Order Code RL31057
CRS Report for Congress
Received through the CRS Web
A Primer on E-Government:
Sectors, Stages, Opportunities,
and Challenges of Online Governance
Updated March 28, 2002
Jeffrey W. Seifert
Analyst in Information Science and Technology Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

A Primer on E-Government: Sectors, Stages,
Opportunities, and Challenges of Online Governance
Summary
Electronic government (e-government) intersects many legislative issues,
including privacy, digital divide (the lack of equal access to computers, whether due
to a lack of financial resources or necessary skills), public access to government
information, service delivery, and information security. E-government solutions are
prominently represented in efforts to improve the management and efficiency of
government information technology resources. To help policymakers discern e-
government initiatives relative to their role in various issues, this report identifies and
defines the principal e-government sectors and stages of development. It also outlines
some of the opportunities and challenges associated with e-government.
Some observers define e-government in terms of specific actions: using a
government kiosk to receive job information, applying for Social Security benefits
through a web site, or creating shared databases for multiple agencies, as examples.
Other observers define e-government more generally as automating the delivery of
government services. While perceptions vary widely, one organization, The Gartner
Group, summarizes e-government as “the continuous optimization of service delivery,
constituency participation, and governance by transforming internal and external
relationships through technology, the Internet, and new media.”
E-government initiatives could have implications for federalism. One of the
hallmarks of a federal system of governance is the emphasis on vertical divisions of
power. In contrast, e-government initiatives utilize information technologies that
emphasize a horizontal, or networked, model of communication and interaction.
While e-government is designed, in part, to dissolve the barriers separating different
agencies, it could also have a similar effect on the boundaries of federal governance.
Although e-government encompasses a wide range of activities and actors, three
distinct sectors can be identified. These include government-to-government (G2G),
government-to-business (G2B), and government-to-citizen (G2C). Each of these
sectors represents a different combination of motivating forces and initiatives.
However, some common goals include improving the efficiency, reliability, and quality
of services for the respective constituency groups.
Due to a variety of technical, economic, and political reasons, e-government
initiatives take time to evolve into their full potential. Consequently, one can divide
e-government projects into four stages of evolution: presence, interaction, transaction,
and transformation. Each successive stage represents an augmented capability to
provide information and services as interactive transactions online.
Finally, proponents and critics of e-government recognize that there are a variety
of opportunities and challenges involved with the successful implementation of e-
government initiatives. Some of the potential opportunities include new services,
increased citizen participation in government, and an enhanced national information
infrastructure. Some of the potential challenges include information security and
privacy, disparities in computer access, and management and funding requirements.

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What is E-Government? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Implications for Federalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Multidimensional Nature of E-Government Issues . . . . . . . . . . . . . . . . . . . . 3
Sectors of E-Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Government-to-Government (G2G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Motivating Forces Behind the G2G Sector . . . . . . . . . . . . . . . . . . . . . 4
Examples of G2G Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Government-to-Business (G2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Motivating Forces Behind the G2B Sector . . . . . . . . . . . . . . . . . . . . . 6
Examples of G2B Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Government-to-Citizen (G2C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Motivating Forces Behind the G2C Sector . . . . . . . . . . . . . . . . . . . . . 8
Examples of G2C Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stages of E-Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Presence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Potential Opportunities of E-Government . . . . . . . . . . . . . . . . . . . . . . . . 11
Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
New and Improved Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Increased Citizen Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Improved National Information Infrastructure . . . . . . . . . . . . . . . . . 12
Potential Challenges to E-Government . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Computer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Disparities in Computer Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Government Information Technology Management and Funding . . . 14
Related Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Related Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

A Primer on E-Government: Sectors,
Stages, Opportunities, and Challenges of
Online Governance
Background
Electronic government (e-government) intersects many legislative issues,
including privacy, digital divide (the lack of equal access to computers, whether due
to a lack of financial resources or necessary skills), public access to government
information, service delivery, and information security. E-government solutions are
prominently represented in efforts to improve the management and efficiency of
government information technology resources. As such, e-government can be
considered a process, or a means to an end, rather than an end in and of itself. E-
government is still in the earliest stages of development and promises to evolve with
advances in technology and increased acceptance and trust in electronic
communications.1 The dynamic nature of e-government and its broad sectoral
applications may sometimes contribute to a lack of a common understanding of its
meaning and significance. To help policymakers discern e-government initiatives
relative to their applications to various issues, this report identifies and defines the
principal e-government sectors and phases of development. This report also outlines
some of the major issue opportunities and challenges associated with e-government.
What is E-Government?
E-government means different things to different people. Some observers define
e-government in terms of specific actions: using a government kiosk to receive job
information, applying for Social Security benefits through a web site, or creating
shared databases for multiple agencies, as examples. Other observers define e-
government more generally as automating the delivery of government services. While
perceptions of e-government vary widely, some common themes can be identified that
capture its evolutionary nature.
E-government involves using information technology, and especially the Internet,
to improve the delivery of government services to citizens, businesses, and other
government agencies. It has the potential to more directly connect the federal
government with its citizens in a manner that opens new opportunities while also
raising new challenges. E-government could enable citizens to interact and receive
1For a more detailed discussion of the role of trust in the development and dependence upon
networked information systems, see Fred B. Schneider (ed.), Trust in Cyberspace
(Washington, DC: National Academy of Sciences, 1999).

