[Senate Report 106-349]
[From the U.S. Government Publishing Office]
106th Congress Report
SENATE
2d Session 106-349
_______________________________________________________________________
Calendar No. 691
ELECTRONIC COMMERCE TECHNOLOGY PROMOTION ACT
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 1912
July 19, 2000.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred sixth congress
second session
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington JOHN D. ROCKEFELLER IV, West
TRENT LOTT, Mississippi Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan RON WYDEN, Oregon
SAM BROWNBACK, Kansas MAX CLELAND, Georgia
Mark Buse, Staff Director
Ann H. Choiniere, General Counsel
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
Gregg Elias, Democratic General Counsel
(ii)
Calendar No. 691
106th Congress Report
SENATE
2d Session 106-349
======================================================================
ELECTRONIC COMMERCE TECHNOLOGY PROMOTION ACT
_______
July 19, 2000.--Ordered to be printed
_______
Mr. McCain, from the Committee on Commerce, Science, and
Transportation, submitted the following
R E P O R T
[To accompany S. 1912]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 1912) ``A bill to facilitate
the growth of electronic commerce and enable the electronic
commerce market to continue its current growth rate and realize
its full potential, to signal strong support of the electronic
commerce market by promoting its use within Federal Government
agencies and small- and medium-sized businesses, and for other
purposes'', having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
Purpose of the Bill
The major provisions of the bill, S. 1912, would establish a
Center of Excellence in Electronic Commerce at the National
Institute of Standards and Technology (NIST). The Center
would--
(1) act as the centralized resource of information
for Federal agencies in electronic commerce (e-
commerce) technologies and issues;
(2) provide guidance to the Office of Management and
Budget in developing policies pertaining to e-commerce;
(3) promote the use of e-commerce technologies within
Federal agencies and small- and medium-sized
businesses; and
(4) ensure that the interests of the United States
government are appropriately represented at both
domestic and international meetings of formal standards
organizations, industry consortia, and other bodies
that define interoperability specifications for e-
commerce technologies.
The NIST Center of Excellence would be established as a
matrix organization that will coordinate existing and future
activities at the Institute on Electronic Commerce using
existing resources. Its activities would include relevant
reference implementations for Federal agencies and would
provide technical assistance to small- and medium-sized
businesses.
Background and Needs
E-commerce can be broadly defined as the use of non-
proprietary electronic communications--like the Internet and
its World Wide Web (Web)--for transactions such as the purchase
of goods and services electronically. E-commerce has been
widely embraced, both as a means for operational cost
reduction, as well as an additional marketing channel with high
potential for increased customer reach. According to reports
from market research firms, the amount of commerce conducted
over the Web may reach a staggering $6.9 trillion by 2004.
North America will account for $3.5 trillion of that worldwide
amount. It is expected that by 2004, the United States will
continue to maintain its position as the world e-commerce
leader. The number of users who make purchases over the Web
will jump from 31 million in 1998 to more than 183 million in
2003, a figure which will still represent only 36 percent of
all Web users.
Although e-commerce is popularly thought of as Web sites that
allow potential customers to browse for product information and
purchase products on-line, this application is neither the
major market segment for e-commerce software applications nor
the main reason for the tremendous growth in the e-commerce
market. In industry parlance, these applications are referred
to as ``consumer-to-business'' (or ``storefront'')
applications. However, the ``business-to-business'' (or
``B2B'') applications segment is where e-commerce is
consistently experiencing its fastest growth. These
applications include procurement, order management, and supply
chain integration which are expected to account for $8.5
billion of the estimated $13.1 billion overall e-commerce
applications market in 2003. Another rapidly growing market
segment involves customer service and support applications.
Overall, the worldwide customer service and support
applications market grew 154 percent in 1998 to $444 million,
was expected to grow 280 percent in 1999 to $1.7 billion, and
is projected to jump to $13.1 billion in 2003.
B2B is an important application and depends on the ability to
establish connections between two previously non-corresponding
companies. Without this capability, new customers cannot be
generated. There are many customers whose requirements are
characterized by a need to communicate across multiple
organizational layers without a common service provider. An
example of this is the automobile industry which requires
manufacturers and part suppliers to communicate with each other
absent a single network provider.
The ubiquitous nature of the Internet and the Web means that
e-commerce applications and services are inherently global,
unless regulated to be otherwise. By year end, almost 60
percent of the world's online population will reside outside of
the United States, and non-United States Internet commerce will
explode from 26 percent of worldwide e-commerce spending in
1998 to 46 percent by 2003. According to market research firms,
e-commerce activity in Western Europe is expanding rapidly,
with spending expected to increase at a compound annual growth
rate of 138 percent, to $1.5 trillion by 2004, led by
aggressive efforts of industry and growth of online businesses.
