Revolutionizing the Purchase of Commercial Items – Phase One Complete

June 1, 2018

The General Services Administration (GSA) and the Office of Management and Budget (OMB) have completed Phase I of the implementation of Section 846 of the FY18 National Defense Authorization Act (NDAA), otherwise known as the Amazon Amendment. The first phase called for the development of an implementation plan and policy assessment report. The final product, entitled Procurement Through Commercial E-Commerce Portals Implementation Plan, was delivered to Congress in March.

Soon after the passing of Section 846, GSA and OMB started gathering information about online marketplaces. They also considered the effects that the dramatic changes proposed under the Section could have on the federal procurement process. Regulations, provider terms and conditions, sharing of data, security, and implementation are just some of the areas that the team studied prior to submitting their report.

The team’s initial recommendations to Congress were also derived, in part, from comments and feedback from stakeholders, including federal agencies, portal providers, suppliers, industry partners, and procurement attorneys. The team gathered feedback through a public meeting held at GSA earlier this year, as well as from written public comments.

Phase I also involved analysis and information-gathering centered around procurement policy questions. The end goal is to have e-commerce portals reflect commercial buying practices as much as possible. For example, are there regulations that need to be changed or eliminated? The answer is probably yes, but which ones and the impact of the changes are need to be investigated and answered.

The report included four legislative recommendations that OMB and GSA feel are vital to e-commerce purchasing:

  1. Increase the micro-purchase threshold to $25,000 for purchases made through GSA-approved portals
  2. Allow GSA to make changes in competition rules such that a purchase made using the e-commerce portal would be considered a competitive procurement
  3. Give GSA the authority to set up an unpriced contract with a portal provider and suppliers to ease the burden of direct contact with suppliers on agency buyers
  4. Revise the definition of commercial e-commerce portal to allow the government a broader scope of options to consider now and in the future

The implementation plan report also lays out the implementation phases and deadlines. In the next phase, scheduled to be completed by June 2019, the team will research buying practices of e-commerce providers and suppliers to study models of operation and terms. The team is focusing on the following models:

  • E-Commerce Model – purchases are made from vendors that use an online platform to sell their own products and perform fulfillment duties;
  • E-Marketplace – purchases are made from the portal provider, who sells its own proprietary products and/or products from third-party vendors;
  • E-Procurement Model – a software as a service (SaaS) model in which the portal provider doesn’t sell products, only provides the platform; a larger supplier pool would be possible.

Committee members revealed at a recent industry forum that they still have more questions than answers at this point in the process. They are being very transparent about that fact that they are in learning mode and are not trying to pretend to have all the answers. GSA is open to hearing ideas from industry and government stakeholders as they continue to learn the nuances of e-commerce.

A public meeting is scheduled for June 21, 2018, which will continue its dialog with industry, suppliers, and other interested parties. GSA also plans to release Requests for Information (RFIs) to obtain additional information from suppliers and portal providers. They will be looking for suggestions on terms and conditions, products, and the design of the portals.

It is clear that GSA is leading a revolutionary change for the purchase of COTS items that will allow government agencies to take advantage of technological advances. This is a good idea that is complicated by long-standing regulations and practices contained in the current procurement system. GSA’s work is just beginning, as it leads the way in shaping government acquisition methods of the future.

For more information about the implementation of Phase one of the implementation of Section 846, please contact our GSA specialists and Shawne Carroll at 301.231.6200.