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services from the federal government (or state and local governments) 24 hours a day,
seven days a week. Some observers of e-government initiatives suggest service
delivery could become more convenient, dependable, and less costly. The Gartner
Group describes e-government as “the continuous optimization of service delivery,
constituency participation, and governance by transforming internal and external
relationships through technology, the Internet, and new media.”2 Mark Forman,
Associate Director for Information Technology and E-Government at the Office of
Management and Budget (OMB) has defined e-government as “the use of Internet
technology and protocols to transform agency effectiveness, efficiency, and service
quality.”3
E-government is itself a process still in the early stages of development. Initial
forays into e-government initiatives have focused mostly on providing enhanced
access to information and basic services. Although the full transformative effects of
e-government remain largely unrealized at this time, the rapid growth in interest and
resources dedicated to e-government initiatives may contribute to swifter changes.
Implications for Federalism
One area where the implications for implementing e-government initiatives may
have a significant effect relates to the concerns of federalism. The Constitution
established a federal system of governance granting certain powers to the national
government while reserving others to the states and the people. Throughout the
history of the country, the nature of American federalism has evolved, reflecting the
political, economic, and social changes that have occurred.4 However, one of the
hallmarks of a federal system of governance is the emphasis on vertical divisions of
power. In contrast, e-government initiatives utilize information technologies that
emphasize a horizontal, or networked, model of communication and interaction.
While e-government is designed, in part, to break down the barriers separating
different agencies, it could also have a similar effect on the boundaries of federal
governance.

In light of the divergent properties of federalism and e-government, the advent
of e-government has the potential to effect significantly the power relationship
between the national and state governments. An example includes initiatives to create
“one-stop-shopping” Web sites to obtain government services and information, such
as the FirstGov site. In addition to its original role of providing access to all federal
2Gartner Group, “Key Issues in E-Government Strategy and Management,” Research Notes,
Key Issues
, 23 May 2000.
3Stephen Barr, “President Searching for a Few Good E-Government Ideas,” Washington Post,
10 August 2001, p. B2.
4See CRS Report RL30772, American Federalism, 1776 to 2000: Significant Events, by
Eugene Boyd and Michael K. Fauntroy, for a more comprehensive analysis of the evolution
of American federalism.

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government Web sites, FirstGov has added links to most state Web sites as well.5
One of the goals of these types of sites is to create an experience that attenuates the
agency-centric approach to providing services. Although this usually refers to
agencies at the same level of government, it could also include services that are
provided through some form of national, state, and/or local cooperation, such as
welfare, transportation, or law enforcement activities. However, these same efforts
to improve the delivery of government services could also diffuse political
responsibility and credit, making it less clear from where the funding and direction are
originating.
The Multidimensional Nature of E-Government
Issues
Discussed in greater detail below, the advent of e-government raises a number
of issues. It is important to stress at this point the multidimensional nature of those
issues. On the one hand, e-government provides new opportunities to enhance
governance, which can include improved efficiency, new services, increased citizen
participation, and an enhanced National Information Infrastructure. On the other
hand, e-government also presents new challenges to governance including information
security, privacy, disparities in computer access, and management and funding
requirements. Together, all of these issues are complicated by their combined intra-
and inter-governmental nature. They can crosscut both the various sectors and stages
of e-government development. However, they also share a number of recurring
themes often associated with previous, less technologically-dependent approaches to
improving government such as jurisdictional authority, procedures for the appropriate
handling of information, building and maintaining infrastructures, providing services,
and citizens’ rights. The multidimensional nature of e-government suggests that there
are no quick fixes for the concerns raised, but rather that issues will need to be
addressed with careful attention to context and precedent.
Sectors of E-Government
Although e-government encompasses a wide range of activities and actors, three
distinct sectors can be identified. These include government-to-government (G2G),
government-to-business (G2B), and government-to-citizen (G2C). Some observers
also identify a fourth sector, government-to-employee (G2E). However, since G2E
operations are intra-agency activities, they can be considered a subset of the G2G
sector and are not addressed separately in this report. A separate report focusing
specifically on G2E issues is forthcoming.
5William Matthews, “FirstGov to Add State Links,” Federal Computer Week, 21 May 2001,
p. 13.

