Reporter's Notebook

How ‘Amazon,’ 5 other acquisition provisions changed in final defense bill

Jason Miller@jmillerWFED

November 13, 2017 4:50 am

7 min read

CORRECTION: An earlier version of this story incorrectly stated the changes to the Simplified Acquisition Threshold and the Micro-purchase threshold. The story was updated on Nov. 16.

If you are keeping score at home, chalk one up for industry in the battle to keep Amazon from dominating how agencies buy commercial products. But don’t expect this to be the final score by far.

The Senate convinced the House to modify the so-called “Amazon” amendment in the 2018 National Defense Authorization bill during the conference negotiations. And industry is pleased.

The NDAA includes the provision to set up more than one online marketplace for agencies to buy commercial products using a two-year phased-in approach.

The bill would require the General Services Administration to develop an implementation plan and schedule within 90 days of the act becoming law. Then a year later, GSA and the Office of Management and Budget should recommend changes to laws to ensure the effective implementation of the online marketplaces, as well as what products should be included in the pilot, a review of standard terms and conditions, including small business and other similar requirements, and what security features are needed to protect data.

Finally, two years after the bill becomes law, GSA and OMB will issue guidance to create the marketplace.

This is a much different approach than what the House initially wrote in the NDAA.

Trey Hodgkins, the senior vice president for the IT Alliance for Public Sector, said lawmakers addressed many of the questions about how the use of online commercial marketplaces would work.

“This establishes a thoughtful approach to creating this capability while ensuring that risks for the government and vendors are fully assessed,” Hodgkins said in an email to Federal News Radio. “Though the provision affords ample time to make these assessments and establish a viable contract, we view these deadlines as caps and we will be encouraging the administrator at GSA to put this option in place expeditiously.”

ITAPS recommended to the Senate Armed Services Committee staff members that technology and communications products be exempted from the initial pilot in the online marketplace.

And because the NDAA now calls on GSA to assess what products would make sense for the online marketplace, ITAPS will have time to continue to drive home its concerns.

Roger Waldron, president of the Coalition for Government Procurement, said the thoughtful and phased-in approach to the online marketplace effort makes more sense than launching it immediately.

“It’s important to see how the government can leverage commercial technologies like e-commerce but also understand how it can be effectively leveraged in a balanced way given all the different stakeholders and touch points when you are dealing with the government. Something like this approach was imperative and Congress recognized that,” he said. “The need to balance the government’s requirements with commercial buying desires requires a thoughtful process to figure it out. They also recognized the critical role data plays. The new provision prohibits commercial providers from using the data for any competitive advantage, and it recognizes there could be an inherent conflict of interest between the marketplace provider and the product provider.”

Experts say over the next few years, House lawmakers and/or Amazon will try to change the 2018 NDAA to speed up the timeline or push through wholesale changes to the online marketplace to get it stood up much more quickly.

This is an estimated $5 billion market, so the lobbyists probably already are working the 2019 NDAA process.

Along with the so-called “Amazon” provision, the conference report included several other interesting acquisition provisions:

Simplified acquisition threshold and micro-purchase threshold get raises. One provision would increase the SAT to $250,000 from $150,000 for the entire govenrment. Another provision would increase the micro-purchase limit to $10,000 from $3,500 for only civilian agencies. In the NDAA report, the conferees say the increase in the SAT will help small businesses, especially those new and innovative firms, win work at DoD.

Unsuccessful bid protests costs going up, for some. The NDAA calls for a three-year pilot program to test out the concept of unsuccessful vendors who protested a contract award to the Government Accountability Office to pay the Defense Department’s costs incurred for processing a protest. The pilot program will be for companies with revenues more than $250 million. DoD has two years to get the test program implemented. Eric Crusius, a senior counsel with Holland & Knight in Washington, D.C, said the provision leaves more questions than answers about how the pilot would work. He asked does “costs incurred” refer to DoD’s attorneys responding to protests, administrative costs or what? He also asked how do you determine the hourly rate of a government attorney? Additionally, Crusius asked how will the government determine the revenues of the company that protested. Would it include federal and commercial work, or just federal earnings? All of these questions will have to be answered by DoD in a new acquisition regulation.

Post-award debriefings to improve. The Senate won another provision to limit delays because of bid-protests. This provision would require DoD to conduct post-award debriefings and provide details and comprehensive statements about the agency’s overall award decision —basically all the information that would typically come out during a bid protest trial. The House added language to increase the threshold of mandatory release for all contracts worth more than $100 million instead of the Senate’s plan for $10 million. The House also added an option for small businesses or nontraditional contractors with contracts in excess of $10 million, but less than $100 million to request such disclosure. Holland and Knight’s Crusius said in some ways, this provision builds on an effort the Air Force already is doing. He said the service has been running a voluntary program with extended debriefings for unsuccessful bidders. “All parties, including the awardee, must consent to the extended debriefing. Following a review of the source selection documents, a bidder’s outside counsel then engages in a question and answer session with the contracting agency,” he said. “It was the Air Force’s belief that an earlier disclosure of source selection information prevented some protests that may have been filed for the primary purpose of understanding the rationale of an award to a different bidder.”

Kaspersky Lab prohibition sticks. Sen. Jeanne Shaheen’s (D-N.H.) effort to ban products made by Kaspersky Lab because of cybersecurity threats came to fruition. The NDAA adopts Shaheen’s provision, along with a requirement to “review and report on the procedures for removing suspect products or services from the information technology networks of the federal government.” This is something the Homeland Security Department already is doing.
Additionally, the House Science, Space and Technology Committee is holding a hearing Tuesday to see how agencies are doing in removing Kaspersky Lab products from their networks under the DHS Binding Operational Directive from October.

DoD chief information officer changes. The Senate’s desire to raise the authority and power of the CIO won out over the House. But the House added language requiring the CIO position to be presidentially-appointed and Senate-confirmed, bringing it back to the pre-2010 time when it was the CIO and assistant secretary of defense for networks and information integration (NII). In May 2010, then-Secretary Robert Gates eliminated the AS(NII) office, thus not requiring Senate confirmation of the DoD CIO. But the 2018 NDAA would elevate the CIO’s role and realign its authorities. “This provision would establish a Chief Information Warfare Officer (CIWO), who would assume responsibility for Defensewide information warfighting functions. The roles and responsibilities of the current CIO concerning business systems and statutory requirements not specified within the CIWO’s purview would fall to the Chief Management Officer (CMO) of the Department of Defense,” the Senate provision stated. Meanwhile, the House added an amendment to “designate additional responsibilities related to budgets and standards and would authorize the CIO to evaluate and certify that Department of Defense budgets are sufficient in meeting departmentwide requirements for the functional areas it oversees.”