TECHNOLOGY POLICY ISSUES

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By Neil Munro

Hot-button issues such as year 2000, worker training, Internet access charges, copyright and encryption, online taxation, outsourcing or procurement reform have proliferated over the last two years, jamming the calendars of top industry lobbyists with congressional meetings, White House lunches, industry summits, political fund-raisers and press conferences.

The basic issue "is the conversion of most laws into the digital era," said Ed Black, president of the Computer and Communications Industry Association, based in Washington, whose members include companies such as AT&T, Basking Ridge, N.J., and Sun Microsystems Inc., Mountain View, Calif. Black's concerns range from encryption to the implementation of the Federal Acquisition Streamlining Act, the 1996 law that is intended to sharply reduce procurement paperwork but which could also favor the award of government contracts to large companies, said Black.

These aren't just technical or legal issues - they are high-stakes political issues that force companies to join associations and hire lobbyists, including Black and the four other high-profile lobbyists cited in this special report. Their job is to prod, push and pull the government toward policies that favor their companies' expansion, market share and profits.

There's plenty of valuable work to be done, even in such prosaic issues as the implementation of the Federal Acquisition Streamlining Act or reform of the government's accounting system.

For Bert Concklin, director of the Professional Services Council, Vienna, Va., the government's accounting system is used to hide 10 percent of agencies' operating costs from outside observers. This low-tech trick is an ace in the hole that industry officials can use to fend off outsourcing proposals offered by systems integrators.

There's no shortage of good accounting systems used by industry to highlight spending by a particular agency or office. But there is a shortage of legislators or civil servants with the clout or nerve to force government officials to adopt one of those modern accounting systems, said Concklin.

But Concklin is making some progress, chiefly by winning more congressional co-sponsors to a bill that would force more outsourcing by government. Concklin is also lobbying tirelessly for a new accounting system by meeting with officials in the Office of Management and Budget, congressional legislators and staff members.

Tom Horan photo Rep. Steve Horn, R-Calif.

In the short term, Concklin does not foresee any quick success - and suspects he may suffer a reverse in back-room dealings when outsourcing proponents must negotiate with legislators seeking to defend government-run depots and agencies in their districts from outside industry competition.

Politics also pervades the effort to fix the year 2000 problem, which is caused by poorly designed software that cannot differentiate between the years 1901 or 2001.

Harris Miller, president of the Information Technology Association of America, Arlington, Va., whose membership includes industry giants such as Microsoft Corp., is trying - and failing - to generate top-level intervention by President Bill Clinton to help fix the problem.

"We have not seen an indication other than a brief mention in August that he really understands and is ready to make this a priority for the federal government," said Miller.

Despite pressure from legislators such as Rep. Steve Horn, R-Calif., or Rep. Connie Morella, R-Md., White House officials are leery of getting involved.

Sally Katzen, director of OMB's Office of Information and Regulatory Affairs, and the administration's leader on year 2000 problems, was not available for comment.

Last month, Katzen issued a report to Congress showing how agencies are dealing with the problem. In the report, Katzen threatened to restrict information technology spending by three agencies that have failed to adequately deal with the year 2000 problem.

OMB officials "need to sit down with the president and tell him bluntly that the only way [it] is going to get solved is to get the cabinet secretaries attention" with a pronouncement and perhaps the creation of a year 2000 czar responsible for getting the government's networks fixed, said Miller.

Miller also worries about work force training issues and is leading a government-industry effort that includes Education Secretary William Riley, Commerce Secretary Richard Daley and Sen. John Warner, R-Va. The bipartisan effort is intended to develop policy proposals that the states could use to boost the supply of high-tech workers and solve industry shortages of at least 190,000 workers, said Miller.

Another problem facing Miller's group - which includes 300 large corporations such as Microsoft Corp., Redmond, Wash., AT&T, and IBM Corp., Armonk, N.Y. - are government policies that can promote or retard the development of high-tech security technology needed to protect online commerce. That's a concern widely felt throughout industry and its lobbyists, including Bruce Hahn, Washington director of the Computing Technology Industry Association, which includes numerous companies that build or repair high-tech components - the bricks and mortar of electronic commerce.

According to Hahn, the two great roadblocks are online taxes and government controls on encryption.