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Government-to-Government (G2G)
In many respects, the G2G sector represents the backbone of e-government.
Some observers suggest that governments (federal, state, local) must enhance and
update their own internal systems and procedures before electronic transactions with
citizens and businesses can be successful.6 G2G e-government involves sharing data
and conducting electronic exchanges between governmental actors. This involves
both intra- and inter-agency exchanges at the federal level, as well as exchanges
between the federal, state, and local levels.
Motivating Forces Behind the G2G Sector. There are a number of forces
motivating G2G e-government initiatives. One of these involves legislation. There
are a variety of laws and regulations that are contributing to the implementation of e-
government initiatives.7 For example, the Paperwork Reduction Act (PRA) reduces
the information collection and reporting requirements of the federal government while
also promoting the coordination of government-wide information management
activities.8 The Computer Security Act requires federal agencies to develop
information security plans, and tasks the National Institute for Standards and
Technology (NIST) with the responsibility to develop federal government computer
security standards. The Clinger-Cohen Act, among other provisions, established a
chief information officer (CIO) in each executive branch agency, decentralized and
streamlined information technology procurement procedures, and assigned
information technology capital planning and investment responsibilities to the Office
of Management and Budget (OMB).9 The Government Paperwork Elimination Act
(GPEA) requires OMB to provide leadership in acquiring and implementing the
technology necessary to substitute electronic documents for paper documents.10
GPEA also tasks OMB, in conjunction with the National Telecommunications and
Information Administration (NTIA), to establish procedures for the use and
6Robert D. Atkinson and Jacob Ulevich, Digital Government: The Next Step to
Reengineering the Federal Government
, Technology & New Economy Project, Progressive
Policy Institute, March 2000.
7See CRS Report RL30745, Electronic Government: A Conceptual Overview, by Harold C.
Relyea, and CRS Report RL31088, Electronic Government: Major Proposals and
Initiatives
, by Harold C. Relyea. for a more comprehensive analysis of the legislation and
policy environment shaping e-government initiatives.
8See CRS Report RL30590, Paperwork Reduction Act Reauthorization and Government
Information Management Issues
, by Harold C. Relyea, for a more comprehensive analysis
of PRA.
9See CRS Report RL30661, Government Information Technology Management: Past and
Future Issues (The Clinger-Cohen Act)
, by Jeffrey W. Seifert, for a more comprehensive
analysis of the Clinger-Cohen Act.
10The creation of multiple formats raises the issue of determining what is considered the
“official” version of government material and whether online publication satisfies
requirements regarding the printing and archiving of documents.

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acceptance of electronic signatures11 in the executive branch of the federal
government.
A second force spurring G2G initiatives is the interest in improved efficiency.
One of the expected benefits of information technology investment solutions often
cited by proponents is cost savings achieved by increasing the speed of transactions,
reducing the number of personnel necessary to complete a task, and improving the
consistency of outcomes.12 As attention to efforts to contain the growth of the federal
budget has heightened, so has interest in using information technology solutions to
streamline procedures and trim costs.
Related to this interest in efficiency, a third driving force is the growing attention
being paid to improving the management of federal government information
technology and public resources. Efforts to identify and apply “best practices” from
other areas of the public and private sectors have helped fuel the development of
federal e-government initiatives. State and local governments are often perceived as
models for e-government initiatives due to their role in delivering services to
citizens.13 State and local governments are also the targets of many G2G efforts due
to their relative proximity, geographically and politically, to citizens. A growing
reliance on information technology generally, and the need to update and invest in
long term information technology projects, such as the overhaul of the Federal
Aviation Administration (FAA) and the Internal Revenue Service (IRS) systems, have
emphasized the importance of good information technology management practices to
help ensure the success of these projects. As part of re-examining information
technology management strategies, policymakers have considered many approaches
to restructuring government. In this context, e-government is often proposed as a
solution.
Examples of G2G Initiatives. One example of a G2G e-government
initiative is the Northeast Gang Information System (NEGIS). NEGIS is sponsored
by the Department of Justice and serves as a shared resource for street gang
information for states in the northeast, including Connecticut, Rhode Island, Vermont,
Massachusetts, and New York. It includes information such as gang-related
activities, gang intelligence, and a reference library. NEGIS connects the state police
11Electronic signatures (e-signatures) are methods used with an electronically transmitted
message that uniquely identifies the sender. Like a written signature, the purpose of an
electronic signature is to guarantee that the individual sending the message really is who he
or she claims to be. Electronic signatures are especially important for electronic commerce.
See CRS Report RS20344, Electronic Signatures: Technology Developments and
Legislative Issues
, by Richard M. Nunno, for a more comprehensive analysis of issues related
to electronic signatures.
12John Trattner, “E-gov Revolution Transforms Federal Operations,” Government Executive
M a g a z i n e
, 2 9 N o v e m b e r 2 0 0 0 ,
[http://www.govexec.com/dailyfed/1100/112900PRUNE.htm].
13Timothy Sprehe, “States Show Feds the Way,” Federal Computer Week, 30 April 2001, p.
48; William Matthews, “States More ‘Freewheeling’ in Egov.,” Civic.Com, 9 August 2000,
[http://www.civic.com/civic/articles/2000/0807/web-1egov-08-09-00.asp].

