The Virtual State: Transforming American Government? Jane E. Fountain Over the course of the twentieth century, American government took on its present bureaucratic form through a series of negotiations and political processes. It seems logical to assume—and recent evidence suggests—that this structure of government will change as policy makers and public managers use the Internet and other new information technologies to reshape programs, ser- vices, agencies, and policy networks. This article lays out some of the central questions about digital government—or as I call it, the virtual state. 1 By that I mean a government in which decision makers increasingly use information technology (IT) in ways that blur the boundaries among agencies, levels of gov- ernment, and the private and nonprofit sectors. What are its central features? What efficiencies can we expect from digital government? What challenges should change agents be aware of? Finally, what are some of the larger ques- tions of governance to keep in mind as innovators build the virtual state? American government appears to be in the early phase of significant trans- formation as public managers begin to use the Internet and related information technologies in ways that affect coordination, control, and communication. Many of these developments hold the potential for substantial efficiency in pro- ducing and delivering information and services. However, since new and unan- ticipated innovation and interaction is likely to emerge, it is difficult to predict the effects of these technologies on the deeper organizational and institutional restructuring of government. A useful way to think about digital government operations and their effects is to distinguish among three sets of government relationships. A government- to-citizen (G2C) contact encompasses information and service flows between the government and its citizens. A government-to-business (G2B) transaction includes procurement of goods and services by government from the private sector as well as a variety of other transactions between business and govern- ment. Finally, a government-to-government (G2G) relationship characterizes the networked nature of government, including interagency and intergovern- mental linkage and partnership. In all cases, the Internet and the World Wide Web make it possible to move information flow and millions of transactions NATIONAL CIVIC REVIEW, vol. 90, no. 3, Fall 2001 © John Wiley & Sons, Inc. 241