Pentagon Adopts Web Tools To Speed Up Contract Process.

The Defense Department is turning to the World Wide Web to expedite a growing backlog of contract paperwork.

By establishing a paperless contracting system, powered by the Internet, the Pentagon intends to save time and money, while speeding up payments to contractors for their good and services, according to defense officials.

Common sense has played a major role in the development of such tools, Pentagon officials have said time and time again. As advanced technologies became available, and as information sharing capabilities and the Internet expanded, it was only logical that U.S. Government agencies--the Defense Department being no exception--got the most out of these innovations.

Today, the Pentagon uses several Web systems to interact with contractors. These include that Web Invoicing System (WInS) and Wide Area Workflow Receipts and Acceptance (WAWF-RA). The Joint Electronic Commerce Program Office (JECPO) and the Defense Finance and Accounting Service (DFAS) work in conjunction to bring these technologies to bear.

National Defense recently was invited to visit the Defense Department's Paperless Contracting office, in Arlington, Va., to view live demonstrations of the systems.

Diana L. Buttrey, DFAS program manager, led the WInS exhibition, and said that DFAS has had the capability to do Web invoicing for some time.

"Nobody's been doing business with us for quite a few years, but we've had the capability to do electronic invoicing and some contracting for years," said Buttrey. "We were having a hard time getting our contracting community to come onboard with electronic invoicing."

First, the Defense Department adopted DEI, or electronic data interchange. EDI is simply the exchange of information between two or more computers. But initially, it was not the sensation Pentagon officials hoped it would be.

"We actually started out with EDI," said Buttrey. "We were offering this capability to our vendors, but they weren't coming. 'Build it, and they will come,' doesn't always work."

For the corporate giants, EDI was easy. But not so for small businesses.

"Our vendor base across DFAS is very diverse. We have small, mom-and-pop shops. We have small other kinds of companies. We have medium-size companies. We have medium-large companies. And we have really large companies," said Buttrey. "The large companies did EDI without even blinking. ... And a lot of them do their own EDI translation."

There are more than 300,000 contractors that lobby for Pentagon business, and their sizes and revenues vary significantly. EDI, in the beginning, was not a healthy investment for many of the small companies, because they could not afford a VAN, or value added network, said Buttrey.

Web Invoicing System

"The VAN is sort of the conduit in the middle of EDI," she said." ... The situation was, for years, the large guys came onboard, but we were really missing the majority of our vendors by only offering EDI. Quite frankly, they couldn't do it. It cost too much to get the VAN involved--this guy in the middle who did all this translation. And they would have to change their systems. A lot of small guys don't have system. It was just too costly and too lengthy a process for them.

"We ended up going to the Web," said Buttrey. "And we said, 'OK, let's offer the vendor some Web programs, but still use our EDI capabilities at the back end, because we didn't really want to spend time redoing things that we had already done. So our Web initiatives are taking advantage of the back end that we already have available--the EDI feeds--which was really cutting edge technology. When WInS was implemented, it was one of the very first programs to actually use Web and EDI together. It was right there, out there, on the edge. And even other federal agencies are looking to DFAS [to see how we] did that."

Previously, all invoices were submitted through the mail as hard copies. This would cause payment delays because of mail time. But it was not just postal delivery turnaround, said Buttrey. There were increased delays, because these copies would sit in DFAS mailrooms until they were sorted through. And that could be for long periods, considering the magnitude of paper-flow that came in, she added. In fact, DFAS handles 12 to 14 million invoices a year.

Hard-copy invoices face the potential danger of getting lost in the mail. Also, there is more opportunity for error with hard copies, because the information has to be keyed into the system.

WInS allows contractors to enter information into vouchers and invoices on the Web, so that payments may be made in a more timely manner at no cost to the vendors. The no-cost element is particularly appealing to the small and medium size companies that could not afford direct EDI, said Buttrey.

WInS offers invoice applications that are already loaded into the system. The contractor just needs to insert the appropriate data into the designated fields.

Data fields may, require items such as contract numbers, delivery order numbers, and money totals to name a few. And mandatory fields are shaded so that users know that their invoices cannot be submitted until a figure is entered.

Today, payments are issued on an average of four days after the initial invoice is submitted.

Other benefits of Web-based invoicing include cost savings; improved data accuracy and no mail time, said Buttrey.

The contractors do nor have to learn specific EDI terminlogy or formats. They just enter the data and submit, so there is no chance for re-key entry errors. And the vendor does not need any specific software other than a Web browser, such as Netscape or Microsoft Explorer.

Invoices include the Mechanization of Contract Administration Services (MOCAS), the Standard Automated Material Management System (SAMMS) and the Standard Accounting and Reporting System (STARS).

MOCAS offers commercial invoices, public vouchers and progress payments.