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departments of the participant-states, which, in turn, transmit the information to the
states’ other law enforcement agencies.
A second example is the Electronic Contractor Past Performance System
maintained by the National Institutes of Health (NIH). Started in December 1996,
this online database contains past performance scorecards of government contractors,
as rated by contract/project officers. It is designed to help agencies determine the
suitability of potential contractors on the basis of criteria such as the quality of
product or service, cost control, timeliness of performance, and business practices.
Thirteen agencies contribute to the database, including the Environmental Protection
Agency (EPA), the Department of Commerce, and the General Services
Administration (GSA).
Government-to-Business (G2B)
Government-to-Business (G2B) initiatives receive a significant amount of
attention, in part because of the high enthusiasm of the business sector and the
potential for reducing costs through improved procurement practices and increased
competition.14 The G2B sector includes both the sale of surplus government goods
to the public, as well as the procurement of goods and services. Although not all are
directly dependent on the use of information technology, several different
procurement methods are used in relation to the G2B sector. Performance-based
contracting
is a method in which the payment made to the contractor is based on the
actual goals and outcomes of the job. Share-in-Savings contracts are those in which
the contractor pays for the up-front costs of a project, such as the installation of a
new computer system, and receives payment passed on the savings generated by
switching from the previous system. 15 Reverse auctions, on the other hand, are reliant
on the use of information technology and could become a frequently used method for
purchasing products that are standardized and easily evaluated for quality, such as off-
the-shelf technology components or office supplies. Conducted over the Internet, a
reverse auction entails companies openly bidding against each other in real time to win
a government contract. The purpose of reverse auctions is to drive prices down to
market levels. Due to the emphasis on price, reverse auctions are best-suited in cases
where quality and expected performance are clear and easily assessed.
Motivating Forces Behind the G2B Sector. There are two primary forces
driving the G2B sector. The first is the business community. In many industries, the
use of electronic means to carry out various activities, such as procurement, sales, and
hiring is commonplace. For example, the auto industry created an electronic business
exchange called Covisint in fall 2000. Covisint provides an online environment for
automakers and parts suppliers to buy and sell goods, share information, and
collaborate on new products.16 In addition, the software industry is producing an
ever-growing number of products focused on moving routine business activities
14Alorie Gilbert, “President Bush Backs E-Government, Digital Signatures,”
InformationWeek, 6 April 2001, p. 24.
15Greg Langlois, “An Equal Slice of Success,” Federal Computer Week, 14 May 2001, p. 44.
16The Covisint Web site may be found at [http://www.covisint.com/].

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online. Many companies would like to extend the cost savings realized in their
business-to-business (B2B) transactions to their business with federal, state, and local
governments (B2G).
The second primary force motivating interest in the G2B sector is the growing
demand by policymakers for cost cutting and more efficient procurement. Similar to
the interest in efficiency that is helping propel G2G initiatives, many G2B initiatives
are promoted on their potential to streamline and improve the consistency of
personnel-intensive tasks, such as processing license renewals or employee benefit
changes. However, there is some disagreement over whether these efforts should help
centralize or decentralize procurement by agencies. Until the passage of the Clinger-
Cohen Act in 1996, procurement decisions for information technology products and
services were generally centralized, with the General Services Administration (GSA)
performing a significant role. Among its provisions, the Clinger-Cohen Act
decentralized some of the decisions back to the agencies. Some observers suggest
that decentralized procurement allows agencies greater control over their own
projects, and reduces the amount of time between when a product is ordered and
when it is delivered.17 In contrast, other observers promote centralized procurement
on the basis that it will lower costs by aggregating the purchases of similar products
by multiple agencies and enhance accountability by limiting the number of people
authorized to enter into purchase agreements.18
Examples of G2B Initiatives. One example of a G2B initiative is GSA
Auctions.19 GSA Auctions is an online auction Web site in which GSA sells federal
surplus property to the highest bidders. Items sold include everything from hand tools
and furniture to industrial machinery and vehicles. Perhaps one of the more well-
known items was the recent auction of a fifty-year-old Coast Guard cutter, the
Tamaroa, which appeared in the movie Perfect Storm.
A second example of a G2B initiative is Buyers.gov, a business and auction
exchange administered by the GSA Federal Technology Service (FTS). The
Buyers.gov site facilitates the purchase of information technology products by federal
government agencies through the use of reverse auctions and aggregating demand for
commonly purchased products.20
A third G2B initiative, also administered by GSA, is FedBizOpps.21 FedBizOpps
is a Web site designed to serve as a central location for agencies to post procurement
notices, such as Request-for-Purchase (RFP) notices. The goal of the site is to create
17Senator Fred Thompson, Committee on Governmental Affairs, Government at the Brink:
Urgent Federal Government Management Problems Facing the Bush Administration
, June
2001, Vol. 1, p. 37; Dan Caterinicchia, “Tough times for 8(a)s,” Federal Computer Week,
18 September 2000, [http://www.fcw.com/supplements/Fedlist/2000/fed-8as-09-18-00.asp].
18Katy Saldarini, “Feeling the Consequences of Procurement Reform,” Government Executive
Magazine
, 18 January 2000, [http://www.govexec.com/dailyfed/0100/011800k1.htm].
19The GSA Auctions Web site can be found at [http://www.gsaauctions.gov].
20The Buyers.gov Web site can be found at [http://www.buyers.gov].
21The FedBizOpps Web site can be found at [http://www.fedbizopps.gov].