Cities and states are looking to online commerce "with dollar signs in their eyes," said Hahn, who has joined a broad industry coalition supported by the controversial Internet Tax Freedom bill, sponsored by Sen. Ron Wyden, D-Ore., and Rep. Chris Cox, R-Calif. If approved by the president, the bill would bar states and cities from imposing new taxes on online services, preventing the emergence of different tax laws around the country, say proponents.

On encryption, almost all of the high-tech industry including Hahn, Black and Miller, has allied to fend off a proposal by FBI Director Louis Freeh that would require companies to build electronic back doors into the computerized networks and software that they sell inside the United States. That controversy is nowhere near settled and industry officials are trying to persuade Clinton and Vice President Al Gore to intervene on their side, partly because they are concerned that Freeh may win Congress over to his side.

Senate photo Sen. John McCain, R-Ariz.

"So far, the White House has shown zero interest in getting into this" and is instead allowing the FBI to set the policies for the White House, said Rhett Dawson, president of the Information Technology Industry Council, based in Washington. Although the congressional debate started out very much in industry's corner, "McCain now is the center," lamented Dawson.

Despite the fight with Freeh, and despite Congress' unfamiliarity with high-tech issues, industry officials are optimistic that Congress is heading their way, mostly because the industry's economic clout is growing by leaps and bounds. The high-tech industry generated 6.2 percent of the nation's gross domestic product in 1996, according to the Washington-based American Electronics Association.

But these lobbyists still lament the information technology industry's reluctance to spend their revenues on government lobbying and are always trying to persuade companies to join their associations. "The attitude of industry is that government is something we should stay away from...." said Miller, whose organization includes 300 primary corporate members, plus a close alliance with an association of 11,000 smaller high-tech companies based throughout the nation.

However, controversies such as Freeh's encryption plan and the now-defunct Communications Decency Act have shown industry executives that Washington has a major impact on their business - and that Washington responds to concerns voiced by the industry, said the lobbyists.

"We are getting there slowly but surely," said Miller.

Bruce Hahn Policy Director Computing Technology Industry Association Arlington, Va.

Encourage the expansion of electronic commerce by eliminating controls on encryption by enacting the Security and Freedom through Encryption (SAFE) Act and the Internet Tax Freedom Act, which would preclude new state and local taxes on the Internet.

Promote international trade: Reduce tariff and other trade barriers by enacting fast-track legislation - unencumbered by unrelated labor or environmental requirements - and expand copyright protection through enactment of the Omnibus Patent Act of 1997.

Promote a healthy domestic economic climate by enacting additional tax incentives for education and training, a permanent research-and-development tax cut, additional reductions in capital gains taxes and a federal pre-emption against nuisance shareholder lawsuits. [CompTIA also seeks to prevent] states from imposing additional regulatory or licensing requirements on the current voluntary industry-based technical certifications.

What political, business and technical pressures will help or hinder your public policy objectives?

Increased political posturing, both long-term and during the election cycle, works against thoughtful development and enactment of good public policy. In addition, the computing sector is growing in its visibility and therefore also in its political vulnerability. For both reasons, 1998 will be a tough year.

The computing channel is extremely competitive at every level in the food chain - manufacturing, software publishing, distribution and retailing. Getting executives to focus on policy issues that have an increasing impact on their bottom line is a challenge when they also have to focus on the short term to stay competitive.

Technology creates both pressures and opportunities for us. Pressures come from those who think it should be controlled and the opportunities are in harnessing it to build a powerful and effective grassroots force among the over 100,000 computing technology sector manufacturers, software publishers, distributors and retailers.

What can the U.S. government do to help its agencies and U.S. companies weather the year 2000 software problem?

First, it must face up to the problem in time to remedy it. There are signs that appreciation for the problem is growing within the agencies, but a much greater commitment of resources will be needed to resolve the problem.

What steps could Congress take to promote efficient outsourcing of government work?

Major reforms have been enacted in the last several years; they will succeed or fail depending on how well they are implemented. Congress should closely monitor the implementation to make sure that the full potential for reducing costs to the taxpayer, simplifying the process and maintaining fairness for all potential contractors is achieved. As glitches develop, they should be ironed out at the regulatory level and, if necessary, through corrective legislation.

What further reforms in government procurement rules are needed to build on the successful Clinger/Cohen and FASA bills?

That remains to be seen. Let's watch the trends closely, provide advice and input on an ongoing basis during implementation, and take appropriate corrective action if needed.

Rhett Dawson President Information Technology Industry Council Washington, D.C.

