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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
----------------------------------------------------------------------------------------------------------------
                                  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.