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a standardized, easy-to-access point of contact for businesses which may want to bid
on a government contract instead of having to search through the variety of agency-
specific methods of advertising contracting opportunities.22 A similar site called
DoDBusOpps was also established specifically for the Department of Defense.23
Government-to-Citizen (G2C)
The third e-government sector is Government-to-Citizen (G2C). G2C initiatives
are designed to facilitate citizen interaction with government, which is what some
observers perceive to be the primary goal of e-government. These initiatives attempt
to make transactions, such as renewing licenses and certifications, paying taxes, and
applying for benefits, less time consuming and easier to carry out. G2C initiatives also
often strive to enhance access to public information through the use of dissemination
tools, such as web sites and/or kiosks. Another feature of many G2C initiatives is the
effort to attenuate the agency-centric, and at times, process-laden nature of some
government functions. Some e-government advocates suggest that one of the goals
of implementing these initiatives should be to create a “one-stop shopping” site where
citizens can carry out a variety of tasks, especially those that involve multiple
agencies, without requiring the citizen to initiate contacts with each agency
individually.24 A potential outgrowth of G2C initiatives is that they may facilitate
citizen-to-citizen interaction and increase citizen participation in government by
creating more opportunities that overcome possible time and geographic barriers,
thereby connecting citizens who may not ordinarily come into contact with one
another.
Motivating Forces Behind the G2C Sector. Interest in G2C initiatives
is driven by a combination of several factors. One is citizen demand, especially by
younger citizens and those accustomed to using electronic transactions in other areas
of their lives (e.g., banking).25 Some observers expect the citizen demand for e-
government to increase significantly over the next ten years as the youth, who are
now growing up with personal computers and the Internet as a routine presence in
their lives, become adults.26 However, studies illustrating the relatively low political
activity of young adults suggest this uptick in citizen participation may be delayed
22Jason Peckenpaugh, “Council Issues Online Procurement Rules,” Government Executive
Magazine
, 17 May 2001, [http://www.govexec.com/dailyfed/0501/051701p1.htm].
23The DoDBusOpps Web site can be found at [http://www.dodbusopps.com].
24Judi Hasson, “Treasury CIO Promotes Expanded Fed Portal,” Federal Computer Week, 19
March 2001, p. 14; William Matthews, “Setting a Course for E-Government,” Federal
C o m p u t e r W e e k
, 1 1 D e c e m b e r 2 0 0 0 ,
[http://www.fcw.com/fcw/articles/2000/1211/cov-egov-12-11-00.asp].
25John P. Mello, Jr., “Building a Better Bureaucracy,” CFO.com, 1 October 2000,
[http://www.cfo.com/article/1,4616,0|1|AD|1012,00.html].
26“A Survey of Government and the Internet, Digital Democracy,” The Economist, 24 June
2000, p. 31.

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several years.27 Citizen demand may also be driven by increased time pressures. As
citizens feel they have increased demands placed on their time, they may look for
ways to reduce time spent standing in lines and taking care of administrative tasks.
One way to do this is to be able to complete routine governmental transactions, such
as renewing a license or applying for a permit online. Similar to G2G and G2B
projects, G2C initiatives are also driven by an interest in “better government” through
improved efficiency and more reliable outcomes.
Examples of G2C Initiatives. Although many examples of G2C initiatives
can be found at the local and state level, there are also examples at the federal level.
One of these examples is the establishment of the FirstGov Web site.28 FirstGov, a
public-private partnership, is administered by GSA. Established in September 2000,
FirstGov is designed to serve as the online portal29 for 30 million pages of government
information, services, and online transactions. According to the Web site, FirstGov
has a search engine capable of searching “every word of every U.S. government
document in a quarter of a second or less.” Its creators also hope that FirstGov will
serve as a platform for future efforts to provide “secure seamless electronic
government.”
A second example is the IRS.30 In addition to providing all IRS tax forms online
for downloading, the IRS Web site also contains a wealth of information to answer
a variety of tax-related questions that citizens might normally ask during a call to an
IRS telephone help line or a visit to one of its centers. The IRS also allows citizens
and businesses to file and pay their taxes online using an option called e-file.
Depending on one’s tax situation, e-file can enable a filer to submit information, make
payments, and receive refunds electronically.
Stages of E-Government
In addition to identifying e-government initiatives according to their sector, such
projects can also be classified according to their level or stage of development.
Although different e-government initiatives strive to accomplish different goals, some
observers argue that one of the overarching themes of e-government is to fully realize
the capabilities of available information technology in an effort to transform
government from an agency-centric, limited service operation into an automated,
citizen-centric operation capable of delivering government services to citizens,
businesses, and other government agencies 24 hours a day, seven days a week.
However, for a variety of technical, economic, and political reasons, it will take time
for these initiatives to evolve into their full potential. For that reason, some observers
27John M. Strate, Charles J. Parrish, Charles D. Elder, and Coit Ford, “Life Span Civic
Development and Voting Participation,” American Political Science Review, vol. 83, June
1989.
28The FirstGov Web site can be found at [http://www.firstgov.gov].
29A portal is a web site that provides a broad array of resources and services such as search
engines, forums, and specialized content.
30The IRS Web site can be found at [http://www.irs.gov].

