Industry tries to prune ‘Amazon’ amendment before NDAA is finalized

ITAPS and the Coalition for Government Procurement have offered suggestions to the Senate for testing out the use of online commercial marketplaces.

As House and Senate conferees close in on an agreement for the 2018 National Defense Authorization bill, the controversial “Amazon” provision remains in play. But it seems likely the final version will look a lot different than the current one.

If you aren’t familiar with this provision, Section 801 of the House version of the NDAA would require the General Services Administration to create one or more online marketplaces for agencies to buy commercial items, therefore simplifying the process and reducing costs. House Armed Services Committee staff members say the goal of the provision is to make federal procurement less complex and more competitive.

The Senate version of the bill doesn’t include such a provision, meaning it is one of many differences that have to be ironed out in the conference committee.

And because the Senate Armed Services Committee didn’t include or fully understand the “Amazon” provision, staff members did some last-minute cramming before the conference on the bill started.

Why is it called the “Amazon” provision? Well, some in the industry believe the Seattle, Washington giant played a key role in writing or strongly encouraging the House to develop the language

Industry sources confirmed SASC staff members held 90-minute-or-so learning sessions in early October with 30-to-40 industry experts seeking details and insights about the provision.

Sources say about six or seven staff members showed up, asked questions and then requested ideas for a pilot to test out the “Amazon” provision.

“They asked what were the challenges and the advantages of the provision,” said one industry source who was familiar with the briefing. “The tone and tenor of the discussion was that this is a big initiative that has merit, but its impact can’t be understood and implemented if we did the whole thing right away. There is an openness for the impact and some skepticism of what is the best thing to do at this time.”

Another source said the attendees ranged from medical supply, technology and office supplies businesses to industry associations and lobbyists.

The source said attendees expressed concerns about the provision’s language as it’s currently written.

A SASC spokeswoman refused to comment on the meeting or the committee’s feelings toward the provision.

The committee received ideas for the pilots from at least two industry associations.

The IT Alliance for Public Sector and the Coalition for Government Procurement submitted responses.

The CGP made their comments public, while Federal News Radio obtained a copy of ITAPS’ letter to SASC.

The ITAPS letter is interesting because the association, of which Amazon is a member, suggested IT and communications technology (ICT) not to be included in any pilot.

“ITAPS has long advocated for the purchase of ICT using commercial terms and conditions to the maximum extent practicable. It is unclear, however, whether the proposed marketplace platform would allow for such purchases,” Trey Hodgkins, the association’s senior vice president, wrote to the committee. “The language bars the government from requiring the direction/flow-down of additional terms and conditions on the platform itself, leaving the government with limited compliance capabilities, notwithstanding the fact that statutory requirements remain in place for the purchase of items. The provision’s current language shifts the compliance burden for many laws from the vendor to the government (while excluding the platform contractor from accountability for that which is being purchased), which has cost and administrative burden implications for the government as it compiles this information for the provider.”

What ITAPS is referring to is the assortment of statutory and policy regulations, including the Truth in Negotiations Act (TINA), the Berry amendment, the Buy American Act and small business rules such as the Rule of Two.

“This burden is especially the case with ICT, as there are a number of requirements regarding cybersecurity to safeguard the supply chain and prevent vulnerabilities from entering any given agency’s IT system,” Hodgkins wrote. “For example, there are strict requirements in place to ensure that counterfeit products do not enter the supply chain, but the provision is silent on how the portal vendor or the [GSA] will monitor compliance for this requirement. Thus, the government customer must still comply with these requirements, and the vendor selling on the portal could potentially be held liable for issues that may arise from their products interacting with counterfeit products.”

An ITAPS spokesman told Federal News Radio that the association had no further comment beyond the letter.

Meanwhile, the Coalition for Government Procurement’s suggestions focused more on the impact on the federal acquisition market.

“As it stands, Section 801 of the FY18 NDAA embodies the most consequential procurement policy changes in a generation,” the CGP wrote. “Considering the requirements of the e-commerce proposal, it is likely that only one or two providers would possess the capability and potential regulatory compliance (e.g., FedRAMP) necessary to participate. Thus, the proposal could result in monopoly or duopoly control over access to the federal market for commercial items. Monopolies and duopolies can, of course, lead to higher prices, limit competition, and create barriers to the federal market to new entrants and innovative technologies.”

The coalition stated the government spends about $52.9 billion a year on products using commercial item acquisition procedures, thus giving the commercial marketplace vendors access to a huge revenue stream.

“Assuming the commercial e-commerce provider charged a 10 percent fee to suppliers, the contract(s) proposed under Section 801 would have an estimated value of between $5.29 billion and $5.88 billion annually, which could make the e-commerce provider(s) one of the top 20 largest contractors in the federal market, without having to have gone through a full and open competition, consistent with the Competition in Contracting Act (CICA),” the coalition stated.

The CGP offered 12 suggestions lawmakers and GSA should consider for launching any pilot. These include identifying long-standing procurement policies that could be waived, identify metrics to measure the direct and indirect costs to determine the total acquisition cost and define how all pilot transactions will be handled.

CGP also provided five additional suggestions for how the pilot could work. These range from limiting the amount bought from the commercial marketplaces to $10,000 per transaction, asking GSA’s 18F organization to test in parallel other e-commerce solutions in and out of government and to evaluate multiple online commercial marketplaces on an equal basis.

The industry source said there’s a pretty good chance some sort of pilot will come from the NDAA.

“I expect this issue to be elevated to the big four — the chairman and ranking members of the House and Senate committees — to be solved,” the source said. “There is a reason why the House made it Section 801 of the NDAA, the first section of the acquisition reform efforts.”

It’s also unclear how much support there is from the Trump administration. In the statement of administration policy, the White House doesn’t mention any support for or unhappiness with the provision.

Lesley Field, acting administrator at the Office of Federal Procurement Policy, mentioned it at the Professional Services Council Vision Conference on Nov. 2, saying the administration has an “appetite” for bold ideas, and is “looking for new ways of buying things, whether it’s through an online marketplace or other things that were suggested by Congress. The federal marketplace is changing so quickly.”

That seems to signal the administration would support at least testing the commercial online marketplace concept, leaving GSA and others to get ready for the beginnings of a major acquisition transformation.

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