Acquisition Network Flops

Agencies say that the Federal Acquisition Computer Network (FACNET), designed to become a governmentwide vehicle for electronic procurement, is a failure, according to a new General Accounting Office report.

The Federal Acquisition Streamlining Act mandated the creation of FACNET for agencies to use for purchases between $2,500 and $100,000. FACNET would provide a "single face" to industry for procurements within this range, speed up communication between contractors and agencies, and lower costs by cutting paperwork and reducing lead times. It would become a model of how the federal government could use electronic commerce to improve the procurement process. But agencies surveyed by GAO found that the difficulties of using FACNET outweigh the benefits it has provided.

Federal users said FACNET lacks a sound infrastructure, is ineffectively managed and is not appealing to contractors. FACNET is a closed network, and thus is unavailable over the Internet.

In 1995 less than 2 percent of the 2 million federal procurements in FACNET's price range were accomplished through FACNET. Of the 113,000 procurements made over FACNET, 75 percent were actually below the $2,500 threshold. Ninety-seven percent were performed by the Department of Defense.

Government contractors are unimpressed with FACNET as well. As of October only about 4,000 of an estimated 300,000 government contractors had registered in the FACNET database. Companies said that FACNET's unreliability was the primary reason they didn't want to use it.

In 1993, the National Performance Review predicted electronic commerce could save the government $500 million a year in acquisition costs.

The failure of FACNET does not mean agencies are dumping electronic commerce. Most agencies are finding other electronic commerce initiatives more useful than FACNET. Purchase cards, the Internet, and on-line catalogs are considered simpler and faster.

Survey respondents also told GAO that although time and money were not saved through FACNET, they did benefit from the lessons they learned and the skills they acquired using the network. The Defense Logistics Agency, the General Services Administration, and the Department of Veterans Affairs reported they extensively use electronic data interchange (EDI), the electronic exchange of business documents, for procurements--though their successes have been outside of FACNET.

Because the Federal Acquisition Streamlining Act requires the use of FACNET, GAO recommended that procurement policymakers may want to seek legislative relief from that requirement. Because a few agencies, particularly segments of DoD, have found success on FACNET, it will likely remain part of the government's electronic commerce program.

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