CRS-10
use a common schema for classifying the stages of evolution of e-government
projects.31 The schema is based on the degree to which the properties of information
technology have been utilized to enable the delivery of services electronically. Using
this schema, there are four stages of evolution; presence, interaction, transaction, and
transformation. It is important to note that an e-government initiative does not
necessarily have to start at the first stage and work its way through all of the stages.
Instead, a project can skip levels, either from its inception or as it develops.
Presence
Presence is the first stage of development and is the establishment of a
placeholder for delivering information in the future. It represents the simplest and
least expensive entrance into e-government, but it also offers the fewest options for
citizens. A typical example is a basic Web site that lists cursory information about an
agency, such as hours of operation, mailing address, and/or phone numbers, but has
no interactive capabilities. It is a passive presentation of general information. Some
observers refer to these types of sites as ‘brochureware,’ suggesting they are the
electronic equivalent of a paper brochure.
Interaction
The second stage is interaction. Although interactive Web-based initiatives offer
enhanced capabilities, efforts in this group are still limited in their ability to streamline
and automate government functions. Interactions are relatively simple and generally
revolve around information provision. These types of initiatives are designed to help
the customer avoid a trip to an office or make a phone call by making commonly
requested information and forms available around the clock. These resources may
include instructions for obtaining services, downloadable forms to be printed and
mailed back to an agency, or perhaps e-mail contact to respond to simple questions.
Transaction
The third stage in the evolution of e-government initiatives is transaction. These
initiatives are more complex than simple information provision and embody the types
of activities popularly associated with e-government. They enable clients to complete
entire tasks electronically at any time of the day or night. These initiatives effectively
create self-service operations for tasks such as license renewals, paying taxes and fees,
and submitting bids for procurement contracts. Although the level of interactivity is
of a higher magnitude than second stage initiatives, the activities still involve a flow
of information that is primarily one-way (either to government or to the client,
depending on the activity). The electronic responses are generally highly regularized
and create predictable outcomes (e.g., approving a license renewal, creating a receipt,
acknowledging a bid).
31Christopher Baum and Andrea Di Maio, Gartner’s Four Phases of E-Government Model,
21 November 2000.

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Transformation
The highest order of evolution for e-government initiatives is transformation.
Initiatives at this level utilize the full capabilities of the technology to transform how
government functions are conceived, organized, and executed. Such initiatives would
have the robust customer relationship management capabilities required to handle a
full range of questions, problems, and needs. Currently, there are very few examples
of this type of initiative, in part due to administrative, technical, and fiscal constraints.
One of the distinctions of these initiatives is that they facilitate the seamless flow of
information and collaborative decision making between federal, state, local, public,
and private partners. In other words, transformative e-government initiatives often
seek to remove the organizational barriers that promote agency-centric solutions and,
instead, promote customer-centric solutions. Some advocates suggest that, at its
most advanced level, e-government could potentially re-organize, combine, and/or
eliminate existing agencies and replace them with virtual organizations.32
Issues for Congress
Potential Opportunities of E-Government
On the one hand, proponents of e-government suggest these initiatives will
provide a variety of opportunities to improve governance. As discussed above, there
are a number of forces driving the different e-government sectors. However,
proponents of e-government suggest there are some overarching benefits that will
result, either directly or indirectly, from these initiatives. E-government is one means
Congress may use to try to achieve objectives related to these issues.
Efficiency.
As with many information technology-related projects, one of the
anticipated benefits is improved efficiency. In e-government projects, this efficiency
can take many forms. Some projects seek to reduce errors and improve consistency
of outcomes by automating standardized tasks. A related efficiency goal of many e-
government initiatives is to reduce costs and layers of organizational processes by re-
engineering and streamlining operating procedures. Similarly, some e-government
advocates suggest that reducing the amount of time spent on repetitive tasks will give
those federal employees an opportunity to develop new skills and advance their
careers.33
New and Improved Services. Another opportunity promoted by e-
government supporters is the potential to improve the quality, range, and accessibility
of services. Some observers suggest that, in addition to enhanced efficiency, the
quality of services may be improved through quicker transactions, improved
32Ibid.
33Jeff Breen, “At the Dawn of E-Government: The Citizen as Customer,” Government
Finance Review
, 1 October 2000, p. 15; Daintry Duffy, “Q&A: Balancing the Role of E-
G o v e r n m e n t , ” C N N , 1 3 N o v e m b e r 2 0 0 0 ,
[http://www.cnn.com/2000/TECH/computing/11/13/qna.egov.idg/].

