Digital Handshake Characterizes Defense Electronic Commerce

March 1999
By Robert K. Ackerman
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Military experts are adopting commercial approaches to develop efficient business practices with industry.

The Defense Department is melding the expertise of the business and technology worlds to embrace electronic commerce as its primary means of transaction. To enable the services and defense agencies to conduct business with private industry more efficiently, the department is working with its contractors to adapt their own best practices and technologies to military requirements.

The department’s Joint Electronic Commerce Program Office, or JECPO, is spearheading the effort. Inaugurated last year, JECPO has begun consolidating the department’s diverse electronic commerce programs and implementing new technologies and practices.

JECPO is a dual-base organization built under the aegis of the Defense Information Systems Agency (DISA) and the Defense Logistics Agency (DLA). While defense commerce would normally fall under the purview of DLA, the electronic aspect lands it in DISA’s domain. Accordingly, JECPO comprises both business and technology experts. The office is divided into functional groups that work with all the communities expected to benefit from electronic commerce, including contracting, acquisition, logistics, transportation, finance and personnel organizations.

Claudia “Scottie” Knott, JECPO director, offers that this dual-sponsor approach was adopted because electronic commerce is an enabling technology. “You really need two sides of the coin to make it work,” she explains. “You need the technology side—the people who understand technology and how to take it from the commercial sector and make it scalable for Defense Department solutions. You also need the business acumen from people who understand specific business problems and can employ the technology to solve a problem or streamline a process.”

Knott says that the office has had considerable success in breaking through traditional cultural barriers to achieve change. Much of this results from prior work to acclimate department personnel to electronic commerce as well as the revolution in the private sector. “We’ve been able to ride that larger revolution in the Defense Department of wanting to adopt commercial business practices,” Knott states. 

The Defense Department has responded well to the office’s electronic commerce initiatives, says Col. William Osborne, USAF, deputy director of JECPO. He cites support from the offices of Deputy Secretary of Defense Dr. John Hamre and the assistant secretary of defense for command, control, communications and intelligence and chief information officer (CIO). The services also are being very cooperative with all of JECPO efforts.

Although, the emergence of electronic business in the private sector is driving the Defense Department’s program, both Knott and Col. Osborne emphasize that the bottom line is not the primary motivator for establishing an efficient departmentwide electronic commerce structure. Instead of focusing on attaining cost savings, JECPO has efficiency as its main goal.

“Almost all firms in private industry has recognized that they need to re-engineer their business processes to take advantage of new technology,” the colonel explains. “They want to make their people more efficient and handle the flow of information much more effectively. That is our real objective.” He notes that the commercial sector has been moving in this direction for a number of years, with resulting gains in productivity. The department is seeking the same success stories that have emerged in private industry.

Amid nine current initiatives, JECPO is focusing on reducing operational costs and shortening process cycle times. The office’s mission statement emphasizes that these two elements are its measures of effectiveness. “Saving people money and figuring out how their processes can be much more cost-effective are the types of things that we seek to attain with electronic commerce,” Col. Osborne states. “Ultimately, decreasing the amount of time it takes to provide goods and services to the warfighter” is the office’s target.

The office’s major challenge lay in “synthesizing all the views of electronic commerce” and its many definitions, Col. Osborne says. Consolidating these different outlooks of electronic commerce in a Defense Department context became a focal point of the office’s efforts. Putting these electronics concepts on paper is essential to producing a Defense Department regulation on electronic commerce. The department is currently drafting a strategic plan, and JECPO has its own strategic implementation plan. The result will be a single Defense Department approach to electronic commerce.

Knott cites emerging Internet technologies as JECPO’s primary interest. “The power of the network to link customers directly with sources of supply, either in logistics or information systems, [involve] the types of technologies that can really help a large organization, such as the Defense Department, re-invent itself,” she says.

The office’s nine initiatives are its focal points. These include facilitating the Defense Department’s adoption of commercial identifiers instead of unique government identifiers; working with the U.S. Transportation Command (USTRANSCOM) on transportation and financial processes; helping determine smart card crosswalks between the cards and other technology efforts; managing the Defense Department’s Electronic (E-) Mall program and expanding it; and implementing security policies on digital signatures, integrated public key infrastructure certificates and electronic document access control.

Other initiatives include developing the department’s electronic commerce architecture; managing the development of a past performance automated information system; coordinating the development and implementation of a business opportunities module to provide on-line access to department solicitation information; and managing the purchase card electronic commerce/electronic data interchange process. This includes implementing electronic interfaces between credit card banking institutions and Defense Department finance systems.

The overall goal remains support to the warfighter, Knott emphasizes. Bringing these technologies to bear on applications that support forces in the field “is the most meaningful task of JECPO,” she says.

