Much of what has been written about the federal government's electronic commerce system commonly known as FACNET (the Federal Acquisition Computer NETwork) has focused on the horror stories and there have been many. But if the truth be known, FACNET represents a truly revolutionary means to reduce the cost of goods and services commonly purchased by the federal government, while simultaneously opening federal markets to thousands of small businesses which otherwise could be excluded.

What is FACNET?

FACNET was created as part of the Federal Acquisition Streamlining Act of 1994 (FASA) to provide a means of conducting electronic commerce between the United States government and it suppliers. FASA requires that all acquisitions between $2,500 and $100,000 be procured using FACNET unless otherwise exempted. Solicitations for goods and services are no longer required to be announced in the Commerce Business Daily (CBD) if procured using FACNET.

In addition, FASA mandates that all solicitations over FACNET be set aside for SMALL BUSINESSES. This means that the goods and services offered by small businesses in response to a FACNET solicitation must also be produced and manufactured by small businesses, if the estimated value of the purchase action is greater than $25,000.

Who Stands to Gain?

FACNET is still in its infancy and there exists some confusion within Government procurement shops as to when and how FACNET is to be used. However, it becomes apparent that the federal government can not help but get better prices for goods and services by using FACNET as opposed to purchasing those same items through conventional means on the open market. Small businesses also stand to gain significantly because of the set aside requirement.

Who Stands to Loose?

If properly administered, FACNET can be a win win situation for all parties involved. However, businesses that have enjoyed profit margins above industry norms, simply because of lack of competition in the federal arena, may find that use of FACNET will increase competition and thus force them to lower their margins.

How Can Your Business Benefit From FACNET?

1. Unlike the Commerce Business Daily (which generally provides announcements of the availability of solicitations); FACNET provides immediate access to active solicitations (an immediate pool of bidding opportunities, not announcements).

2. FACNET is an all electronic means of doing business, thus preparation of quotations and/or bids is greatly simplified.

3. The turn-around-time, i.e.; the time from when a quote is submitted until a purchase order is offered, is substantially less than using the paper process and typically occurs within 30 days.

4. Expedited payments - many FACNET orders are paid using of the government's credit card thus greatly reducing the time for payment and vastly improving cash flow.

5. Because the scope of FACNET is international, one has immediate access to markets throughout the world (anywhere that the US government has operations).

How Can Your Business Take Advantage of This Tremendous Opportunity?

Contrary to a lot of what has been written about FACNET, it does not cost a lot to participate in electronic commerce with the federal government. There are free, limited use services available. However, if you already own a computer with a communications device, like a modem, your start up cost can be as low as $60.00, with monthly subscription charges ranging from below $50.00 to slightly over $100.00 per month. You will need to engage the services of a Value Added Network (VAN) provider that has been certified by the federal government to provide FACNET access.

How do You Choose a VAN?

As of January 1, 1997, there were approximately 30 VANs that have been certified for FACNET by the government. Choosing a VAN can be a daunting process with lots of pricing and service offerings. However, there are a few fundamental guidelines that you may use to choose a VAN to fit your needs.

What are your company's requirements?

Assess your operational requirements; i.e., whether you company uses a stand alone PC or operates under a LAN environment. Look at the speed of your modem, you will want one with at least 14,400 BPS. Determine whether or not you wish to access the VAN service from multiple locations and whether you will be using EDI data in other applications.

Once your company’s requirements have been determined, develop a checklist, then question the VANs and weed out the ones that do not meet your requirements.

Evaluate the Services That the VAN is Offering.

You may further cull the list of possible VANs by closely examining the services/products the VAN offers.

The proposed VAN must be certified and deliver your transactions reliability. The service should make it easy for you; the user, to access information. You should consider the “tube time” or the amount of time that you have to spend in front of the CRT/monitor of your PC to get the information/RFQs that you want and to prepare quotes. Some services require that you go through and pick each category that you want to view, each and every time that you use the service. Other services store a profile of the categories that you are interested in using. The service must be able to segregate and sort solicitations and purchase orders. Above all, the VAN must provide user friendly, consistent service.

The VAN must also support ALL OF THE EDI VERSIONS USED BY THE GOVERNMENT. There are currently four (4) versions in use. They are 2003, 3010, 3040 and 3050. Get proof!

Get references, speak to them and find out how many purchase orders they have received. You may also want to consider using the software and the service for a trial period.

Since most of us do not want to waste money, price is certainly a consideration. Therefore, you should determine whether the service is priced on a flat fee or measured basis. Find out about the limitations and the manner of access. Whether there is a local number for your area, an 800 number or access through the internet.

Consider the pros and cons of access through the internet (WWW) versus a private network (dialup).

Recap: The Following are Some Major Factors to Consider When Choosing A VAN

The VAN must provide solid references.

Does the VAN provide all of the components for successful operation, including translation software, communications service and exchange service?

The VAN must support all EDI versions used by the government.

The VAN should provide message sortation and delivery acknowledgment.

The VAN should prove its availability to deliver. Speak with contracting personnel to find out what problems, if any, they have been had with the VAN and how helpful the VAN was in the resolution.

Consider customer service. How easy is it to obtain? Do you get a live operator or a voice mail system where you leave your name and number.

The service should be simple and easy to use. Functions should be readily discernible and discoverable. You can determine this by requesting a demonstration.

How Do You Win Awards?

Submit quotes early and submit quotes often. It is generally not considered a good idea to wait until the due date to submit a quote. Submit the quote on the same day that you receive the RFQ. Submit lots of quotes and quote aggressively. Become familiar with FAR 13.108(a) regarding the legal effect of a quotation.