GSA still must answer supply chain risk questions with e-commerce platforms

It was delayed by the coronavirus pandemic. It was protested at least twice after the solicitation came out in November. The White House contradicted it with a January executive order, and it remains controversial among contractors.

But the General Services Administration’s e-marketplace platform initiative finally reached the end of the beginning.

GSA awarded proof-of-concepts to Amazon Business, Overstock.com and Fischer Scientific on Friday to provide agencies access to their commercial e-commerce platforms for purchases below the micro-purchase threshold of $10,000. Two of the three winners — Amazon and Overstock — submitted agency level protests about the solicitation over the last six months forcing GSA to amend it at least twice.

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The goal for these pilots, which could last up to three years, is to test out the use of commerce platforms that hopefully will give agencies more granular data into what GSA estimates is a $6 billion annual market through the government purchase cards.

GSA Federal Acquisition Service Commissioner Julie Dunne said in a statement that the proof-of-concepts will start small and within the next 30 days. She said GSA will refine the pilots through repeated testing and by soliciting stakeholder feedback.

“The feedback GSA has already received from a wide variety of stakeholders has been critical to achieving this important milestone in the Section 846 implementation,” said Dunne. “I’m excited for the path ahead — especially the spend data. Such data will help with compliance in areas like AbilityOne, small business and supply chain risk management.”

In an email from the GSA Ombudsman, which Federal News Network obtained, five agencies will participate in the proof of concept: The departments of Veterans Affairs, Justice and Labor as well as the Environmental Protection Agency and GSA.

“Each agency is structuring their participation differently with some agencies identifying select card holders, while others are identifying a specific office and/or bureau to participate,” the ombudsman email stated. “At this time, the commercial platforms team is focused on those agencies that have committed to participating, as this is a small-scale proof of concept. The commercial platforms team will continue to partner closely with the national account managers on agency engagement and will address interest from additional agencies in the months ahead.”

Bumps and potholes over the last year

It’s been a long and winding road full of bumps and potholes to get to these awards. Congress called for GSA to test out these commercial online marketplaces in the 2018 National Defense Authorization Act. GSA spent most of the next year gathering industry and other expert feedback before releasing the solicitation for the proof-of-concepts.

During that time, the leading proponent on Capitol Hill, Rep. Mac Thornberry (R-Texas) announced he was retiring and would not seek reelection in 2020. One of the biggest supporters in the Defense Department, Bob Daigle, a former lead staff member on the House Armed Services Committee who many believe wrote the Section 846 provision, left after spending almost two years as the director of the Cost Assessment and Program Evaluation (CAPE) office. So the two biggest supporters of the e-marketplace initiative no longer have any reason to push for, or authority over, the program.

Read more: Acquisition News

Additionally, industry has been wary of the program since its inception and the concern only grew when President Donald Trump signed an executive order in January with a goal of cracking down on counterfeit products coming from these e-commerce providers. At the same time, the Department of Homeland Security issued a report to the White House on some of the best practices for using commercial e-commerce platforms and avoiding counterfeit products.

Roger Waldron, the president of the Coalition of Government Procurement and who hosts Off the Shelf on Federal News Network, has been one of the most outspoken industry representatives. Waldron has blogged about his concerns and written letters to GSA and the White House about the seemingly contradictory requirements coming about e-commerce platforms and about the creation of two different rules for micro-purchases — those under the e-commerce platforms and those bought directly or through other platforms like GSA Advantage.

“As GSA stated, moving forward, transparency is vital. Stakeholders will need to understand the operational and policy parameters of the pilot and whether they align with the critical supply chain concerns of government,” Waldron said in an email to Federal News Network. “With that in mind, industry looks forward to seeing how GSA addressed the e-marketplace best practices identified by DHS and promoted by the White House, including best practices around country of origin listings.  We also hope to see how GSA addressed the e-marketplace organizational conflict of interest issues and the restriction on platform provider use of 3rd party transactional data, which goes to the heart of a fair and open market.  Finally, we look forward how the pilot assesses performance around country of origin and counterfeit products.”

Waldron added that like some in Congress and within the administration, CGP wants to better understand “what appears to be the creation of an open, virtual expressway for the purchase of off-shore goods, including those from China.”

Addressing supply chain concerns

GSA, in its press release, tries to address some of these outstanding concerns about counterfeit and new or additional risk brought on by the commercial e-commerce platforms.

GSA Administrator Emily Murphy said in a statement that the pilots are an important step to protecting the federal supply chain against malicious or counterfeit goods.

“Our approach continues to be shaped by DHS’ Best Practices for E-Commerce Platforms and Third-Party Marketplaces, combining better security practices, better data, and better pricing,” she said in a statement. “I’m pleased that GSA is at the forefront of leading such dynamic and innovative change.”

Read more: Agency Oversight News

Sources also say GSA sent a copy of the DHS report to each of the awardees, who are expected to adhere to the recommendations.

Despite all of these challenges, GSA said agencies are excited about the initiative. During a March hearing before the House Oversight and Reform Subcommittee on Government Operations, GSA said it met with more than a dozen agencies, and received commitment from several to work with them to help drive requirements and to participate in the program.

Larry Allen, the founder of Allen Federal Business Partners and a long-time GSA expert, said there is great potential with the pilot to give agencies the type of spending data they never had before.

“GSA made a great decision in making multiple awards. This ensures that there will be competition among the contractors, an approach that helps ensure good prices and service levels,” he said. “It will now be up to each awardee to promote their solutions to current and new customers.”

The question now that the awards are made, and there are no further protests by unsuccessful bidders, is how quickly agencies adopt these new e-commerce platforms. GSA has a heavy lift to change contracting officers’ habits of using purchase cards directly with the provider or with another platform like Walmart.com. Additionally, Amazon, Overstock and Fisher Scientific must demonstrate their value, especially if there is any sort of fee involved in using the platforms.

Now that the end of the beginning is here, the real test begins for the e-commerce platform initiative.