The General Services Administration estimates the size of the federal market for commercial products to be about $50 billion a year. Manufacturers and distributors of commercial products have seen GSA’s multiple award schedule contracts as a good way to way to access federal customers. But a GSA schedule contract does not guarantee sales and the process of obtaining and adhering to such a contract presents its own headaches.
Soon there will be a better way.
Section 846 of the National Defense Authorization Act for FY 2018 establishes a program that will allow federal agencies to purchase commercially available off-the-shelf (COTS) items through commercial e-commerce portals that are currently available only to the private sector. As long as the procurement is under the new $250,000 Simplified Acquisition Threshold, COTS products (not services) will be available for purchase Government-wide, presumably without additional competition and without a lengthy list of FAR clauses incorporated by reference.
Under the program, GSA will enter into “multiple contracts” with “multiple e-commerce portal providers.” To the maximum extent possible, the Government will adopt and adhere to standard terms and conditions established by the e-commerce portals themselves.
The commercial e-commerce portals program will take some time to set up, but it is already in the early phases of implementation. On December 15, 2017, GSA and OMB issued a request for public comment, specifically seeking input on how the e-commerce portals program should be designed, how e-commerce portals are used in the private sector, and how existing acquisition regulations should be modified. See 82 Fed. Reg. 59619 (Dec. 15, 2017). The types of issues that GSA and OMB will be considering in this first phase can be seen in the questions presented in the notice:
- What are the standard terms and conditions relating to purchasing through the portal? Which of these standard terms and conditions would need to change for Federal Government buying? What relief from applicable laws, Executive Orders, regulations, and policies is necessary for portal providers to want to enter this marketplace?
- What is the commercial practice for the privity of contract relationship between e-commerce portal providers, sellers through portal providers, and buyers? Who should have privity of contract under the program? Should the portal provider have privity of contract with the sellers? Should the Government buyer have privity of contract with the seller through the portal provider?
- What is the commercial practice of e-commerce portal providers for monitoring compliance with applicable laws/regulations and supply chain risk management of sellers through the portal? To the extent that purchases made through the portal are subject to certain Government-unique requirements, who should be responsible for ensuring compliance (e.g., the platform provider, the seller, the government buyer, other)?
- What, if any, adjustments should be made to existing requirements associated with small businesses, socio-economic programs, and mandatory sources?
- If the program were only to apply core commercial item clauses in contracts with e-commerce portal providers and suppliers who sell through the portal, could the program operate successfully in part or in full? If not, what additional changes are needed to statutes, Executive Orders, regulations, policies, and other guidance and tools, to make the program successful?
On January 9, 2018, GSA and OMB will be holding a town-hall-style public meeting to solicit “viewpoints and information presented by different interested parties.” A January 16, 2018 deadline has been set for the submission of written comments. We’ll be interested to see what developments come from the meeting and from the written comments that may be submitted.
The quick turnaround is a function of the statute. The first deadline is March 12, 2018. By that date, OMB is required to give Congress an implementation plan and schedule, including its first set of recommendations as to changes and exemptions from “policies, procedures, requirements, or restrictions” that would normally apply to federal procurements.
The actual implementation will likely take somewhat longer. The statute requires OMB to submit a market analysis and an assessment of the technical issues presented by the Government’s use of e-commerce portals by March 12, 2019. Specific guidance on the parameters of the e-commerce program is due a year later, or March 12, 2020.