First is a basket of issues related to electronic commerce - all designed to accelerate the growth of business conducted over global networks. Areas being addressed most urgently are the promotion of high-speed, affordable access to networks; the passage of World Intellectual Property Organization implementing legislation that protects the industry's interests; privacy and encryption. Other issues are taxes, standards and information security.

Next is promotion of what we call a "Digital Common Market," which includes negotiation of the Information Technology Agreement II, liberalization of export controls and China's admission to the World Trade Organization.

Also, to forge an international consensus on agreements to remove technical and regulatory barriers to trade in the IT sector.

What political, business and technical pressures will help or hinder your public policy objectives?

Greater industry involvement will certainly help us achieve our objectives. Business needs to make government more aware of industry's contributions to the U.S. economy in terms of jobs, productivity and competitiveness. Technically, we believe consumers will increasingly become frustrated over the lack of affordable bandwidth, and that frustration should advance our agenda. Political pressure that hinders our efforts include government controls on exports and the use of taxes or tariffs on IT products and services.

What can the U.S. government do to help its agencies and U.S. companies weather the year 2000 software problem?

Contrary to what others may think, ITI believes that the federal government is taking this issue seriously. The recently announced procurement moratorium makes that clear. It is unfortunate, however, that the government must rely on such measures to get the attention of certain managers. What we really need is for the president or vice president to visibly step up to the plate. Vice President Al Gore's nickname of technology czar is well-deserved. If he were to take the lead on the year 2000 issue, it would substantially increase awareness both within the government and in the private sector.

What steps could Congress take to promote efficient outsourcing of government work?

Not an ITI issue.

What further reforms in government procurement rules are needed to build on the successful Clinger/
Cohen and FASA bills?

I am not so certain that we need further statutory legislation at this juncture. Rather, Congress should use its oversight prerogative to ensure that the landmark reforms mandated by Clinger/Cohen and FASA are fully implemented. Unfortunately, ITI does not believe that has been the case. We hope to work closely with the House and Senate in the coming year, to ensure that the intended reforms are fully realized.

Bert Concklin President Professional Services Council Vienna, Va.

Stimulating the maximum degree of federal privatization and outsourcing; promoting the continued deregulation and reform of the federal acquisition system and; and improving the understanding and appreciation of the value-added contributions that the professional and technical services sector makes to its clients.

What political, business and technical pressures will help or hinder your public policy objectives?

The principal political impediment to realizing a robust, continuous program of federal outsourcing is the intense resistance of the federal employee unions, which exert a major influence on the administration and Congress. An additional pressure that will hinder progress is people making the transition to a liberated environment - culture change. Acquisition reform has momentum and legitimacy, which should carry it forward through 2000, with the only serious threat being an intolerance for inevitable setbacks in making the transition to a liberated environment.

What can the U.S. government do to help its agencies and U.S. companies weather the year 2000 software problem?

The answer is simpler than the execution. Congress and the Office of Management and Budget have to be much tougher in compelling lagging agencies to get their acts together. Passive, indirect measures do not work. There must be hard dates set, tangible results demanded and verified, independent monitoring of plans and results by competent organizations and full-scale testing well in advance of the needed date. The U.S. government should take direction and lead from U.S. companies confronted with this challenge and learn from their actions.

What steps could Congress take to promote efficient outsourcing of government work?

Congress has already started with the introduction of the Thomas-Duncan omnibus privatization legislation (S. 314 and H.R. 716), which contains most of the principles and mandates necessary to stimulate broad-scale federal outsourcing. The key will be to build enough bipartisan support.

What further reforms in government procurement rules are needed to build on the successful Clinger/Cohen and FASA bills?

No significant reform initiatives are needed at the legislative level, as opposed to serious, focused oversight of key implementation issues - such as progress in shortening acquisition cycles or pilot testing IT commercial-type procedures.

At the regulatory level, the major emphasis should be on training. Training can be supported by the development and introduction of software-based training and performance tools and protocols, and relentless leadership activities to help propel the enormous cultural changes that are still in the infancy stage in many parts of government.

Ed Black President Computer and Communications Industry Association Washington, D.C.

CCIA is focused on several equally important issues to the future of the Internet and global electronic commerce. First, successfully easing U.S. export controls on products with strong encryption capabilities, thereby precluding the need for U.S. companies to surrender marketshare, move off-shore or license products overseas. Further, we are working to prevent the adoption of new domestic controls on encryption products.

