The move to e-Commerce solutions envisioned by Section 846 of the Fiscal Year 2018 National Defense Authorization Act (NDAA) represents the most consequential procurement policy change in a generation.[1] As we approach the deadline for the General Services Administration’s (GSA) Phase II report, this week’s blog examines the agency’s unique opportunity to leverage e-Commerce to increase best value deliverables, foster economic growth, and expand Federal customer’s access to commercial solutions.
In recent forums, GSA has indicated that the principle value of its Multiple Award Schedules (MAS) program is providing Federal customers with ready access to compliant products at “competitive” prices. Indeed, several recent studies confirmed the program’s effectiveness through comparisons with alternative commercial platforms. These studies noted that GSA provides significantly lower pricing and faster and cheaper shipping for its customers than the commercial alternatives to which they are compared.[2], [3], [4] Notwithstanding the many demonstrated benefits of the MAS program, the program’s e-Commerce platform, GSA Advantage!, does not enjoy favorable reviews for its user interface. Consequently, the program appears to be hindering GSA from maximizing the potential of the MAS program. By investing in resources and leveraging commercial capabilities to improve the usability of GSA Advantage!, GSA could create a significant opportunity for economic growth and increased access to best-value solutions for Federal customers.
Another significant opportunity for GSA to leverage e-Commerce would be expansion of the scope of its Section 846 pilot program. As you may recall, in its Phase I report, GSA identified three potential types of e-Commerce portal models:
- e-Commerce Model
- e-Marketplace Model
- e-Procurement Model
In its recent Request for Information (RFI), GSA restricted its proposed pilot to only one of these portal provider models, the so-called “e-Marketplace model.” According to GSA, the e-Marketplace model may offer the portal provider’s proprietary products and products from third-party vendors, or in some cases only the latter. By artificially and unilaterally narrowing the focus of the Section 846 pilot, this approach has generated concerns regarding its consistency with statutory requirements and its impact on competition in the Federal market. Moreover, by not fully exploring all commercial e-Commerce solutions, GSA risks restricting opportunities for platforms that do not fall within the e-Marketplace model. Specifically, pursuant to Section 846, GSA is responsible for establishing the protocols and rules governing the use of commercial e-Commerce platforms. By narrowing its focus to only one model in the commercial market, GSA’s approach raises significant questions about whether the agency can appropriately establish protocols and rules that would accommodate the unique aspects of the commercial e-Commerce platforms that are not included within the e-Marketplace model.
GSA could create further opportunities by utilizing the terms and conditions of the Section 846 pilot’s contracts to address potential inconsistencies between commercial platforms and Federal law and/or policy. For instance, Section 846, as well as Section 838 of the FY 2019 NDAA, provide specific protections related to the use of data, including an unequivocal prohibition on portal providers using supplier transaction data for their own competitive purposes. For suppliers, these protections are critically important as this data could yield a significant advantage for any portal provider that also offers its own products within its portal.
In addition, as noted in a prior blog, GSA must understand and address the impact that fees, commissions, or other market-affecting terms and conditions have on the over-arching best interests of the government. Not only do these fees risk negative price impacts, but they also could discourage competition, small business participation, and government access to innovative solutions. Moreover, potential inconsistencies between the terms and conditions of portal providers and Federal law and/or policy, such as Most Favored Nation (MFN) pricing provisions, risk limiting opportunities by reducing competition, increasing prices, and discouraging participation in the Federal market for small, medium, and large businesses. Thus, it would be an unfortunate twist if, what began as an effort to increase government access to innovation, resulted in a decrease in such access.
In summary, as we approach the release of the Phase II report, GSA’s community of industry partners will be eagerly watching to see if the agency actually will leverage e-Commerce to maximize opportunities for economic growth, best-value deliverables, and customer access to e-GSA commercial solutions.
[1] Pursuant to of Section 846 of the FY 2018 NDAA, GSA is responsible for establishing and managing an e-Commerce portal program described under the statute. In March 2018, GSA, in consultation with the Office of Management and Budget (OMB), issued the Section 846 implementation plan, “Procurement Through Commercial E-Commerce Portals.” The implementation plan is the end-product of Phase I of GSA’s Section 846 implementation efforts which focused on information gathering and analysis. Currently, GSA is in Phase II of Section 846 implementation focused on market research that will support the agency’s Phase III efforts to develop and implement e-Commerce procurement guidance. GSA’s Phase II report is expected to be released in March 2019.