Promoting Electronic Commerce in the Defense Industry

Abstract

Beginning in 1993, when the U.S. Federal Government proposed the “framework of electronic commerce (EC),” the call went out for the wide-scale deployment of EC solutions in government. The Department of Defense immediately became the center of attention since it has the largest procurement budget of all. Initiatives were launched to move from a paper-driven procurement process to an electronic, on-line concept satisfying federal mandates. However, the defense industry consists of thousands of small and medium sized enterprises (SMEs) that were far from ready to conduct business with the government electronically. In order to help the Department of Defense (DoD) and its suppliers to comply with the EC mandates, 17 Electronic Commerce Resource Centers (ECRCs) were established across the U.S. to transfer process improving and enabling EC technologies to small and medium sized businesses and government agencies. Each ECRC comprises business partners (and several university partners) that provide EC outreach, training and technical support to DoD supply chains. The goal of the nationwide network of centers is to facilitate the transition from paper-dependent supply chains to fully electronic-based procurement environments. In order for SMEs to do business with the U.S. government electronically, the mission of the ECRC must grow beyond training and outreach to hands-on implementation and intervention in SMEs. In this chapter, the key issues, approaches and challenges of bringing EC to defense supply chains are described. The chapter first discusses the complexity of defense supply chains and the efforts underway to make the procurement processes EC compliant. The related government laws and regulations are outlined to set the legal foundation for EC implementation. Then, the elaboration of the ECRC model provides a detailed view of the collaboration between industry, academia, and government to improve defense industry supply chains. Details of a local ECRC’s operations are provided to demonstrate its functions and accomplishments. Case examples of the center’s operations and technical support are provided to show how the technology is transferred to the SMEs. The chapter concludes with a description of future directions in EC promotion, education and support necessary for the defense industry to change and to do business electronically