6 August 1999 Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html ----------------------------------------------------------------------- [Congressional Record: August 4, 1999 (Senate)] [Page S10235-S10238] From the Congressional Record Online via GPO Access [wais.access.gpo.gov] [DOCID:cr04au99pt2-48] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS ______ By Mr. BINGAMAN (for himself, Mr. Rockefeller, Ms. Snowe, and Ms. Mikulski): S. 1494. A bill to ensure that small businesses throughout the United States participate fully in the unfolding electronic commerce revolution through the establishment of an electronic commerce extension program at the National Institutes of Standards and Technology; to the Committee on Commerce, Science, and Transportation. ELECTRONIC COMMERCE EXTENSION ESTABLISHMENT ACT OF 1999 Mr. BINGAMAN. Mr. President, today I'm very pleased to be joined by Senators Rockefeller, Snowe, and Mikulski in introducing the ``Electronic Commerce Extension Establishment Act of 1999.'' The purpose of this bill is [[Page S10236]] simple--to ensure that small businesses in every corner of our nation fully participate in the electronic commerce revolution unfolding around us by helping them find and adopt the right e-commerce technology and techniques. It does this by authorizing an ``electronic commerce extension'' program at the National Institute of Standards and Technology modeled on NIST's existing, highly successful Manufacturing Extension Program. Everywhere you look today, e-commerce--the buying, selling, and even the delivery of goods and services via computer networks--is starting a revolution in American business. Being so new, precise e-commerce numbers are hard to come by, but by one estimate business to business and business to consumer e-commerce sales in 1998 were $100 billion. If you add in the hardware, software, and services making those sales possible, the number rises to $300 billion. That's comparable to adding another entire automobile industry to the economy in the last few years. Another estimate has business to business e-commerce growing to $1.3 trillion by 2003. Whatever the exact numbers, an amazing change in our economy has begun. But the shift to e-commerce is about more than new ways to sell things; it's about new ways to do things. It promises to transform how we do business--how we design products, manage supply chains and inventories, advertise and distribute goods, et cetera--and thereby boost productivity, the root of long term improvements in our standard of living. A recent Washington Post piece on Cisco Systems, a major supplier of Internet hardware, notes that Cisco saved $500 million last year by selling its products and buying its supplies online. On sales of $8.5 billion, that helped make for some nice profits. Imagine the productivity and economic growth spurred when more firms get efficiencies like that. And that's the point of this bill, to make sure that small businesses get those benefits too. Electronic commerce is a new use of information technology and the Internet. Many people, including Alan Greenspan, suspect information technology is the major driver behind the productivity and economic growth we've been enjoying. The crucial verb here is ``use.'' It is the widespread use of a more productive technology that sustains accelerated productivity growth. It was steam engine, not its sales, that powered the industrial revolution. In 1899, only about 5 percent of factory horsepower came from electric motors, even though the technologies had been around for two decades. But by 1920, when electric motors finally accounted for more than half of factory horsepower, they created a surge in industrial productivity as more efficient factory designs became common. Closer to today, in 1987, Nobel Prize winning economist Robert Solow quipped, ``We see the computer age everywhere but in the productivity statistics.'' Well, it looks like the computer has started to show up because more people are using them in more ways, like e-commerce. Information technology producers, companies like Cisco Systems who are, notably, some of the most sophisticated users of IT, are 8 percent of our economy; from 1995 to 1998 they contributed 35 percent of our economic growth. There are also some indications that IT is now improving productivity among companies that only use IT, though economists continue to debate that. But here's the real point. If we are going to sustain this productivity and economic growth, if this is to be more than a one time boost that dies out, we have to spread sophisticated uses of information technology like e-commerce beyond the high tech sector and companies like Cisco Systems and into every corner of the economy, including small businesses. Back in the 1980s we used to debate if it mattered if we made money selling ``potato chips or computer chips.'' But here's the real difference: consuming a lot of potato chips isn't good for you; consuming a lot of computer chips is. I emphasize all this because too often our discussions of government policy, technology, and economic growth dwell on the invention and sale of new technologies, which are crucial, but shortchange the all important, but not terribly glamorous topic of their adoption and use. Extension programs, like the electronic commerce extension program in this bill, are policy aimed at precisely spreading the adoption and use of more productive technology by small businesses. Now, with that in mind, the e-commerce revolution creates both opportunities and challenges for small businesses. On the one hand, it will open new markets to them and help them be more efficient. Many of us have seen that cartoon with a dog in front of a computer saying, ``On the Internet no one knows you're a dog.'' Well, on