GSA’s E-Commerce Portal Pilot Strategy, opportunity to enhance competition

This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.

In June 2020, the General Services Administration launched an initial e-commerce portal proof-of-concept with the award of three contracts to e-marketplace platform providers for purchases below the micro-purchase threshold of $10,000.

As GSA noted in announcing the proof-of-concept, the contract awards were “part of implementation efforts for the Commercial Platforms program and Section 846 of the 2018 National Defense Authorization Act.” GSA should be commended for its proof-of-concept strategy, as it is prudent to obtain real-life metrics on how the e-marketplace platforms work in the context of government procurement.

The e-marketplace proof-of-concept provides GSA and Office of Management and Budget the opportunity to collect procurement data that can be used both to assess current market performance and to develop future strategies that enhance access to, and competition across, the commercial market.

These e-marketplace contracts, however, should be the first step in implementation of an overall e-commerce portal strategy to access the commercial market for e-commerce solutions that meet customer agency needs. As GSA noted in its April 2019 Procurement Through Commercial E-Commerce Portals, Phase II Report: Market Research & Consultation,

GSA will start with the e-marketplace model (one of the three models identified in the Phase I report) for this initial proof of concept while continuing to assess opportunities to leverage the benefits of other commercial e-commerce portal models.

Phase II Report at 3.

Although GSA’s e-marketplace proof-of-concept prompted some questions and concern regarding the potential role the e-commerce and e-procurement models would play in the overall strategy, the agency clearly indicated that, under its plan, there would be future opportunities to assess the role and performance of these other e-commerce models. Indeed, GSA stated:

“[T]he one model that best fits GSA’s priorities for an initial proof of concept is the e-marketplace model. This model enables GSA to implement an initial proof of concept quickly while minimizing Government burden and costs … However, GSA is fully committed to assessing the best ways to leverage the benefits of the other models throughout implementation of the initial proof of concept. Phase II Report at 8. [Emphasis in original.]”

In this regard, then, GSA’s phased approach to a complex challenge was viewed as a first step, and it left industry looking forward to the opportunity to engage with GSA on the future role of the two other models while testing and data collection continued on the e-marketplace model.

Unfortunately, in its June 2021 Procurement Through Commercial E-Commerce Portals: Business Model Cost Estimate Analysis, GSA appears to foreclose proof-of-concept testing of the e-commerce and the e-procurement models. The 2021 report essentially concludes, without any proof-of-concept testing, that the e-commerce and e-procurement models are too costly to consider. In the report, GSA states that implementing either of these will not yield “the benefits of an efficient, commercial-driven shopping experience,” and it will “result in an overly expensive, resource-intensive implementation.” This rejection of the e-commerce and e-procurement models raises significant policy and operational issues and/or questions.

As a threshold matter, the 2021 report reflects a sea change in GSA’s approach to piloting all three of the models it devised. For over a generation, the fundamental operating principle of federal procurement has been to maximize the opportunity to increase competition from, and access to, the commercial market. GSA’s rejection of a proof-of-concept for the e-commerce or e-procurement models runs counter to this operating principle.

Substantively, the 2021 Report raises some key observations and concerns:

• GSA has reached a conclusion that the e-marketplace model is the preferred approach without testing the other two models. A proof-of-concept/pilot of the e-commerce and e-procurements would provide real-life data addressing the costs and benefits to the government customer. It also would provide an opportunity to assess the interplay between, and competition among, all three models, which could result in identifying additional opportunities to deliver value to customer agency through all three models.
• Given the significance of GSA’s decision, in particular the wholesale change in approach, the agency needs to release additional information regarding how it identified, assessed, and allocated costs to the potential implementation of the e-commerce and e-procurement models, as well as more details regarding the assumed processes for implementing these models. Without this information, it is difficult to understand the context of the numbers GSA identified and the conclusion it drew.
• Proof-of-concept testing of all three models provides GSA not only the widest access to the commercial market, but also an opportunity to think outside the box in constructing solutions to meet customer agency needs. For example, it could assess a role for the Multiple Award Schedule (MAS) program in implementing the e-commerce platforms, as well as how all three models support small business opportunities.
• Competition among all three models through a proof-of-concept implementation will benefit customers. It is a positive driver for innovation and value across all three models, forcing providers to innovate. The power of competition drives the commercial market delivering new solutions and ever greater value to customers, and the 2021 Report simply does not provide a sufficient, data-based rationale for restricting it.
• All three models currently compete and team in the private sector. It is unclear, then, how GSA concluded that the costs outweigh the benefits when commercial customers, the very buyers GSA seeks to emulate under the program, are leveraging all three models to deliver value and operational support.

GSA is on the threshold of making transformative change with the introduction of innovative acquisition approaches, like the e-commerce portals. Rather than undermining that change, and risk foreclosing the benefits associated with it, the Coalition recommends that GSA evaluate all three approaches. Indeed, the very nature of a pilot is to test approaches in order to derive the data necessary to draw conclusions. For this reason, Coalition members believe GSA should reassess its decision to reject the e-commerce and e-procurement models. GSA should continue the e-marketplace proof-of-concept, and it also should pilot the e-commerce and e-procurement models. As always, Coalition members offer any assistance as GSA sees fit.

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