CRS-12
accountability, and better processes. The evolution of e-government also creates the
potential for new services. Along with the possibility of combining existing services,
e-government initiatives could contribute to a qualitative change in how government
conducts business and how citizens interact with government and each other.
Increased Citizen Participation. A third benefit anticipated by some e-
government advocates is increased citizen participation in government. One way this
could occur is by connecting people who live in remote areas of the country so that
they can send and receive information more easily. A second way suggested by some
observers is through increased participation in government by younger adults. Some
advocates believe that the generation of citizens about to come of political age, who
have grown up with the Internet and digital communications technologies in their
everyday lives, will be more likely to become participant citizens if the means to do
so are similar to the ones they use for personal and professional activities. By
extension, e-government initiatives could also enhance citizen-to-citizen (C2C)
interaction by providing opportunities for people with similar interests, opinions, and
concerns, who may be geographically separated, to interact and share information.
Improved National Information Infrastructure. A fourth possible benefit
of the drive to implement e-government initiatives is the improvement of the national
information infrastructure (NII). During the years leading up to the Y2K rollover,
there was growing concern over the protection of NII. As part of the efforts to
address the Y2K problem, former President Clinton released Presidential Decision
Directive No. 63. “The Directive sets up groups within the federal government to
develop and implement plans that would protect government-operated infrastructures
and calls for a dialogue between government and the private sector to develop a
National Infrastructure Assurance Plan that would protect the nation's critical
infrastructures by the year 2003.”34 Following the successful handling of the Year
2000 (Y2K) problem, attention began to wane again. However, the events of
September 11, 2001 have re-invigorated the sense of urgency to focus interest in NII
issues. On October 16, 2001 President Bush signed Executive Order 13231, which
outlines the Administration’s policies and objectives for critical infrastructure
protection and reiterates many of the provisions in PDD-63. This heightened
awareness, along with the effort to make many government services available online,
could renew interest in the NII and lead to its further development to accommodate
the resource needs of these initiatives. By extension, additional investment in NII
could lead to increased attention to information security issues and the development
of new technologies.
Potential Challenges to E-Government
On the other hand, despite the potential opportunities for the implementation of
e-government initiatives, there are a number of challenges that could prevent the
realization of these anticipated benefits. Some of the challenges, such as disparities
in computer access (digital divide - the lack of equal access to computers, whether
due to a lack of financial resources or necessary skills), are pre-existing conditions
34See CRS Report RL30153, Critical Infrastructures: Background, Policy, and
Implementation
, by John D. Moteff.

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that are connected to larger issues. Others, such as funding rules and concerns about
federalism, are problems that have emerged out of efforts to integrate information
technology into government generally.
Computer Security. Perhaps one of the most significant challenges for
implementing e-government initiatives is computer security. In a series of evaluations
published since July 1999, the General Accounting Office (GAO) has repeatedly
reported that the largest federal agencies “were not adequately protecting critical
federal operations and assets from computer-based attacks.”35 Specifically, GAO has
identified six areas of weakness: security program management, access controls,
software development and change controls, segregation of duties, operating systems
controls, and service continuity.36 For e-government activities, service continuity is
critical not only for the availability and delivery of services, but also to build citizen
confidence and trust. However, the risks of fraud and misuse of sensitive data are
concerns as well.
Privacy. Related to computer security, privacy also presents a challenge to the
implementation and acceptance of e-government initiatives. Concerns about the use
of “cookies,”37 sharing information between agencies (computer matching)38, and the
disclosure or mishandling of private information are frequent subjects of debate. As
GAO reported in a September 2000 report regarding online privacy protections at
federal web sites, nearly one-third (23 of 70) of the agencies had shared personal
information with other agencies, and, in some cases, with private sector entities.39 In
June 2000, it was reported that the National Drug Control Policy Office was using
cookies to track the Internet movements of visitors to its site.40 These privacy
35General Accounting Office, Information Security: Weaknesses at 22 Agencies,
GAO/AIMD-00-32R, 10 November 1999, p. 1.
36General Accounting Office, Computer Security: Weaknesses Continue to Place Critical
Federal Operations and Assets at Risk
, GAO-01-600T, 5 April 2001, p. 4.
37Cookies are small text files placed on a user’s computer by a Web site so that it can track
the user’s movement through a Web site. Originally designed to allow user-side customization
of Web information, the expanded use of cookies has raised concerns about the privacy of a
user’s Web browsing habits. For a more comprehensive analysis of the privacy issues
surrounding the use of cookies, see CRS Report RL30784, Internet Privacy: An Analysis of
Technology and Policy Issues
, by Marcia S. Smith.
38“Agencies often share information to establish or verify an individual’s eligibility for federal
benefits programs or to collect payments or delinquent debts. This enables agencies to reduce
errors and prevent fraud.” As more data is stored and processed electronically, it becomes
easier for citizen information to be transmitted and shared. Diane Frank, “OMB Adds
Guidance on Privacy,” Federal Computer Week, 8 January 2001,
[http://www.fcw.com/fcw/articles/2001/0108/web-omb-01-08-01.asp]. See CRS Report
RL30824, The Privacy Act: Emerging Issues and Related Legislation, by Harold C. Relyea,
for a more comprehensive analysis of computer matching issues.
39General Accounting Office, Internet Privacy: Agencies’ Efforts to Implement OMB’s
Privacy Policy
, GAO/GGD-00-191, September 2000.
40John F Harris and John Schwartz, “Anti-Drug Web Site Tracks Visitors,” Washington Post,
(continued...)

