This week, the Coalition for Government Procurement hosted a forum entitled, “The $50 Billion e-Commerce Question: Section 846 Implementation Plan — Next Steps.” The forum kicked-off with remarks by Federal Acquisition Service Commissioner Alan Thomas followed by General Services Administration and Office of Management and Budget senior leaders discussing the implementation plan issued in March and next steps in the process. The government panel was followed by a panel of industry experts discussing the legal, compliance and policy issues highlighted in the implementation plan.
At the outset, we thank all the panelists and forum attendees. The discussion was engaging. Panelists and attendees provided thoughtful commentary and questions throughout the session, demonstrating the procurement community’s keen interest in e-commerce’s role in procurement modernization and what it means for government and industry.
The implementation plan, representing Phase 1 of the government’s efforts required under statute, was accomplished within the 90-day statutory deadline. It provides a roadmap and framework for ongoing examination of the key policy, operational and management challenges surrounding implementation of commercial e-commerce solutions in the federal space. It contains an implementation timeline for Section 846 beginning on page 10.
Phase 1 (90 days): Implementation plan and policy assessment (Completed)
Phase 2: (90 days + 1 year) Market Research & Consultation
Phase 3: (90 days + 2 years) Implementation Guidance
Phase 4: (by end of FY19) Potential Initial Rollout
Phase 5: (by end of FY20) Assess and Scale Rollout
During Phase 2 of the Section 846 implementation, GSA and OMB will be conducting market research and consultation with e-commerce providers to understand the commercial terms and conditions associated with different e-commerce models. GSA and OMB also will be consulting with agency stakeholders, including DoD, to understand government-unique requirements and to solicit feedback on the implementation approach. These activities will lead to additional Phase 2 efforts regarding the identification of appropriate product categories for purchase via e-commerce solutions, the development of change management strategies, the analysis of the impact on existing contracting programs and the development of a proof of concept. Phase 3 of the government’s effort will entail the development of implementation guidance; Phase 4 will be the potential initial rollout of the identified solutions; and Phase 5 will provide for an assessment of the initial rollout and rollout scaling.
As noted on page 8 of the implementation plan, ”[t]he central challenge to moving toward buying using commercial e-commerce portals is to find the balance between gaining commercial-level efficiency to satisfy requirements and reduce administrative costs, while keeping the necessary protections for maintaining integrity, fairness, openness and public policy objectives.” The answer(s) to this fundamental challenge will shape e-Procurement in the federal space over the next decade. Indeed, it has implications across a number of business and policy issues. Phase 2 provides an opportunity for the procurement community to explore this complex, multi-faceted challenge. In this regard, here are just some of the areas of exploration that should be considered:
What is the scope/definition of “competition?” The implementation plan identifies three main e-Commerce business models: (1) e-commerce model; (2) e-marketplace model; and (3) e-procurement model. [See page 6 of the Procurement Through Commercial E-Commerce Portals Implementation Plan for descriptions of the three models]. Is competition measured/defined as occurring within or among/across each model, or both? For example, the implementation plan cites “increased competition” within the e-marketplace; yet, the “market” for/among e-marketplace platforms is concentrated and may be the least competitive of the three models. As the Coalition has noted, some have questioned whether these platforms meet the level of existing GSA program performance. Along these lines, it would be helpful for GSA to clarify publicly that the implementation plan’s language regarding the phased implementation of e-commerce in no way should be interpreted as preferring or focusing on the e-marketplace model.
Does the proposed increase of the Micro-Purchase Threshold (MPT) to $25,000 for purchases made through the e-commerce platforms strike the appropriate balance between streamlining and necessary government requirements? Purchases below the MPT are not subject to a series of government-unique requirements, on which, stakeholders across the procurement community likely will weigh-in. For example, purchases below the MPT are not subject to the Buy American Act, the Trade Agreements Act, and the Berry Amendment. They also are not subject to small business rules. In this context, government and industry will need to assess the value, tradeoffs, and implications of waiving these requirements.
Given that the increase in the MPT will only be for purchases pursuant to Section 846 portals, will the result lead to “parallel universes” of commercial purchasing, and if so, what will be the impact of those parallel universes? The community needs to understand how pre-existing commercial contracting programs, where contracts include government requirements, like TAA compliance, socio-economic requirements, and protections from counterfeit products, will be impacted by new channels where such requirements do not apply.
In assessing/reviewing commercial terms and conditions, what is the impact of fees, commissions, or other market-affecting terms and conditions across the various models, and how do they affect the overarching best interests of the government? Some terms and conditions, such as the surrender of vendors’ transactional data to portal providers would appear to be antithetical to the statute and otherwise create potential barriers to entry to the federal market.
How do large commercial entities purchase? Commercial management and procurement best practices for commercial firms need to be understood. Similarly, the government should know what role commercial e-commerce providers/solutions play in supporting institutional purchasing.
What is the impact on pre-existing contract programs? For example, regarding the Multiple Award Schedule (MAS) program, there were over 1.1 million orders placed on GSA Advantage during FY 17. Moreover, the recent increase in the MPT to $10,000 for civilian agencies is a powerful, under-the-radar streamlining initiative for pre-existing multiple award IDIQ contracts, like the MAS program. For orders via pre-existing multiple award IDIQs, this reform provides government customers with the best of both worlds, that is, streamlined ordering combined and ongoing compliance with government requirements, like the TAA. The remaining challenge is streamlining the upfront contract award process, and it remains to be seen whether Section 846 can drive this next reform.
GSA and OMB are to be commended for the collaborative approach taken with the procurement community in this effort. Coalition members look forward to working with all stakeholders as Phase 2 of this effort begins.
Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.