the web, the garage shop can look as good as IBM or GM. On the other hand, the high fixed costs, low marginal costs, and technical sophistication that can sometimes characterize e-commerce, when coupled with a good brand name, may allow larger, more established e-commerce firms to quickly move from market to market. Amazon.com, perhaps the archetype e-commerce firm, has done such a wonderful job of making a huge variety of books widely available that it's been able to expand to CDs, to toys, to electronics, to auctions. Moreover, firms in more rural or isolated areas have suddenly found sophisticated, low cost, previously distant businesses entering their market, and competing with them. Thus, there is considerable risk that many small businesses be left behind in the shift to e-commerce. That would not be good for them, nor for the rest of us, because we all benefit when everyone is more productive and everyone competes. The root of this problem is the fact that many small firms have a hard time identifying and adopting new technology. They're hard pressed and hard working, but they just don't have the time, people, or money to understand all the different technologies they might use. And, they often don't even know where to turn for help. Thus, while small firms are very flexible, they can be slow to adopt new technology, because they don't know which to use or what to do about it. That's why we have extension programs. Extension programs give small businesses low cost, impartial advice on what technologies are out there and how to use them. Extension programs have a long, solid pedigree. They started in 1914, with the Department of Agriculture's Cooperative Extension Service to ``extend'' the benefits of agricultural research to the farmer. That extension service has played no small part in making the American farmer the most productive in the world. More recently, the competitiveness crisis of the 1980's prompted the creation of the Manufacturing Extension Program, or MEP, at NIST to help small manufacturers find and use the technology they need. NIST has done a good job building and managing MEP's network of more than 70 non-profit centers, in all 50 states, with 2000 experts on call, that has helped over 60,000 manufacturers. Today, the United States is the international leader in e-commerce, but other nations are working to catch up, just like they did in manufacturing. Thus, the time is ripe to solidify our lead in e- commerce and extend it to every part of our economy in every corner of the nation. An electronic commerce extension program will help us do that. So, what might such a program do? Imagine you're a small specialty foods retailer in rural New Mexico and you see e-commerce as a way to reach more customers. But your specialty is chiles, not computers; imagine all the questions you'd have. How do I sell over the web? Can I buy supplies that way too? How do I keep hackers out of my system? What privacy policies should I follow? How do I use encryption to collect credit card numbers and guarantee customers that I'm who I say I am? Can I electronically integrate my sales orders with instructions to shippers like Federal Express? How might I handle orders from Japan or Holland? Should I band together with other local producers to form a chile cybermall? What servers, software, and telecommunications will I need and how much will it cost? Can I do this via satellite links? Your local e-commerce extension center would answer those questions for you. And, you could trust their advice, because you'd know they were impartial and had no interest in selling you a particular product. This bill will lead to the creation of a high quality, nationwide network of non-profit organizations providing that kind of expert advice, analogous to the MEP network NIST runs today, but [[Page S10237]] with a focus on e-commerce and on firms beyond manufacturers. NIST, as part of the Department of Commerce, is a logical choice to run an e- commerce extension program because it's about promoting commerce via technology and standards; recall that the Internet is based on standards for how computers can talk to each other. But the best reason for NIST to do this is that MEP shows they can do it well; that expertise will prove invaluable in getting this new network up and running. Similarly, this bill is directly modeled on the MEP authorization. It retains the key features of MEP: a network of centers run by non- profits; strict merit selection; cost sharing where the federal government's share decreases from one half to one third over time; and periodic independent review of each center. In addition, it emphasizes serving small businesses in rural or more isolated areas, so that those businesses can get a leg up on e-commerce too. In short, this legislation takes an approach that has already been proven to work. Practically speaking, if this bill becomes law, I assume NIST, together with its headquarters organization, the Technology Administration, would begin by leveraging their MEP management expertise to start a few e-commerce extension centers and then gradually build out a network separate from MEP. They could also use the study of e-commerce extension resulting from my amendment to the Commerce, State, Justice Appropriations bill the other week. I also want to note that this is a new, separate authorization for an e- commerce extension program because it will have a different focus than MEP and because I do not want it to displace MEP in any way. MEP is a great program. Let's keep it going strong while we build this new e- commerce extension system. Mr. President, I hope my colleagues will join me in supporting this important, timely, and practical piece of legislation. Just as a strong agricultural sector called for an agricultural extension service, and a strong industrial sector called for manufacturing extension, our shift to an information economy calls for electronic commerce extension. