion of our audit work in September 1996, agencies

and vendors continued to identify operational problems with the

infrastructure and the CCR database. Although DOD stated that it was not

experiencing any operational problems as of late November because of

recent enhancements, we believe insufficient time has elapsed to verify

whether the operational problems have been eliminated.

3. According to the Director for DOD EC, as of December 5, 1996, DOD has

not issued policy guidance on the use of faxes pertaining to FACNET

solicitations.

Page 45 GAO/NSIAD-97-26 Acquisition Reform
Appendix VIII 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Kevin M. Tansey

Patricia D. Slocum

Thomas W. Hopp

Accounting and

Information

Management Division

Carl M. Urie

Gwendolyn A. Dittmer

Office of General

Counsel

John A. Carter

(705121) Page 46 GAO/NSIAD-97-26 Acquisition Reform
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