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Article 1 Federal Agencies Embrace Online Contract Bids

Manufacturers use the Web to access federal-contract specifications.

By Bridget McCrea

for Office.com

Aug. 7, 2000 There's little question that the Internet is proving itself

as a tremendous time-saver for manufacturers of all sizes and shapes. From

matching suppliers with buyers to the quick accessing of plans and

specifications, the medium provides relief for the woes brought on by

traditional fax, mail and paper-based business systems. And Uncle Sam has

taken notice: From online requests for proposals to the instantaneous

publishing of project specifications, he's using the Web to do business,

too.

And it's no secret why. According to the U.S. Department of Commerce's

publication, The Emerging Digital Economy II, individual estimates of

Internet use vary, but by any measure, the ability of consumers and

businesses to reach the Internet and to engage in e-commerce is increasing

rapidly. According to Nua, a Dublin, Ireland-based Internet strategy firm,

as of mid-1999, 171 million people across the globe had access to the

Internet, with over half of them in the United States and Canada.

Related Links

U.S. Army Corps of Engineers

Government Methods of Buying

Govcon.com

List of Government Resources

GSAAdvantage.gov

Buyers.gov

Of those millions, it's the manufacturers who are using the Web to do

business with the government that are realizing efficiencies that give

them far-reaching advantages over their "nontechnical" competitors. For

example, small manufacturers can streamline the government's bidding

process traditionally a labor- and paper-intensive task’s by using one

of the various Web sites that government agencies have set up for

requisitions. "Basically, we don't do paper at all," says Mike Watson, a

structural engineer for the U.S. Army Corps of Engineers in Memphis, Tenn.

"If a manufacturer or contractor comes to the Corps, they get a CD-ROM."

Watson explains that for the typical job, the agency distributes about 100

CD-ROMs to potential bidders. By using the CD-ROMs, bidders are able to

access large amounts of data and specifications on various government

contracts. It's a process that has saved the Corps both time and money.

"When this was done on paper, a big job might cost $300 to $400 to

reproduce on paper," he says. Now that the government leverages digital

technology, and because there's no such thing as a job that's too big to

fit on a CD-ROM, he says it only costs about $3 or $4 per set to produce.

"It not only makes things easier, but we've cut about three to four days

out of the entire bidding process," adds Watson.

All Aboard

No matter what type of customer a company is targeting, most small

manufacturers, from the T-shirt producer to the cutting-tool maker, are

realizing that they can't do without the Internet as a business tool.

Soon, it will even become an issue of "keeping up" with technology-savvy

business partners, from architects to engineers to government agencies.

For the small manufacturer that does business with the federal government,

the Internet is becoming invaluable. Currently, many companies are using

the medium to investigate current needs of government programs and to gain

specific information about contract requirements and/or job

specifications. The Internet also provides immediate access to information

on trademarks, patents, tax information, government regulations (both

current and proposed), according to Kevin Kragenbrink, Ph.D., associate

director for the Inland Empire Center for Entrepreneurship, California

State University in San Bernardino.

"This information may be vital for companies involved in technology

development or preparing to launch new products or use new manufacturing

processes," says Kragenbrink. "Before the Internet, it would take days,

weeks, or sometimes even longer to investigate the regulatory climate of a

product or industry. With the Internet, that same research can often be

accomplished in a matter of minutes."

Just ask Mike Shook, director of technical marketing for precast-concrete

manufacturer Choctaw Inc. Before the government started using the

Internet, his firm had to trek from his company's headquarters in Memphis

to Nashville in order to review sets of Department of Transportation plans

and specifications. Because duplicating hard copies of plans was

expensive, and shipping them was impractical, companies like Choctaw were

forced to go to the source to review materials for upcoming projects.

Thanks to the Internet, DOT plans, along with specifications from various

other government and private organizations, are posted on the Web. With

just few keystrokes on the Web, or the insertion of a CD-ROM into a

computer, Shook can have the valuable data at his fingertips. "One thing

a manufacturer doesn't want to do is fork out a whole lot of money for a

set of plans and specs on a job that they may not really want," explains

Shook. "The Internet allows us to do a lot more, and at no charge, when

it comes to reviewing what's on the table. It lets us make that

determination and buy the few sets of plans that we really want, if

necessary."

According to Inland Empire Center's Kragenbrink, the Internet is also a

powerful resource for researching subcontractors to provide products or

services the manufacturer may need, or, conversely, to investigate prime

contractors who may be in need of subcontract services the manufacturer

may be able to provide. "The Internet allows business to handle sales

transactions on line, to provide billing on line, to order product and

supplies on line, to make payments for goods and services online," he

adds.

For example, James Townsend, president of D.C.-based Information

Strategies, cites one particularly useful strategy: the establishment of

an electronic payment system. Through it, a manufacturer can receive

prompt payments from federal agencies for goods sold. Rather than waiting

for a paper check to come through the mail, payments are deposited

instantly.

On the other end of the sale, Townsend suggests setting up automated

ordering systems that enable customers to trigger reorders when a certain

inventory level is reached, all without having to go through the

traditional paperwork hassle. "Another really important use of the

Internet is the scouting of RFPs and other business opportunities," says

Townsend, whose company specializes in Internet application development

for the government. Such opportunities can give manufacturers valuable

insights into government developments, including what the federal

government is buying and where the real needs are within the government in

terms of goods and services.

Next page: The Web offers unique challenges.

Not a Cure-All

While it may sound like the ultimate cure for logistics and communications

problems, the Internet does present some unique challenges on both the

buying and selling sides of the equation. For example, at least one

engineer says small manufacturers simply aren't posting enough information

on their Web sites to make using them worthwhile.

According to the Army Corps' Watson, that lack of pricing becomes a real

issue when he's surfing around, trying to come up with an rough cost for

an oddball product. He says the justification for the dearth of

information is usually twofold: on one hand, the vendors don't want their

competitors to have access to their pricing; on the other, prices usually

vary by quantity and customer.

"I realize that the manufacturers have multiple prices for a particular

product, but as an engineer who is trying to come up with some rough ideas

of cost, just a ballpark figure, without having to call, that extra

information would be helpful," says Watson.

Watson says the other excuse he's heard regarding pricing is the need for

phone or face-to-face contact to discuss pricing. "I know that sales

requires developing relationships, but there's also a preliminary step

that needs to take place," he adds. "If I'm seeking an unusual product, I

can use that information to find out if I'm way over budget."

On the manufacturing side, the main challenge is overcoming the urge to

"rush in," according to Rob Atkinson of AE Concrete Precast Products, a

manufacturer of precast concrete products in Vancouver, British Columbia.

On the Web since 1998, he advises manufacturers lured by the Internet to

do what his firm did: Take the time to first map out an action plan before

jumping into cyberspace.

Future Insights

With experts predicting that the Internet community will only grow as time

goes by, it makes sense for all small manufacturers to grab a piece of the

pie now. Townsend says that, currently, the government is actively

encouraging vendors to make their products and services available

electronically. "The government is creating marketplaces and consolidating

its purchasing function at the same time," he says. "Because of this, the

small manufacturer who doesn't make the investment to get online really

has to worry about being left behind."

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Reprinted with Permission

ARM Spring Conference - SPRING INTO ACTION - June 4, 5, 6, 2001

Outline

Contract Procurement, Consulting in Business Development and Marketing, Development and Hosting of Web Sites and e-commerce solutions.