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30 Procurement Law. 1 (1994-1995)

handle is hein.journals/procurlw30 and id is 1 raw text is: Formerly known as Public Contract Newsletter r ri' r t in i Electronic Contracting: The Future Is Sooner Than You Think STEVEN M. PORTER The federal government is committed to using electronic contracting for all small purchases-with larger purchases to follow. The timetable is set, and project action (PAT) teams at both DoD and the civilian agencies are busy meeting deadlines, installing equipment, and writing pro- cedures to make all of this happen. The move toward electronic contracting has been mandated by both Congress and the executive branch. As reported in the August 21, 1994, Congressional Record, Congress-in the Federal Acquisition Streamlining Act of 1994-has required implementation of electronic con- tracting by all federal agencies as a prerequisite to raising the small purchase threshold (soon to be renamed the simplified acquisition threshold) to a new $100,000 level. Raising the threshold is important to government managers because most contract actions are under $100,000; increasing the threshold will allow use of sim- plified (less labor-intensive, less expensive) procedures. In order for federal managers to obtain this concession, Congress required a quid pro quo: implementation of electronic contracting. In addition, in accordance with President Clinton's memorandum of October 26, 1993,' the executive branch has mandated implementation of electronic contracting. In fact, the Department of Commerce has directed that all executive branch agencies and departments utilize the so-called X-12 standard for all types of data interchange, including procurement.' To coordinate implementation of electronic contract- ing on a government-wide basis, a federal EDI task force has been formed. According to this task force, many civil- ian agency locations will soon be using electronic con- tracting. The master plan calls for initially using electronic contracting just for small purchases, but to migrate very quickly to larger purchases as soon as the sys- tem permits. Within DoD, the plan is to have 154 small purchase contracting sites on line by March 1, 1996, with an additional sixty-six sites to follow within the next six months. A total of 249 sites will be doing about 80 per- cent of DoD's small purchases by September 1996. This article describes the procedures that will be used when the federal government moves to electronic con- tracting as well as a few of the legal issues that must be addressed in order for electronic contracting to work. Electronic Contracting in the Private Sector Electronic contracting has been used in the private sector for many years, primarily between firms with established business relationships. The firms use any one of a number of established electronic systems to transmit invoices, purchaseorders, catalog data, price information, bills of lading, delivery reports, and order confirmations, as well as regulatory information such as tariff filings, environ- mental reports, and customs declarations. Firms exchanging information electronically must have an established structure and formats for data trans- mission so that they fully understand the content of the electronic messages they are exchanging. Standard fors and formats for data transmission are chosen by business- es utilizing national and international standards-setting processes, or occasionally outside of those processes by agreement among trading partners or groups of trading partners in a single industry. It is vitally important for the (continued on page 22)

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