CCIA is aggressively seeking ratification of the WIPO Copyright Treaties. Additionally, CCIA is actively promoting the proposal to make the Internet a duty-free zone so that a mish-mash of undue taxes do not stunt the growth of global electronic commerce.

CCIA strongly believes that a balanced intellectual property law is necessary to spur both innovation and competition and cannot be used in an anti-competitive manner. Another priority for CCIA is the expansion of global trade opportunities. Finally, CCIA continues its aggressive role of promoting the full and open competition standard in the federal government marketplace, so that any firm may know about and be able to bid on a government contract.

What political, business and technical pressures will help or hinder your public policy objectives?

One of the more difficult challenges for any information technology association is keeping policymakers and regulators abreast of rapidly changing technology so that they can make more informed decisions.

What can the U.S. government do to help its agencies and U.S. companies weather the year 2000 software problem?

CCIA has positioned itself in an advisory role to assist federal agencies with the year 2000 conversion. CCIA maintains that the cost of fixing the year 2000 is not to be undertaken by the private sector, and that outside vendors should not be held liable nor contractually obligated to bear the full cost of the conversion process.

What steps could Congress take to promote efficient outsourcing of government work?

No response.

What further reforms in government procurement rules are needed to build on the successful Clinger/Cohen and FASA bills?

In three major ways, the Clinger-Cohen Act of 1996 set in motion significant changes in the acquisition process. CCIA fought aggressively to retain the statutory "full and open" competition standard and was successful in acquiring a four-year test of how the district courts and the U.S. Court of Federal Claims perform as protest forums; and in eliminating the long-cherished right of federal agencies to opt out of arbitrated decisions with which they disagree.

CCIA remains concerned about other procurement reforms such as the Federal Acquisition Regulation 15 rewrite. Depending on how it is implemented, this reform could severely limit the ability of small companies to compete for contracts in the $200 billion federal marketplace; could result in the abandonment of the full and open competition standard; and thus would likely increase costs to taxpayers. We need to ensure that fairness is preserved as well as efficiency.

Harris Miller President Information Technology Association of America Arlington, Va.

With the multitude of important issues facing the information technology industry, it is difficult to select only three. ITAA would, however, place year 2000 and work force shortages at the top of our list. The year 2000 is perhaps the most serious crisis that has faced the IT industry in its 50-year history, but the ever-increasing shortage of skilled IT workers is fast becoming another critical challenge. The third issue is security/
privacy, which ITAA believes will be the next year 2000-like issue for the IT industry. Electronic commerce, intellectual property and taxation are also critical.

What political, business and technical pressures will help or hinder the achievement of your public policy objectives?

As more and more government entities realize the important role the IT industry plays not only in the U.S. economy, but in the global economies, we can expect to see ever-increasing government attempts to legislate or regulate. The IT industry must get more involved in government at all levels. In the case of year 2000, the most precious commodity is time, and there is not enough of it. With the work force shortages, the entire U.S. educational system needs to be revamped to realign it for the information age.

What can the U.S. government do to help its agencies and U.S. companies weather the year 2000 software problem?

The most severe problem facing government agencies on year 2000 is the lack of attention this subject has received from senior management in both the executive and legislative branches. Year 2000 is not a technical issue, it is a management challenge, and insufficient attention has been paid so that we now face a crisis where many government agencies will experience some serious malfunctions in mission-critical systems. In the case of U.S. companies, the president and Congress should be demonstrating leadership in this area, but sadly that has not occurred except for a few like Rep. Steve Horn, R-Calif., Rep. Constance Morella, R-Md., Rep. Tom Davis, R-Va., and Sen. Daniel Patrick Moynihan, D-N.Y.

What steps could Congress take to promote efficient outsourcing of government work?

ITAA has just issued a position paper on federal outsourcing. Congress should be promoting the outsourcing of noninherently government work to the private sector, but in some cases, it has acted as the roadblock. The fact that agencies cannot accurately account for all their costs make cost comparisons impossible. Congress should send a strong message to the agencies that outsourcing will allow them to keep pace with technology and permit them to focus on their critical missions.

What further reforms in government procurement rules are needed to build on the successful Clinger/Cohen and FASA bills?

While there are other reforms that would improve the federal procurement system, it probably makes sense to concentrate on successfully implementing all the reforms included in FASA and Clinger/Cohen. Agency personnel - inside and outside the Beltway - need to be trained on all the reforms that have already taken place so that they are knowledgeable about all the legislative and regulatory changes. This has not yet happened.