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no obection, the bill was ordered to be printed in the Record, as follows: S. 1494 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Electronic Commerce Extension Establishment Act of 1999''. SEC. 2. FINDINGS. Congress makes the following findings: (1) The United States economy is in the early stages of a revolution in electronic commerce--the ability to buy, sell, and even deliver goods and services through computer networks. Estimates are that electronic commerce sales in 1998 were around $100,000,000,000 and could rise to $1,300,000,000,000 by 2003. (2) Electronic commerce promises to spur tremendously United States productivity and economic growth--repeating a historical pattern where the greatest impetus toward economic growth lies not in the sale of new technologies but in their widespread adoption and use. (3) Electronic commerce presents an enormous opportunity and challenge for small businesses. Such commerce will give such businesses new markets and new ways of doing businesses. However, many such business will have difficulty in adopting appropriate electronic commerce technologies and practices. Moreover, such businesses in more rural areas will find distant businesses entering their markets and competing with them. Thus, there is considerable risk many small businesses will be left behind in the shift to electronic commerce. (4) The United States has an interest in ensuring that small businesses in all parts of the United States participate fully in the electronic commerce revolution, both for the sake of such businesses and in order to promote productivity and economic growth throughout the entire United States economy. (5) The Federal Government has a long history of successfully helping small farmers with new agricultural technologies through the Cooperative Extension System at the Department of Agriculture, founded in 1914. More recently, the National Institute of Standards and Technology has successfully helped small manufacturers with manufacturing technologies though its Manufacturing Extension Program, established in 1988. (6) Similarly, now is the time to establish an electronic commerce extension program to help small businesses throughout the United States identify, adapt, and adopt electronic commerce technologies and business practices, thereby ensuring that such businesses fully participate in the electronic commerce revolution. SEC. 3. PURPOSE. The purpose of this Act is to establish an electronic commerce extension program focused on small businesses at the National Institute of Standards and Technology. SEC. 4. ESTABLISHMENT OF ELECTRONIC COMMERCE EXTENSION PROGRAM AT NATIONAL INSTITUTES OF STANDARDS AND TECHNOLOGY. (a) Establishment.--The National Bureau of Standards Act (15 U.S.C. 271 et seq.) is amended by inserting after section 25 (15 U.S.C. 278k) the following new section: ``regional centers for the transfer of electronic commerce technology ``Sec. 25A. (a)(1) The Secretary, through the Undersecretary of Commerce for Technology and the Director and in consultation with other appropriate officials, shall provide assistance for the creation and support of Regional Centers for the Transfer of Electronic Commerce Technology (in this section referred to as `Centers'). ``(2) The Centers shall be affiliated with any United States-based nonprofit institution or organization, or group thereof, that applies for and is awarded financial assistance under this section in accordance with the program established by the Secretary under subsection (c). ``(3) The objective of the Centers is to enhance productivity and technological performance in United States electronic commerce through-- ``(A) the transfer of electronic commerce technology and techniques developed at the Institute to Centers and, through them, to companies throughout the United States; ``(B) the participation of individuals from industry, institutions of higher education, State governments, other Federal agencies, and, when appropriate, the Institute in cooperative technology transfer activities; ``(C) efforts to make electronic commerce technology and techniques usable by a wide range of United States-based small companies; ``(D) the active dissemination of scientific, engineering, technical, and management information about electronic commerce to small companies, with a particular focus on reaching those located in rural or isolated areas; and ``(E) the utilization, when appropriate, of the expertise and capability that exists in State and local governments, institutions of higher education, the private sector, and Federal laboratories other than the Institute. ``(b) The activities of the Centers shall include-- ``(1) the establishment of electronic commerce demonstration systems, based on research by the Institute and other organizations and entities, for the purpose of technology transfer; and ``(2) the active transfer and dissemination of research findings and Center expertise to a wide range of companies and enterprises, particularly small companies. ``(c)(1) The Secretary may provide financial support to any Center created under subsection (a) in accordance with a program established by the Secretary for purposes of this section. ``(2) The Secretary may not provide to a Center more than 50 percent of the capital and annual operating and maintenance funds required to create and maintain the Center. ``(3)(A) Any nonprofit institution, or group thereof, or consortia of nonprofit institutions may, in accordance with the procedures established by the Secretary under the program under paragraph (1), submit to the Secretary an application for financial support for the creation and operation of a Center under this section. ``(B) In order to receive financial assistance under this section for a Center, an applicant shall provide adequate assurances that it will contribute 50 percent or more of the estimated capital and annual operating and maintenance costs of the Center for the first three years of its operation and an increasing share of such costs over the next three years of its operation. ``(C) An applicant shall also submit a proposal for the allocation of the legal rights associated with any invention which may result from the activities of the Center proposed by the applicant. ``(4)(A) The Secretary shall subject each application submitted under this subsection to merit review. ``(B) In making a decision whether to approve an application and provide financial support for a Center under this section, the Secretary shall consider at a minimum-- ``(i) the merits of the application, particularly the portions of the application regarding technology transfer, training and education, and adaptation of electronic commerce technologies to the needs of particular industrial sectors; ``(ii) the quality of service to be provided; ``(iii) geographical diversity and extent of service area; and ``(iv) the percentage of funding and amount of in-kind commitment from other sources. ``(5)(A) Each Center receiving financial assistance under this section shall be evaluated during the third year of its operation by [[Page S10238]] an evaluation panel appointed by the Secretary. ``(B) Each evaluation panel under this paragraph shall be composed of private experts, none of whom shall be connected with the Center involved, and with appropriate Federal officials. An official of the Institute shall chair each evaluation panel. ``(C) Each evaluation panel under this paragraph shall measure the performance of the Center involved against the objectives specified in this section and under the arrangement between the Center and the Institute. ``(6) The Secretary may not provide funding for a Center under this section for the fourth through the sixth years of its operation unless the evaluation regarding the Center under paragraph (5) is positive. If such evaluation for a Center is positive, the Secretary may provide continued funding for the Center through the sixth year of its operation at declining levels. ``(7)(A) After the sixth year of operation of a Center, the Center may receive additional financial support under this section if the Center has received a positive evaluation of its operation through an independent review conducted under procedures established by the Institute. Such independent review shall be undertaken for a Center not less often than every two years commencing after the sixth year of its operation. ``(B) The amount of funding received by a Center under this section for any fiscal year of the Center after the sixth year of its operation may not exceed an amount equal to one- third of the capital and annual operating and maintenance costs of the Center in such fiscal year under the program. ``(8) The provisions of chapter 18 of title 35, United States Code, shall (to the extent not inconsistent with this section) apply to the promotion of technology from research by Centers under this section except for contracts for such specific technology extension or transfer services as may be specified by statute or by the Director. ``(d)(1) In addition to such sums as may be appropriated to the Secretary and Director for purposes of the support of Centers under this section, the Secretary and Director may accept funds from other Federal departments and agencies for such purposes. ``(2) The selection and operation of a Center under this section shall be governed by the provisions of this section, regardless of the Federal department or agency providing funds for the operation of the Center. ``(e) In this section, the term `electronic commerce' means the buying, selling, and delivery of goods and services, or the coordination or conduct of economic activities within and among organizations, through computer networks.''. (b) Description of Program.--(1) Not later than 90 days after the date of the enactment of this Act, the Secretary of Commerce shall publish in the Federal Register a proposal for the program required by section 25A(c) of the National Bureau of Standards Act, as added by subsection (a). (2) The proposal for the program under paragraph (1) shall include-- (A) a description of the program; (B) procedures to be followed by applicants for support under the program; (C) criteria for determining qualified applicants under the program; (D) criteria, including the criteria specified in paragraph (4) of such section 25A(c), for choosing recipients of financial assistance under the program from among qualified applicants; and (E) maximum support levels expected to be available to Centers for the Transfer of Electronic Commerce Technology under the program in each year of assistance under the program. (3) The Secretary shall provide a 30-day period of opportunity for public comment on the proposal published under paragraph (1). (4) Upon completion of the period referred to in paragraph (3), the Secretary shall publish in the Federal Register a final version of the program referred to in paragraph (1). The final version of the program shall take into account public comments received by the Secretary under paragraph (3). (c) Authorization of Appropriations.--There is hereby authorized to be appropriated for the Department of Commerce each fiscal year such amounts as may be required during such fiscal year for purposes of activities under section 25A of the National Bureau of Standards Act, as added by subsection (a). ______