Myriad B2G solutions will soon be within reach of all jurisdictions. What are sometimes referred to as "buy-side" solutions--software that can automate the procurement of goods and services--include capabilities to send out notices to bidders, submit bids, conduct auctions, negotiate contracts, make payments and manage workflow.
Holding out the promise of even greater potential are e-marketplaces where government buyers and suppliers can come together at a third- party-hosted Web site to conduct business in a virtual environment. These marketplaces are likely to come fully equipped with all the capabilities needed to conduct end-to-end procurement over the Web.
B2G commerce is unfolding in waves in the public sector. The first wave began when forward-looking procurement officials started posting bid notices on their Web sites. A second wave soon followed as some governments posted their buying catalogs, contracts and schedules. A third wave, now under way, has a few governments conducting Internet- based auctions and other approaches to sourcing.
The potential benefits of B2G on a national scale are readily apparent. Take, for example, the growing concern about the state of voting technology in the country and the constitutional implications of antiquated voting systems. Legislation is expected to be introduced in Congress to create a $250 million matching grant to help local governments modernize their voting systems.
This is a rare opportunity to demonstrate the power of e-markets in the public sector. Rather than leave each jurisdiction to its own devices to set standards and procure voting systems--an approach that helped create the controversy in the first place--a coordinated national procurement initiative could leverage the e-market capabilities of the Internet to bring buyers and sellers together for lower costs, greater uniformity and quicker implementations of more modern voting systems.
There are other reasons why the public sector should move quickly and forcefully to establish e-markets. For starters, unlike its private- sector counterparts, the public sector is not comprised of natural competitors that have a built-in incentive to contend with one another with regard to purchasing. Therefore, e-marketplaces, which benefit tremendously from collaboration, should have a promising future in the public sector. After all, if head-to-head competitors such as Ford and General Motors could form an online market exchange, and jointly invest $1.2 billion in a leading e-commerce software company, then non-competing governments should be able to collaborate to build and operate Internet based e-markets.
Secondly, although government represents about a third of the U.S. economy, purchasing in the public sector is fragmented across some 80,000 cities, counties, towns and states. Aggregating the purchasing power of these buyers through e-marketplaces will not only help public officials stretch their purchasing power, it will allow smaller jurisdictions access to some of the benefits of their larger counterparts.
Another reason is that the highly structured purchasing practices many governments use lend themselves to the Internet. For example, requests for proposals and similar administrative practices can be readily deployed to the Web. Some of the newer e-commerce software solutions have been designed with RFPs in mind.
To take advantage of advances in e-commerce generally, and e-markets specifically, there are some formidable obstacles that need to be tackled. Many legal and regulatory hurdles stand in the way. For instance, prior to implementing B2G approaches, such as reverse auctions, Pennsylvania had to change outdated procurement regulations and modernize laws that govern purchasing practices.
It is almost trite--but true--to say that these advances in procurement practices have been technology-enabled. It is just as true to state that these innovations have been driven by exemplary leadership. Leaders at all levels of government can help create an environment for change by setting high expectations and aggressive timetables. Public-sector executives who control budgets should step up to the spending commitments that are necessary to making e-commerce a reality. And those seasoned practioners with direct responsibilities for purchasing should work with B2G technology companies to ensure their solutions meet the needs of government.
