E-commerce: Another reminder of the need for reflection

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.

Recently, The Coalition for Government Procurement’s friend and colleague, George Washington University Law Professor Christopher R. Yukins, posted an interesting piece entitled, “Request Denied by GAO for Documents in Pending Protest Regarding GSA ‘Electronic Marketplaces’ Procurement.” That posting discusses how he submitted a request to the Government Accountability Office for redacted pleadings filed in the protest of Overstock.com Inc. against the pending General Services Administration Commercial e-Marketplace acquisition.

GAO denied the request, stating that records sought related to ongoing work, and, [i]n order to avoid disruption of work in progress, it is [GAO’s] policy not to provide records that are part of ongoing reviews or other current projects …”  GAO estimated that work would be completed on April 24, at which time, a new records request could be filed.

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Putting aside the issue of records transparency during the pendency of a protest, it is interesting to note that the purpose of Yukins’ records request was to facilitate analysis of this critical, large-dollar value, commercial procurement without the delay associated with the resolution of the protest.  After noting the significant interest and discussion of the subject, including issues raised by members of the Coalition, he noted:

The protest of this solicitation is especially important because, outside the procurement itself, there has been little resolution of the legal issues that surround this major shift in federal policy. Congress called for GSA to open electronic portals to users, and GSA received public comments (including on a draft solicitation), but there was no rule-making process despite the substantial impact that this procurement may have on federal procurement. The new marketplaces are estimated by GSA to cover potentially $6 billion in micro-purchases — generally up to $10,000, although GSA seeks to increase that threshold to $25,000 for GSA approved marketplaces.

Yukins pointed out the potential impact of this procurement, potentially affecting protests, debarments, the value of trade agreements, and procurement markets, especially considering the potential expansion of the solutions from commercial products to commercial services. We agree; as Coalition members have noted, the Commercial e-Marketplace acquisition’s reliance on only one solution in the e-Commerce market continues to raise fundamental procurement policy concerns:

  • It risks foreclosing the government from access to evolving technologies and solutions that otherwise are or will be available.
  • It risks insulating the selected market model solution from any forces of competition. As the only channel under the program, that model solution will have little market pressure to improve its services or lower its fees.
  • It risks leveraging the power of the government and the funds of the taxpayers to establish and subsidize a third-party market gatekeeper with the freedom to control industrial base access based on its incentives, not government mission needs

Further, it creates contradictory approaches to supply chain risk mitigation. One need only contrast the evolving regulatory implementation of Section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 with the evolving supply chain risk mitigation requirements of the e-Marketplace acquisition.

The interim rule implementing Section 889(a)(1)(A) bars agency heads from procuring, obtaining, or extending or renewing a contract to procure or obtain equipment or a system, or service that uses telecommunications equipment or services of certain Chinese entities “as a substantial or essential component of any system, or as critical technology as part of any system…” Section 889(a)(1)(B) speaks in terms of restricting contracts with entities using any equipment, system, or service that uses such covered equipment or services.

Recent amendments to the e-Marketplace Statement of Objectives, however, appear to have waived associated requirements here, going from setting forth “requirements for commercial e-marketplace platform providers” to setting forth “the outcomes desired from the commercial e-marketplace platform providers, [with] detail [on] existing commercial practices …” [Emphasis added] If commercial practices do not meet an objective, then offerors will state “whether or how” they might “approximate the desired outcome while keeping deviations from standard commercial practice to a minimum.”

It bears emphasizing that “requirements” are not the same as “desired outcomes.” Along these lines, the amendment also appears to waive the statutory restrictions on the use of contractor data, as well as AbilityOne requirements, among others.

All the foregoing is to say that there are broad implications for the procurement system associated with the e-Marketplace acquisition, and those implications extend into other areas of importance, like supply chain security, socioeconomic programs, and the protection of proprietary data. Yukins is right. Absent the release of these records, “key information on this major procurement may be blocked from the public for roughly three months – the 100-day period for a GAO bid protest to be decided.” So too, from the perspective of Coalition members, it highlights that more review and reflection on the acquisition is needed.

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