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The General Services Administration held its second industry day Thursday to better understand how to develop the congressionally mandated e-commerce portal.
At the same time, GSA issued two requests for information — one for suppliers and one for platform providers — seeking more information to go into its strategy. All of these efforts are trying to alleviate a lot of concern and answer several questions about how the approach will work.
Anne Rung, the former administrator in the Office of Federal Procurement Policy and now is director of Amazon Business, government sector, said moving to a commercial e-commerce portal can work for government, providing more transparency and as good or better compliance with existing federal acquisition rules and policies.
“I’ve been excited about the legislation and how it has transformed the conversation. Two years ago, we weren’t talking about an online marketplace and so I give [House Armed Services Committee] Chairman [Mac] Thornberry and his staff for introducing the legislation and I also applaud GSA and OMB for creating these formal and informal channels by which industry [provides] input and insight,” said Rung in one of her first interviews since she left government 18 months ago.
She said the best solution for the e-commerce portal was to mimic Amazon’s approach: starting with the customer and working backward.
“The customers in this space are both federal buyers and federal sellers so let’s talk to the customers about the challenges they have in this space generally or with solutions today. What do they need to be more efficient and effective and to provide the best value for the taxpayers, and then let’s work backwards from there.”
Rung said that focus on the customer needs will lead to the best solutions, but she was quick to say she wouldn’t “pre-suppose” what the right approach is for the e-commerce portal.
RFIs issued for e-commerce providers and suppliers
GSA is starting to do the type of research Rung said is necessary through the two RFIs. The first is for suppliers, in that, GSA asks a number of questions around categories, terms and conditions, and program design.
The second RFI is for platform providers and questions are focused around five areas: spending trends, data standards, user experience, cybersecurity, and terms and conditions.
“This information will also be used to help inform GSA about the general scope, shape, and types of products that should be considered for a proof of concept,” GSA states in both notices.
Responses to both RFIs are due July 20. Both requests will help inform GSA as it develops the e-commerce portal implementation strategy due in March 2019. The agency released the first report mandated under the 2018 Defense Authorization Act in March detailing the challenges and recommendations.
Roger Waldron, the president of the Coalition for Government Procurement, an industry association, wrote in a blog post on June 7 that GSA is sending mixed messages about the goals for the portal. On one hand, GSA is asking for feedback and data to do analysis to ensure its heading in the right direction.
A competitive e-commerce world
But on the other hand, GSA and House lawmakers want to raise the Micropurchase Threshold to $25,000 for the e-commerce portal from $10,000 with no analysis or understanding of how this change would work.
“To date, the record provides no analysis or data assessing the need for the change or its potential impact on the current procurement system/market, including the impact on customer agencies and contractors,” Waldron wrote. “The proposed increase also serves to highlight the question of balance between commercial terms and conditions and necessary government requirements. The implementation plan does not include a substantive analysis addressing this ‘balance question.’”
GSA explained its rationale for the increase in the Micropurchase Threshold (MPT) in a June 4 blog post.
“The increased MPT recognizes the changing nature of competition in an e-commerce world,” the agency wrote. “Traditionally, micropurchases don’t require competitive quotations and are usually performed non-competitively. Using e-commerce portals will bring a whole new level of competition into this area,” the agency writes.
But Waldron also questions whether increasing the MPT will be better competition to the federal buyer.
“[T]his approach risks creating parallel procurement universes for commercial products: a pre-existing commercial item contract universe where a core set of requirements (e.g., Buy American Act, Trade Agreements Act, socio-economic programs, cyber, supply chain, and counterfeit requirements) apply, and an e-Commerce portals universe where no such core law and policy requirements apply,” he writes. “Indeed, the proposed MPT increase implicitly sends a message favoring and incentivizing transactions via e-commerce portals because none of these government requirements apply.”
Amazon’s Rung told Federal News Radio that she has supported increasing the MPT since her time as OFPP administrator.
“We are talking about the purchase of commercial products. It’s an incredibly inefficient and time consuming process today. We don’t have a lot of visibility into the prices paid or who we are purchasing from or how we are making those purchases,” she said. “To me, raising the micropurchase threshold to $25,000 provides a more efficient means by which you can make those purchases, it provides greater access to a commercial marketplace and it’s also a great means by which small businesses can better reach buyers in a more streamlined fashion. It’s a benefit to the government.”
Compliance concerns ‘overblown,’ Rung says
Rung said the concerns about whether Amazon or any other commercial e-commerce platform would meet any and all federal acquisition laws and policies are overblown as today’s online marketplaces are misunderstood.
She said too often today’s e-commerce portals are seen as those from the dot-com boom of the late 1990s and early 2000s that were limited in the data they collected and could provide back to the customer.
“Historically, one of the biggest challenges in managing your supply chain and managing your spend has been a lack of transparency into the spending. You can’t control or comply with what you can’t see,” she said. “A tool like Amazon Business uses a technology to get real time information to help eliminate obstacles or ensure compliance, and it’s getting timely information into key decision makers when they need it. It’s not one or the other, this tool ensures greater compliance and greater controls.”
Amazon Business provides the controls and compliance the government agency or private sector organization needs. Rung said this includes workflow approvals, visibility into the spending and when it’s occurring, and a structure of rules that mirror the current organization’s requirements.
“Compliance and convenience of the Amazon marketplace are not mutually exclusive,” she said. “In fact, I would argue that Amazon Business’ marketplace provides greater controls and compliance capabilities because you are using the technologies that Amazon Business has to drive greater compliance. You can’t control or comply with what you can’t see, and without visibility into your spending, it’s very hard to comply with existing regulations.”
She said Amazon Business could potentially guide buyers to preferred suppliers, including small businesses or those vendors that meet the Trade Agreements Act or Buy American Act. She highlighted work her employer is doing with the Air Force around purchase card spending transparency under the micropurchase threshold.
The Air Force began the pilot in December.
“The feedback we are getting is the analytics is giving them unprecedented transparency into purchase card spending,” Rung said. “When you think about federal customers in particular, these are large decentralized organizations, there is not a lot of transparency into the spending. They don’t have easy access to what we call level three data, for example prices paid information. They get reporting from the banks but it’s not often detailed analytics. Amazon Business allows a purchase card administrator to see that spending across 50 different data points across the organization.”