The Asia-Pacific region is expected to experience significant
growth by 2004, when technology exports and national
commitments to online trade will drive $1.6 trillion, or more
than 8 percent of all online sales. Falling trade barriers will
create opportunities for increased e-commerce activity. By
2003, it is estimated that 65 percent of Web users will be
international, and non-United States countries will account for
just less than half of worldwide Internet commerce.
A primary driver in the growth of e-commerce is its promise
of increased efficiency in business transactions--the ability
to conduct business cheaper and faster. However, the full
potential of e-commerce can only be realized if these
transactions can occur seamlessly, with no barriers and
borders. Interoperability and standardization plays an
important role in lowering costs and prices, increasing
competitiveness, and improving the benefits to the consumer.
Interoperability allows users to substitute one product with
another which has been manufactured by a different company.
This allows for competition among manufacturers in the
replacement market. In the digital economy, interoperability
plays an even greater role where interactions and exchanges
between businesses and customers occur constantly, in real
time, and increases at each subsequent stage of the business
cycle.
Legislative History
On October 28, 1999, the Subcommittee on Science, Technology,
and Space held an oversight hearing on the Role of Standards in
the Growth of Electronic Commerce at which time testimony was
heard from the Honorable Andrew J. Pincus, General Counsel,
United States Department of Commerce; Professor Andrew B.
Whinston, Director, Center for Research in Electronic Commerce,
University of Texas at Austin; Mr. Randy Whiting, President and
CEO, CommerceNet; Mr. Glenn Habern, Senior Vice President, New
Business Development, Wal-Mart Stores, Inc.; and Mr. Dan
Schutzer, Chairman, the Financial Services Technology
Consortium, Citigroup.
On November 10, 1999, Senator Frist, Chairman of the
Subcommittee, introduced S. 1912, a bill to facilitate the
growth of electronic commerce and enable the electronic
commerce market to continue its current growth rate and realize
its full potential.
On April 13, 2000, the Committee met in executive session
and, on a voice vote, ordered the bill to be reported, without
amendment.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 11, 2000.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1912, the Electronic
Commerce Technology Promotion Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark Hadley.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 1912--Electronic Commerce Technology Promotion Act
Summary: S. 1912 would establish the Center of Excellence
for Electronic Commerce within the National Institute of
Standards and Technology (NIST). The bill would require the
center to develop guidelines and standards for federal
agencies' use of electronic commerce technologies, and to
provide technical assistance to small and medium-size
businesses on issues related to electronic commerce. The bill
also would require the center to lead an interagency working
group to promote the use of electronic commerce.
Based on information from NIST, CBO estimates implementing
S. 1912 would cost $123 million over the 2002-2005 period.
Because S. 1912 would not affect direct spending or receipts,
pay-as-you-go procedures would not apply. S. 1912 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would not affect the
budgets of state, local, or tribal governments.
Estimated cost to the Federal Government: For the purposes
of this estimate, CBO assumes S. 1912 will be enacted near the
start of fiscal year 2001, and that outlays will follow
historical spending patterns of similar programs. The estimated
budgetary impact of S. 1912 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year in millions of dollars--
--------------------------------------------
2001 2002 2003 2004 2005
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level...................................... 27 24 24 24 24
Estimated Outlays.................................................. 24 27 24 24 24
----------------------------------------------------------------------------------------------------------------
Basis of estimate: Based on information from NIST, CBO
estimates that the new center that would be established by this
bill would spend about $9 million to establish guidelines and
standards for the use of electronic commerce technologies by
federal agencies in 2001, and about $6 million to update these
standards in each subsequent year.
S. 1912 would require the new center to work with the Small
Business Administration (SBA) to provide technical assistance
to small and medium-sized businesses on issues related to
electronic commerce. Based on information from NIST and the
costs of SBA's technical assistance programs, CBO estimates
that implementing this provision would cost about $15 million
annually.
S. 1912 would require the center to lead an interagency
working group to promote the use of electronic commerce. Based
on information from NIST, CBO estimates this effort would cost
about $3 million a year over the 2001-2005 period.
Pay-As-you-go considerations: None.
