Acquisition

Feds want to buy off Amazon. But will that clash with acquisition regulations?

With the e-commerce platforms of today — most notably Amazon, but others too —consumers can search, purchase and receive almost any needed item in a matter of days. It’s a level of convenience that looks particularly desirable in the shadow of an often long and expensive government acquisition process.

Presumably that’s why the General Services Administration and Office of Management and Budget released an initial plan for bringing such e-commerce platforms into government agencies March 16, 2018. The plan was mandated under Section 846 of the National Defense Authorization Act, nicknamed the “Amazon provision,” for its clear focus on large-scale e-commerce providers.

But integrating such platforms is easier said than done, as government contracting requirements and policies, notably those for small and veteran-owned businesses, can run afoul of e-commerce platforms originally designed for commercial use.

One such requirement, known as AbilityOne, mandates that government agencies purchase certain products from certified providers that employ blind and severely handicapped people. Under AbilityOne, agencies are prohibited from buying any product, such as pens and other office supplies, that is deemed “essentially the same” as an AbilityOne product.

And while AbilityOne products are already sold on e-commerce platforms such as Amazon and Staples, according to Larry Allen, president of Allen Federal Business Partners, those platforms, as they currently exist in the commercial sector, aren’t set up to actively keep agencies from purchasing products prohibited by AbilityOne.

“What is there to prevent a government buyer from looking at the AbilityOne site, [seeing] that Amazon has maybe put the Ability One items at the top, but then scrolling down and actually making a purchase of other items, which would be in conflict with procurement rules?” said Allen.

Kevin Lynch, president and CEO of the National Industries for the Blind, a national nonprofit agency of AbilityOne, said that program-certified products often face difficulties on the commercial market, because pricing simply cannot compete with cheaper products made overseas.

The AbilityOne program is also not terribly well known, according to Allen, and some agencies could inadvertently purchase products through e-commerce platforms in defiance of regulations without ever realizing that they’re doing anything wrong.

According to both Allen and Lynch, while filters can be designed to remove any “essentially the same” products from any government search results, it shouldn’t fall to e-commerce providers to act as “procurement police.”

In a Jan. 16, 2018 comment on GSA’s e-commerce notice for public comment, Stephanie Lambert, vice president and associate general counsel for Staples, said that it was the responsibility of the provider to ensure compliance with acquisition requirements.

So how might that be accomplished?

According to the GSA and OMB implementation plan, unique government requirements such as AbilityOne, are part of the “important public-policy considerations, which GSA must fully examine” in the e-commerce implementation process, though what that examination will ultimately result in is unclear.

And while solutions to integrating government contracting requirements with e-commerce platforms will likely see greater discussion before the planned e-commerce rollout at the end of FY19, some agencies, such as AbilityOne itself, have already reached agreements with providers like Amazon.

Allen characterized these agreements as “jumping the gun” on the NDAA’s requirements, though Lynch said that his organization has had ongoing conversations with e-commerce platforms about the importance of government contracting preference programs.

“We’re very open to it and we’re very excited to work with companies like an Amazon, but we are also equally concerned that these companies understand that these programs exist, these are very important,” said Lynch. “We need to make sure that we don’t lose those opportunities for people who are blind or have significant disabilities because the government decided to go to a more expedited acquisition platform.”

Despite these concerns, e-commerce platforms do offer AbilityOne organizations the opportunity for added insight into how and when their products are selling in the government. Agencies can also see data on their own AbilityOne purchasing trends.

“Amazon Business makes it easy for customers to discover sellers with a wide range of diversity and quality credentials,” said Anne Rung, director of public sector for Amazon Business and former chief acquisition officer for OMB, and prior to that, GSA. “Customers can also create reports to track this spend on a daily, weekly or monthly basis, making it easier to monitor spend amongst these suppliers. While we are just getting started, and will continue innovating on behalf of customers, our general approach is that technology should not be a replacement for sound procurement judgment. Rather, technology should make it easier for executives to implement and monitor their policies and requirements.”

There are also questions over whether e-commerce portals actually deliver on the promise of faster service and lower pricing in government.

A December 2017 report published by the Naval Postgraduate School comparing the GSA Advantage program to Amazon Business found that prices were lower on GSA Advantage more than 80 percent of the time.

The report also found that, on Amazon Business, the average shipping time was 9.25 days and the average shipping cost was $2.33, while for GSA Advantage, the average shipping time was 5.45 days and shipping was free.

Amazon Business, however, did have an advantage in offering product ratings, not using minimum order requirements and receiving higher customer satisfaction scores in the report’s survey of Air Force government purchase card holders.

According to Allen, it is important to question how those benefits weigh against the difficulties of integrating an e-commerce platform with government acquisition.

“When you’re talking about e-commerce I think GSA and OMB are rightly taking their time in coming up with answers to these questions, so that if they do move forward, they do it in such a way where at least some of these issues are addressed,” said Allen.

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