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breaches could have a negative impact on citizens’ trust in government Web sites and
Web-based services. Addressing the issue of privacy in the context of e-government
may require both technical and policy responses.
Disparities in Computer Access. Another challenge for e-government is
disparities in computer access. This challenge includes two policy issues: the often
described “digital divide” and accessibility for people with disabilities. In the case of
the digital divide, not all citizens currently have equal access to computers, whether
due to a lack of financial resources or necessary skills. While the placement of
Internet-enabled computers in schools and public libraries is helping address this issue,
these efforts are still progressing.41 Some observers point out that much of what
governments do involves interactions with people least likely to have access: the
poor, the elderly, language-limited persons, and the less-well-educated.42 Similarly,
advocates for the disabled observe that computers can present new obstacles for
citizens such as the blind or physically impaired, who may require costly hardware or
software for their computers, such as screen readers or oral controls, to be able to
access online information and services. This also requires that these resources be
designed in a manner that makes them accessible using these tools. On June 21, 2001,
Section 508 of the Rehabilitation Act Amendments of 1998 went into effect. Section
508 requires all electronic and information technology deployed by federal agencies
to be accessible to both federal employees and members of the public with disabilities.
The law applies to Web sites and equipment. Changes to the Federal Acquisition
Regulations (FAR) for implementing Section 508 went into effect on June 25, 2001.43
Government Information Technology Management and Funding.
A multilayered challenge for the development of e-government is government
information technology management and funding. This includes issues such as
government information technology worker recruitment, retention, and compensation;
the establishment of a federal CIO; and cooperation between local, state, and federal
governments. While e-government provides the opportunity for federal employees
to develop new skills, it also presents the dilemma of hiring and retaining skilled
information technology workers in a relatively high-demand field. Below-market
salaries44 and the inability to offer some types of benefits hinders the government’s
40(...continued)
22 June 2000, p. A23.
41U.S. Department of Commerce, Falling Through the Net: Toward Digital Inclusion,
October 2000, [http://www.esa.doc.gov/fttn00.pdf]
42A Survey of Government and the Internet“The Next Revolution,” The Economist, 24 June
2000, p. 2.
43For more information about Section 508, see the Federal IT Accessibility Initiative Web site
at: [http://www.section508.gov/]. Ben White, “Federal IT for the Disabled Gets Boost,”
Washington Post, 20 June 2001, p. A25; Tanya N. Ballard, “Final Rules Governing IT
A c c e s s i b i l i t y I s s u e d , ” G o v e r n m e n t E x e c u t i v e , 2 6 A p r i l 2 0 0 1 ,
[http://www.govexec.com/dailyfed/0401/042601t3.htm].
44To help address this issue the Office of Personnel and Management (OPM) created special
salary rates, ranging from seven percent to 33 percent, for most government information
(continued...)

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ability to attract and retain skilled workers, forcing it to either outsource certain
projects or delay implementation.45
Likewise, the growing debate over the establishment of a federal CIO raises
questions about how to manage and develop information technology and e-
government projects. More than just an organizational issue, the outcome of the
federal CIO issue has implications for the level of support, funding, and interagency
cooperation that will take place.46
Another issue related to technology management is federal funding of state and
local e-government projects. Some observers claim that the terms attached to federal
grants sometimes require predetermined solutions or restrict the use of funds across
two or more programs, hindering efforts to create integrated state-wide systems.
However, efforts to lift restrictions on commingling federal and state funds could raise
concerns regarding federalism, especially or projects that span across several agencies
and budgets. This issue may become more critical if there is an increase in the use of
information technology grants by the federal government.47
Related Legislation
S. 803, Lieberman, E-Government Act of 2001, 5/1/2001 (Governmental Affairs)
H.R. 2458, Turner, E-Government Act of 2001, 7/11/2001 (Government Reform)
Related Reading
CRS Report RL30153, Critical Infrastructures: Background, Policy, and
Implementation, by John D. Moteff.
CRS Report RL30745, Electronic Government: A Conceptual Overview, by Harold
C. Relyea.
CRS Report RL31088, Electronic Government: Major Proposals and Initiatives, by
Harold C. Relyea.
44(...continued)
technology workers in the G5 through G12 pay grades. Colleen O’Hara and Paula Shaki
Trimble, “Agencies Fill IT Pay Gaps,” Federal Computer Week, 5 February 2001, p. 26.
45CRS Report RL30661, Government Information Technology Management: Past and
Future Issues (The Clinger-Cohen Act)
, by Jeffrey W. Seifert; Greg Langlois and Paula
Shaki Trimble, “Projecting a ‘Hip’ Image,” Federal Computer Week, 16 April 2001, p. 24.
46See CRS Report RL30914, Federal Chief Information Officer (CIO): Opportunities and
Challenges
, by Jeffrey W. Seifert for a more comprehensive analysis of this issue.
47William Welsh, “Governors Look to Ease Limits on Fed IT Funds,” Washington
Technology
, 15 February 2001, p. 1.

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CRS Report RS20344, Electronic Signatures: Technology Developments and
Legislative Issues, by Richard M. Nunno.
CRS Report RL30914, Federal Chief Information Officer (CIO): Opportunities and
Challenges, by Jeffrey W. Seifert.
CRS Report RL30661, Government Information Technology Management: Past and
Future Issues (The Clinger-Cohen Act), by Jeffrey W. Seifert.
CRS Report RL31103, House of Representatives Information Technology
Management Issues: An Overview of the Effects on Institutional Operations, the
Legislative Process, and Future Planning
, by Jeffrey W. Seifert and R. Eric
Petersen.
CRS Report 98-67 STM, Internet: An Overview of Key Technology Policy Issues
Affecting Its Use and Growth, by Marcia S. Smith, John D. Moteff, Lennard G.
Kruger, Glenn J. McLoughlin, and Jeffrey W. Seifert.
CRS Report RL30590, Paperwork Reduction Act Reauthorization and Government
Information Management Issues, by Harold C. Relyea.
CRS Report RL30824, The Privacy Act: Emerging Issues and Related Legislation,
by Harold C. Relyea.