Electronic Funds Transfer

Mr. Chairman and Members of the Subcommittee, let me express my appreciation to you for allowing me the privilege to appear before this Subcommittee.

The General Services Administration (GSA) supports the implementation of the electronic funds transfer (EFT) provisions contained in the Debt Collection Improvement Act. While we recognize that there are some concerns, EFT is another step toward our goal of implementing electronic commerce in the Federal Government. Electronic commerce is a term that has been defined in a variety of ways. We define electronic commerce as the use of information technology to improve commerce. Electronic commerce works by using technology to improve, eliminate, or create new and better ways to do business.

Over the past several years, the Federal Government has been engaged in a major effort to use electronic commerce to reengineer a number of functional areas. Today I'd like to talk to you about several of our major initiatives and where we are going.

One of the key electronic commerce tools that we see having a major impact on Government operations is card technology. With the advent of the Internet and intranet access to Government and industry information and services, smart card technologies have emerged as the key mechanism for identification, purchase of supplies and services and access control. Industry has presented smart card systems as the vehicle for portable access control. Smart cards represent the ideal platform for Government to use these market changes in its reinvention and reengineering for the future. Card services and systems can provide secure transactions and unique personal identification.

Our vision is for every Federal employee to carry one card and be able to use it for multiple purposes -- travel, purchases, identification, and other financial and administrative purposes. For the near term, we expect that hybrid cards, combining magnetic stripe and integrated circuit chip technologies, will be a critical tool in the reengineering for electronic business processes. Card systems and, in particular, smart cards are an extremely effective and efficient tool to identify the system users. The portability of smart cards enables the user to gain access to systems applications and conduct business in any location where network connections can be made. Already this capability of connecting is virtually guaranteed through the worldwide web. Through the use of standard ID identifiers such as a minimum ID data set or use of standard digital certificates, card access interoperability can be simply and efficiently accomplished for a wide range of applications.

In order to effectively implement smart card technology, the Government must consult its customers and build its services for the future on customer needs. To illustrate, the Federal Supply Service (FSS) has actively pursued the input and advice of Federal agencies and industry in order to plan for the new card service contracts for the fleet, travel, and purchase card programs. FSS heard the need for Federal agencies to modernize and take advantage of smart card technology and other commercial industry tools for reinventions FSS first issued a draft statement of work for the new programs in December 1996. At the same time it encouraged Government users and industry suppliers to take a critical view at the plans and requirements for the new programs. To make sure that all views were heard and considered, FSS issued a draft request for proposal (RFP) in May 1997 with additional public forums to discuss these services. The final RFP will be released in July 1997 with award expected in January 1998. By issuing the RFP, FSS seeks industry input for solutions to integrate multiple business applications on a single card platform. The RFP will also reflect the requirement for intra-governmental transfers compliant with the Department of the Treasury's (Treasury's) cash flow requirements.

Similar efforts to establish partnerships within Government and with industry are necessary to carry out this ambitious plan to migrate to smart card technology to support the Government's card programs and electronic commerce initiatives. Another example of partnering to implement electronic commerce is with electronic benefits transfer (EBT). Three years ago Vice President Al Gore established the Federal EBT Task Force, consisting of key policy officials from the Departments of Agriculture (USDA), Health and Human Services (HHS), Treasury, Social Security Administration (SSA) and Office of Management and Budget (OMB), to work with states and industry to implement a nationwide EBT program by 1999. Today, three years later, virtually every state in the country is operating an EBT system or has contracted with a service vendor to begin EBT operations by 1999.

Government service delivery through smart card systems is already a reality in Ohio. In partnership with USDA, Ohio has launched a statewide EBT system using smart cards. EBT will be just the beginning as Ohio explores how best to include other forms of Government services, such as public transportation, health information and licensing, through smart card service delivery.