In its short existence, the office has had its biggest impact in paperless contracting, Col. Osborne offers. The work the office has performed in electronic document access as well as efforts to help the Defense Finance and Accounting Service move to paperless contracting has been a big success, the colonel states. Similar successes have emerged through endeavors with the paperless contracting working integrated process team inaugurated by Hamre.

A wide-area workflow prototype aims at reducing unmatched disbursements in the defense receipt, entitlement and payment process by sharing data and electronic documents. The prototype is being designed by JECPO to provide a technical approach for integrating and applying electronic document management, workflow and access as well as electronic data interchange solutions with World Wide Web interactive forms.

Electronic document access, which originated in the finance and accounting community, digitizes contract award documents to allow authorized personnel to access these documents “anywhere, anytime.” Knott says that successfully demonstrating this virtual document access has broadened the application to include contract administration services. The office is prototyping its use to allow vendors to submit additional contractual documents on-line. “With one success, we have been able to convert this into other applications with other users,” she warrants.

Another benefit of this effort affects contracting activities. Instead of physically printed contract documents that are distributed to diverse finance and accounting offices, a digitized document can be viewed electronically from virtually any location. As a result, 80 percent of all documents are not printed for distribution. In addition to paper savings, this digitization frees the workers from repetitive, serial processing of mailing, filing and storing paper documents. As an example, one payment center handles 365,000 active contracts. Adding seven other payment centers to this total illustrates the savings garnered by digitizing 80 percent of all contracts involved in an $84 billion contracting activity.

Knott also mentions efforts with the logistics community to improve its longtime proprietary electronic data interchange (EDI) system. JECPO is building on the logistics community’s advances in that discipline to establish a plan for converting all the proprietary system’s transactions into a modern EDI system.

Among JECPO’s most significant efforts is the Defense Department’s E-Mall. Col. Osborne allows that this program will revolutionize how the department acquires goods and services. Its foundation is well established, with remaining tasks to focus on making it more operational and robust, he states.

The Defense Department’s E-Mall is an outgrowth of DLA’s E-Mall program. This virtual shopping area is being designed with commodities, information technology and services/construction corridors. The services and defense agencies are fielding stores within these corridors to provide one-stop visibility for ordering from all department electronic catalogs as well as order status.

A key JECPO E-Mall thrust is to provide a single point of entry and search across all Internet-based Defense Department catalogs for both goods and services. The mall currently can search across, and order from, a variety of DLA and service sources. This includes clothing, textiles, information technology hardware and software, photographic and lighting supplies, commercial part-numbered items and food services. Plans call for adding other defense electronic catalogs such as the Army’s A-Mart and the Tank and Automotive Command’s tire store. Service and defense agency virtual stores along the three corridors will be expanded and feature new items added to their stocks.

“E-Mall has so much potential for changing how we go about doing business,” Col. Osborne says. “It also will drive the use of smart cards and purchase cards.”

Col. Osborne offers that JECPO’s work with USTRANSCOM in providing services to the warfighter is one of the office’s two primary objectives. The office is working with the command in its efforts to automate its processes and create a paperless environment. Five proof-of-concept projects—airlift, sealift, surface, truckload and less-than-truckload—are under evaluation.

JECPO is moving USTRANSCOM’s electronic data interchange transactions into a more integrated environment, the colonel relates. This effort also includes providing opportunities to take advantage of systems in use by other department communities. Another activity involves developing a prototype with the command’s global transportation network. This is an opportunity to collate substantial amounts of data from a variety of sources and present it in a more efficient fashion, Col. Osborne states.

The other key thrust is information assurance. According to Col. Osborne, the linchpin to achieving all electronic commerce goals is “the chain of trust” among users that their electronic transactions will be secure. The security features that the office is beginning to develop and implement are critical to the success of electronic commerce, he adds.

Development of the Defense Department’s electronic commerce architecture is proceeding apace. The office has briefed its efforts to the directors of DLA and DISA, to the CIO staff and to the services, and reaction has been positive, Col. Osborne states. JECPO also is actively seeking industry experts’ opinions on the plan. Concept, direction and implementation especially are areas where industry feedback is essential to the success of the program. Not only is the private sector a key participant in Defense Department electronic commerce, but it will also be providing the enabling products to develop the architecture. “The main challenge overall that I take on personally is to make sure that this does not wind up to be shelfware,” the colonel declares. The office currently is working on validating its “straw man,” and it expects to have its first “1.0” version of the architecture this spring.

Knott allows that private industry may be tapped for many solutions. Participants in ongoing visits to companies seek to discover how they are adopting relevant technologies to improve cost-effectiveness and reduce cycle times. Examining how a large overnight delivery service employs electronic commerce to manage the distribution and delivery within its transportation services, for example, may provide knowledge that can be adapted for the Defense Department. The financial community’s use of electronic funds transfer and smart cards also can be applied directly to streamline and improve defense business processes.