GSA, OMB detail legislative fixes needed to implement e-commerce portals

The General Services Administration said it complied with a Congressional mandate to map out a plan that would let agencies start to buy the products they need via commercially-run, Amazon-like web platforms. But the agency said  several changes still need to be made to federal acquisition law before the plan can work in the real world.

The implementation plan GSA and the Office of Management and Budget delivered to Congress on March 15 called for the commercial e-commerce “portals” — directed by Congress as part of the 2018 National Defense Authorization Act — to be up and running by the end of fiscal 2019. Officials planned to spend the next 90 days to one year analyzing the market for web-based buying platforms, consulting with federal agencies and determining what kinds of products are appropriate for the portals.

After that, sometime in 2019, GSA would conduct an acquisition process to pick two or more commercial platforms through which agencies could begin buying goods.

But GSA and OMB said that timeline was predicated on Congress making four significant changes to acquisition law later this year, and formally requested those changes as part of its implementation plan.

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Using more “modern” buying practices

For starters, officials said Congress needs to raise the government’s micro-purchase threshold to let items with a value of up to $25,000 be purchased through the portals. The proposal would not change the existing threshold — $10,000 for most agencies, $5,000 for the Defense Department —  for purchases made in other ways.

They said the primary reason for the increase is so that agencies can better use “modernized” commercial buying practices such government purchase cards, while still abiding by requirements to give preferential treatment to sources such as  Federal Prison Industries and AbilityOne. The latter is  the government’s program to employ people with disabilities.

GSA anticipates those programs will be able to proffer their goods via the new commercial  marketplaces.

“If we were to follow our traditional acquisition rules to buy an item above the micro-purchase threshold, we’d have to go through a public posting, put it out there to tell the world we’re looking to buy this, then wait 10 days before taking any action,” Jeff Koses, GSA’s senior procurement executive, said during a conference call with reporters March 16. “By looking to conduct our purchases beneath the micro-purchase threshold, we are maximizing the use of commercial practices while also gathering the data to let us make informed decisions.”

The same proposal would require that all of the transaction data for agency purchases through the new portals be captured and shared across government.

A more competitive platform

Secondly, GSA and OMB want Congress to give the GSA administrator the authority to deem that orders made through the portals are “competitive” for purposes of the Competition in Contracting Act — the law which generally requires government purchasing to be done through full and open competition. The authority would be similar to the designation already given to GSA’s Federal Supply Schedules.

The rationale is that, just like in the consumer world, the online marketplaces would be inherently competitive. Multiple vendors would compete within the platform on price and features — something that was not contemplated when CICA was first passed in 1984.

“It’s a recognition that technology is serving as a disruptor of how things are being purchased, and the business models continue to evolve at a rapid pace,” said Mark Lee, the assistant commissioner for policy and compliance in GSA’s Federal Acquisition Service. “So for us to have the flexibility to set those ordering procedures and evolve them over time would help us take full advantage of everything the e-commerce marketplaces have to offer.”

Flexible commercial e-commerce definition

A third proposal would give GSA more flexibility to determine what counts as a “commercial e-commerce” portal. The implementation plan indicated that the agency believes the definition Congress set in the NDAA is too restrictive, but does not offer a tremendous amount of detail about why that is the case.

“This technical revision would ensure that GSA can include a variety of electronic procurement business models in the program, while enabling a more dynamic and competitive marketplace environment and empowering the government buyer through a simple and streamlined comparative shopping experience,” officials wrote. “By adjusting the definition and providing flexibility to include any future business models, GSA will be able to better create a dynamic and competitive environment.”

Officials said further analysis and recommendations would follow in phase 2.

Relationships with portal and provider

Finally, GSA wants Congress to give it authority to enter into contracts with not just the vendors who will provide the e-commerce portals — but also with the commercial vendors who will supply at least some of the items that will be sold through them.

The implementation plan said GSA would use the authority sparingly, when it makes sense to use indefinite-delivery/indefinite quantity contracts to conduct some contracting activities “centrally.”

“GSA may consider use of an IDIQ contract that allows GSA to have a relationship with both a portal provider and suppliers that sell on the portal platform, if such strategy might generate greater efficiencies for products that are identified as suitable for the program,” officials wrote. “The requested statutory authority would allow GSA, at its discretion, to use IDIQ contracts to achieve certain acquisition efficiencies without also having to negotiate up front pricing with suppliers.”

Officials declined to comment on how the implementation plan or the legislative changes they’re seeking would affect GSA’s existing schedules program or its own associated e-commerce platform, GSA Advantage.

“Part of the statutory requirement is that we’re required to assess the impact on existing programs such as the multiple award schedules or the National Supply System, so we’ll be doing that in phase 2,” said Lee, the GSA assistant commissioner for policy and compliance for the Federal Acquisition Service.

Keeping up with technology

The plan does not give any indication of how many commercial e-commerce providers GSA plans to contract with once the implementation begins in 2019.

An earlier House version of the legislation ordering the creation of the portals directed that the government use “one or more” portals, one of several factors that caused some contractors to worry that a significant chunk of existing government procurement could be redirected to a single, privately-run web portal, such as Amazon. The final version gives GSA the discretion to contract with “multiple” e-commerce companies.

Laura Stanton, the assistant FAS commissioner for strategy management said GSA was committed to providing agencies with access to as many e-commerce platforms as possible, which is one of the reasons it asked Congress for additional flexibility.

“Technology is changing very rapidly at this point, and we’re realizing that what is available today may not be what’s available in 12 months or 24 months, 36 months,” she said. “We want to give GSA the greatest flexibility to make the best decision for the government. We didn’t want to inadvertently lock out something just because we hadn’t been thinking about it at the time, and we want to have as many options as possible as we look forward to implementation next year.”

The initial implementation plan also postpones several questions that have surrounded the notion of commercial e-commerce portals ever since the idea was formally raised by Rep. Mac Thornberry (R-Texas) , the chairman of the Armed Services Committee last year as part of the 2018 NDAA process.

Notwithstanding GSA’s stated intent to protect AbilityOne, some of the biggest unanswered questions surround how the portals’ implementation will interact with other longstanding provisions and principles in acquisition law, including the Buy American Act, the Trade Agreements Act, the Berry Amendment and the Small Business Act.

The document GSA and OMB sent to Congress last week acknowledges that vendors and other stakeholders in the procurement process have raised significant questions about those issues in public comment sessions, but does not explicitly address them.

“There are important public policy considerations which GSA must fully examine as part of the
long term plan around the portals,” the agency said.

But the current timeline for most of those considerations defers them until later phases, in 2019.

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