Intergovernmental and private-sector impact: S. 1912
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Mark Hadley, Impact on
State, Local, and Tribal Governments: Shelley Finlayson. Impact
on the Private Sector: Jean Wooster.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
number of persons covered
S. 1912, as reported, would facilitate the growth of e-
commerce through the coordination of activities at NIST. NIST
is a non-regulatory agency which conducts measurements and
standards activities in support of United States industry and
manages technology grant and assistance programs to increase
United States competitiveness. The Committee believes that the
bill will not subject any individuals or businesses affected by
the bill to any additional regulation.
economic impact
The establishment of a Center of Excellence for Electronic
Commerce would allow NIST to continue its support of other
Federal agencies and United States industries. NIST's e-
commerce programs would continue to assist United States
businesses to be more competitive in international markets and
would continue to benefit the general public through
contributing to the economic growth of the country from
investments in new technologies.
privacy
This legislation would not have an adverse impact on the
privacy of individuals.
paperwork
This legislation would not increase the paperwork requirement
for private individuals or businesses. The legislation would
require two reports to be submitted to the Senate Committee on
Commerce, Science, and Transportation and the House Committee
on Science: (1) the Under Secretary of Commerce for Technology
would be required to submit a report on certain issues in e-
commerce and (2) the Director of NIST would be required to
submit a report on the costs and benefits of the deployment of
e-commerce technologies in Federal agencies.
Section-by-Section Analysis
Section 1. Short title
This section would permit the bill to be cited as the
``Electronic Commerce Technology Promotion Act''.
Section 2. Findings
This section of the reported bill would make findings
pertaining to the growth of e-commerce by the year 2003;
essential elements for sustained growth in e-commerce; the role
of the Federal government to facilitate the growth of e-
commerce; enablers of global e-commerce; adoption and
deployment of relevant technologies and systems; usage of
technologies by the government; strengthening United States
leadership in e-commerce; and the role of small- and medium-
sized businesses to enhance the gross domestic product.
Section 3. Definitions
This section would provide the definitions of several key
terms used throughout the reported bill.
Section 4. Purposes
This section would identify the purposes of the reported bill
as follows:
(1) to enable the e-commerce market to continue its
current growth rate and realize its full potential by
supporting the development of relevant standards and
interoperability specifications;
(2) to signal strong support of the e-commerce market
by promoting the use of e-commerce technologies within
Federal government agencies; and
(3) to establish a Center of Excellence in Electronic
Commerce at the NIST, which will act as a central
resource for the Federal government, promote the use of
e-commerce technologies, and represent the government
interest in private sector collaborative efforts to
develop e-commerce technologies and interoperability
specifications.
Section 5. Center of Excellence for Electronic Commerce
Subsection (a) would require the Director of NIST to
establish a Center of Excellence for Electronic Commerce. The
Center would be required to be organized as a matrix
organization.
Subsection (b) would describe the functions of the Center.
These functions would include acting as a central source of
information for Federal agencies in electronic commerce
technologies and issues; providing guidance to the Office of
Management and Budget; promoting the use of e-commerce within
both Federal agencies and small- and medium-sized businesses;
and ensuring representation of the United States government at
both domestic and international meetings pertaining to the
setting of interoperability specifications for electronic
commerce technologies.
In support of subsection (b), subsection (c) would describe
the activities of the Center. The stated activities would
require the Center to identify and coordinate all the relevant
activities at NIST, coordinate and lead an interagency working
group, develop system guidelines and reference implementations
for use by other agencies, advise the Secretary of Commerce of
any abusive use of standards as barriers to trade, and lead an
effort with the Manufacturing Extension Partnership at NIST to
provide technical assistance to small- and medium-sized
businesses on e-commerce technology issues.
Section 6. Reports
This section of the reported bill would require two reports
to be submitted to the Committee on Commerce, Science, and
Transportation of the Senate and the Committee on Science of
the House of Representatives. One report would be required from
the Under Secretary of Technology at the Department of
Commerce, within six months of enactment, and the other would
be required from the Director of NIST, within one year after
enactment.
The report from the Under Secretary would address the
following issues:
(1) NIST's current efforts and activities on e-
commerce;
(2) the current status of deployment of e-commerce
technologies in the Federal agencies, including any
future plans;
(3) issues Federal agencies are expected to encounter
in widespread deployment of e-commerce technologies;
and
(4) any legislative revisions to existing Federal
programs necessary to support the advancement of e-
commerce in both the Federal government and industry.
The Director's report would present, in collaboration with
the inter-agency working group referred to in section 5, the
plan, proposed schedule, and associated costs and benefits for
the deployment of e-commerce technologies in the Federal
agencies.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, the Committee states that the bill as
reported would make no change to existing law.