We believe what we have already accomplished in EBT is just the beginning. In the follow-up report to the National Performance Review, Access America, Vice President Gore has called for an intergovernmental pilot test of common benefit and service delivery across multiple Federal and state agencies. We are forming an interagency effort to explore how best to build access to all forms of Government benefits, from education loans to Veterans benefits, through common, inter-operable EBT systems. We plan to pilot such expanded service delivery through smart card systems next year to provide customers with secure "one-stop" shopping for all levels of Government benefits and services, regardless of the mode of access.

While card technology is an important part of electronic commerce, other technologies are also pushing the effort. In particular, web technologies, taking advantage of the communications technology of the Internet, are promising to revolutionize how Federal agencies procure and pay for products and services. The growth of electronic catalogs and electronic malls will allow buyers to rapidly find products that provide the best value for taxpayer dollars. The General Services Administration has been a pioneer in electronic catalogs. GSA Advantage!, launched in the fall of 1995, provides buyers the capability of searching across multiple GSA catalogs to compare and purchase a wide variety of products. By the end of fiscal year 1997, GSA expects to have all GSA schedules available through GSA Advantage!. GSA Advantage! allows buyers to search for products using multiple criteria and buy using a purchase card instead of going through the paper procurement process.

Other Federal agencies are following GSA's lead and putting their contracts on the Internet. Over the next few years we expect that the Federal Government will have a "virtual mall" where buyers will be able to search across multiple catalogs from both Federal and other sources to buy products.

To take advantage of these new technologies and a broadened vision for electronic commerce, the Federal Government has created a new electronic commerce management structure. Last summer, John Koskinen, OMB's Deputy Director for Management, sent a letter to GSA requesting that the agency take a broader role in implementing electronic commerce across the Government. In response, GSA and OMB, working with the Department of Defense (DoD), Treasury, and other agencies, formed the Electronic Processes Initiatives Committee (EPIC).

The EPIC is a subcommittee of the President's Management Council and is chaired by John Koskinen. Other members include senior managers from Defense, Treasury, and David Barram, GSA's Administrator. The EPIC, formed to provide high-level vision and direction to the Federal electronic commerce program, began meeting in January 1997. Two EPIC task forces have been formed- one on card technology and another dealing with buying and paying. The task forces will be developing strategies, launching pilots, and working actively with Federal agencies, state and local governments, and the private sector to enable the Federal Government to quickly take advantage of the latest commercial technology and practices.

In addition to the EPIC, GSA has formed an Electronic Commerce Customer Advisory Board and co-chairs an Electronic Program Office with DoD. These two groups help provide a broader buy-in and focus to help support the work of the EPIC.

Before I close, I would like to bring to your attention one other area where your leadership and support would be helpful. Several years ago, Congress passed the Federal Acquisition Streamlining Act (FASA), which brought many needed reforms to the Government's acquisition processes. One part of FASA was the Federal Acquisition Computer Network (FACNET). FACNET was envisioned as a virtual network where public broadcasts of requests for quotations and vendor responses could be achieved through a single face with common standards and commercial technologies. It was felt that FACNET would be a panacea to small businesses because they could go to a single place to obtain information on Federal procurement opportunities in the simplified range ($2,500-$100,000). Because of a variety of reasons, not the least of which is newer technologies, FACNET has fallen short of its intended vision. Recognizing this, we have worked with OMB and DoD to develop new legislation that will modify the FACNET provisions of FASA and allow agencies more flexibility in achieving electronic commerce while retaining critical single face and interoperability needs. This new legislation was recently sent to the Senate Armed Services Committee as part of the Defense Authorization. We recognize that this is currently a Senate bill but we ask for your support for this provision when the House and Senate get together on the final DoD bill.

Thank you for the opportunity to speak on electronic commerce. As you know, electronic commerce is a dynamic area that promises to provide numerous benefits to the Federal Government, and its citizens and business partners in the years to come. GSA will keep you informed on developments in the Federal electronic commerce implementation and we thank you for your continued support.