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GSA’s Section 846 Public Meeting: An Informative and Productive Framing of Phase II Implementation

Yesterday, the General Services Administration (GSA) and the Office of Management and Budget (OMB) hosted their initial Phase II Public Meeting, as required under Section 846 of the National Defense Authorization Act for FY2018, which established a process for the implementation of e-commerce portals for use by federal agencies to purchase select COTS products (stakeholders should look for a second Public Meeting in the Fall). You may recall that this Phase II process contemplates a market research effort by GSA to gather information and to conduct analysis necessary to support the Phase III development of implementation guidance for procurement through e-Commerce portals. In the run up to the public meeting, on June 15th, GSA issued two Requests for Information (RFIs): an RFI from Suppliers Selling On Commercial E-Commerce Portals, and an RFI from Platform Providers of Commercial e-Commerce Portals. The RFIs seek information and data from these respective groups regarding commercial practices and terms and conditions, as well as feedback on the applicability/relevance and impact of government unique requirements in the context of the commercial e-Commerce market. Responses to the RFIs are due July 20th, and the Coalition will be seeking member input/feedback on the RFI responses through our Section 846 Working Group.

At the outset, the government deserves to be recognized for facilitating an impactful, relevant event for stakeholders in this community. The government presentations and industry panel were very thoughtful and very informative. The GSA/OMB panel provided insights and explanations surrounding its March 2018 Section 846 Implementation Plan (the Implementation Plan), and their presentations highlighted key areas of examination, including striking the right balance between government unique requirements and commercial terms and conditions. There was also a discussion regarding potential ordering procedures for use of the portals.

Much of the conversation focused on the Implementation Plan’s recommendation to increase the Micro-Purchase Threshold (MPT) to $25,000 for transaction through the e-Commerce portals (the current MPT is $5,000 for DoD and $10,000 for Civilian Agencies). Interestingly, the Supplier RFI states, in part, that:

In GSA’s view, the nature of buying trough an e-commerce portal brings a significant new level of competition into the micro-purchase world. GSA proposed raising the micro-purchase threshold to $25,000. What benefits and disadvantages do you see in the higher threshold?  Would you recommend a higher threshold and, if so, what should it be? 

Understanding the impact of this significant change is vital to ensuring a balanced, open, and sound implementation of Section 846. As noted in previous blogs, this approach creates the potential for parallel procurement universes for commercial items, e.g. one channel where compliance with government requirements, like the Trade Agreements Act (TAA), is mandated, and another channel where no government-unique requirements apply, or where compliance is challenging. The Public Meeting discussion on this issue was quite substantive, and we look forward to further dialogue around the balance between fundamental, law-based policy and commercial practices, terms and conditions.

Significant discussion also took place around supply chain risk and counterfeit/gray market risks associated with the global supply chain, particularly with regarding to information technology and cyber security. In this regard, the Supplier RFI asks a series of questions regarding supply chain risk and counterfeit products, as does the Portal Provider RFI, but not in as robust a manner. We suggest that the significance of this issue requires that more detailed information than currently specified in the Supplier RFI should be sought from commercial portal provides on how they ensure the integrity of offerings through their sites.

There also was a discussion of data and the potential uses of data. It was gratifying to hear GSA/OMB state how seriously they took the statutory protections of transaction data, including the prohibition on portal providers using supplier transaction data for their own competitive purposes.

Finally, it was refreshing to hear the government’s commitment to the portal competition set forth under statute. In this regard, GSA said that multiple providers will be selected for this effort, and that, if it receives only one acceptable offer to provide an e-Commerce portal, it will cancel its solicitation and go back to the drawing board to develop an approach to yield multiple providers.

These are some initial thoughts and observations regarding the public meeting.  Although more work needs to be done to bring the program to fruition, GSA and OMB are to be commended for their transparency and engagement with all stakeholders. In the coming weeks the Coalition will provide additional thoughts on the opportunities and complexities of Section 846 implementation.

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