MOCAS and SAMMS also offer contractors with multiple contracts the opportunity to submit batch files. Vendors send batch invoices electronically, rather than mailing large batches of paperwork.

From May 1998 through July 31, 2000, WInS has received 3,574 requests for MOCAS, 2,287 requests for SAMMS and 212 requests for STARS. During that same period, the system processed more than 353,000 invoices and vouchers, which totaled more than $19.2 billion. Thirty-seven vendors have exercised the batch file option.

Contractors can go to https://ecweb.dfas.mil and register for a username and password to do business online with DFAS.

Wide Area Workflow

WAWIF-RA takes WInS a step further by incorporating digital signatures so that intended parties can receive reports and certified invoices.

The system is designed to reduce processing time to three days by electronically entering a contract, receiving report, and the invoice--three documents that used to be entered manually.

When an invoice is submitted by a vendor, an e-mail is sent immediately to all appropriate parties to let them know it has been entered into the system. This lets them know that the next action must be taken.

For example, if Company A sends an invoice for 32 widgets purchased by the Army Tank-Automotive and Armaments Command (TACOM), an e-mail is sent to TACOM and DFAS to let them know that the invoice is in the system. TACOM then verifies that it purchased the widgets, and approves the invoice.

After the invoice is authorized, the next step is for DFAS to issue payment. E-mails are continuously sent as transactions are made. If the vendor wishes to offer a discount to a buyer, this also can be included in the invoice.

WAWIF-RA, currently is active at the Air Force Academy (seven users), Fort Campbell (four users) and Hickam Air Force Base (14 users).

Soon, it will be deployed to more than 1,000 vendors and 200 quality acceptance evaluators, said officials.

To date, WInS has received favorable reviews. It was awarded the CIO Council's 1999 prize for best information technology practice in the federal government.

It also was named best Defense Department Web site in 1999, and best electronic commerce team in 2000, at JECPO's Defense Department Electronic Commerce Day.

The next step for the Defense Department is to take these technologies and incorporate them into a single exchange for all the military services to use. The Defense Department hopes to have this system ready by 2010 (related story, below).

Although it is not mandatory for contractors to use these systems, it is highly encouraged.

As the Defense Department continues down the road of paperless contracting, DFAS officials say the Pentagon most likely will not award contracts to those vendors who do not have electronic invoicing capabilities.

Pentagon Poised to Go 90 Percent paperless, Says JECPO Director

Since its inception in June 1998, the Joint Electronic Commerce Program Office (JECPO), has made "significant strides" towards helping the Defense Department achieve its paperless contracting goals, says the office's, director.

When Claudia "Scottie" Knott was put in charge of JECPO, which operates under the Defense Logistics Agency, based at Fort Belvoir, Va., the Pentagon contracting operation was only 27 percent paperless. Today, that figure has reached 85 percent, according to Knott. Though that estimate may be short of the 90 percent the office was hoping for at the turn of the century, Knott believes the Defense Department will have no problem in reaching that goal in 2001.

"I think we'll be able to reach that," she told National Defense in an interview." ... The goal was 90 percent by 1 January 2000. While we didn't make that goal totally, we made significant strides towards it. Clearly, by 1 January; 2001, we will be able to hit that mark."

Paperless contracting is mandated by the Defense Reform Initiative Directive policy.

As the Pentagon works to become a less paper-dependent agency, there are six performance measurements, or metrics, that document its progress: contract requirements, contract solicitations, contract awards/modifications, receipts and acceptance, invoices/payments, and contract closeout. The department reached its 90-percent goal on four of the metrics, but the other two dragged its aggregate score down, said Knott.

"While we certainly didn't meet the [total] goal, we certainly came a long ways," she added.

As the Pentagon inches closer to its paperless goals, Knott envisions a future when the Defense Department will have a single electronic exchange where all of the military services can access all of the electronic commerce technologies, ranging from invoice payment to supply chain management.

"The next step is to go beyond the traditional areas of buying and paying, which is what we concentrated on with the paperless contracting, and to move really to more of the supply chain transactions," said Knott. "In the long term, we are trying to establish an enterprise-wide electronic environment by the year 2010."

Because the services have unique needs, there is a challenge in building a system that can accommodate all of them, she said.

"Our mantra is we're a team of teams, building a system of systems, and the technology today allows a presentation of information to look like a single enterprise," said Knott, "even though the uniqueness of the applications--in other words, the unique differences between the services--can also still be recognized. To that degree, we are trying to build an electronic business exchange, but it is not a single system in the same way that the automotive industry and the airline industry and a lot of the major supply chains are trying to create common business services that support each of the component companies.

"...We have a lot of work yet to do, in terms of making [electronic commerce applications] more integrated. In other words, we built a lot of applications, and our next step really is putting them into an enterprise portal, so that anybody in the Defense Department enterprise can use all of them with a single sign-on."