Photographer: Chris Ratcliffe/Bloomberg

HASC’s NDAA would require Amazon-like online marketplaces

July 14, 2017 Cameron Leuthy

This analysis was first available to Bloomberg Government subscribers. 

Government buying of commercial products may become more like shopping on Amazon.com than the traditional procurement process, if the House Armed Services Committee has its way.

HASC’s version of the fiscal 2018 National Defense Authorization Act would require, among dozens of additional provisions affecting contractors, that the General Services Administration set up “more than one’’ online marketplace.

The Details

The bill would require GSA to use standard commercial terms and conditions of other online marketplaces rather than government-specific terms and conditions. GSA would have to update the online marketplaces for new suppliers, and track vendors and products for regulatory and legal compliance.

The bill also directs the Defense Department to use the online marketplace. Contract recipients would serve as aggregators for multiple vendors. The criteria for the online marketplaces require that they:

  • Provide dynamic selection, in which suppliers and products may be frequently updated, and dynamic pricing, in which product prices may be frequently updated;
  • Enable offers from multiple suppliers on the same or similar products to be sorted or filtered based on product and shipping price, delivery date, and reviews of suppliers or products; and
  • Provide consolidated invoicing, payment, and customer service functions for all transactions.

Industry Pushback

An online marketplace could potentially compete with GSA schedules, leading to concerns from industry.

When the bill was introduced in May, some saw the provision as a “big shot” at the GSA schedules, which are meant to be “long-term government-wide contracts with commercial firms to provide access to millions of commercial products and services at volume discount pricing.”

The Coalition for Government Procurement voiced concerns about the number of online marketplaces in response to similar language in a stand-alone acquisition streamlining bill, H.R. 2511.

H.R. 2511 “risks vesting enormous market power and control with a private firm (or a small number of firms) to exploit COTS vendors’ efforts to access the government market or the commercial market,” the industry group said. CGP said such market power could hurt competition and innovation, increasing the cost to the government and limiting its choices.

Examples of GSA schedules that could see an impact are furniture($425.6 million in total fiscal 2016 federal contract obligations), tools, hardware and appliances ($179.3 million), office products/supplies & services ($69.8 million).

Bloomberg Government subscribers can read all BGOV federal market analyses here.

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