The National Defense Authorization Act for Fiscal Year 2018 passed the Senate by voice vote last Thursday, and awaits the president’s signature. The House version of the bill included several acquisition reforms that comprised the third was of reforms championed by the House Armed Services Committee chairman, Rep. Mac Thornberry (R-Tex.). Among these was a provision requiring the government to purchase commercial items, those things that are not defense-specific and are available off-the-shelf, through an e-commerce portal.
Triumph of the “Amazon Bill”
The provision has become known as the “Amazon bill,” since Thornberry talked-up the capabilities Amazon.com and other online merchants when discussing his vision for how the government buys everyday items. ““Everybody understands what a difference Amazon has made,” Thornberry said early in the process.
Currently, these items are purchased through the General Services Administration’s “schedules,” which GSA describes as “long-term governmentwide contracts with commercial firms to provide access to millions of commercial products and services at volume discount pricing.” The NDAA would upend that system, which critics like Thornberry view as cumbersome, outdated, and inefficient. The bill requires the use of multiple online vendors “that are widely used in the private sector,” to be “implemented in phases.”
Those phases are to be included in an implementation plan completed by the Office of Management and Budget within 90 days of enactment, and a review of that plan by the Comptroller General’s office within 90 days of that plan’s submission. This will delay, but not stop, the implementation of the program.
A reprieve for another commercial procurement method
A previously used method of procuring commercial items, the reverse auction, had been endangered by Thornberry’s measure. In a reverse auction, a government office announces its need to a certain quantity of a commercial item, and using either the GSA’s reverse auction tool, or through commercial vendors like Vienna, Va.-based FedBid.com.
Reverse auction operate like a backwards eBay. Instead of multiple buyers competing to buy from one seller, with the price increasing until the auction ends, in a reverse auction multiple sellers compete amongst each other to offer a single buyer the best price. A fee is added to the transaction to pay the auction host.
Hundreds of government customers have used reverse auctions over the years to procure billions of dollars worth of commercial goods, and some services, at a savings over traditional procurement methods. Thornberry’s e-commerce proposal threatened that business, since it did not specify reverse auctions as an acceptable method of meeting the e-commerce requirements. The conference committee’s report does, however, contain an instruction that might carve out a niche for reverse auctions.
The committee urged the GSA “to resist the urge to make changes to the existing features, terms and conditions, and business models of available e-commerce portals, but rather demonstrate the government’s willingness to adapt the way it does business.” This could refer only to government portals like GSA Advantage and the Defense Logistics Agency’s FedMall, or it could mean that reverse auctions get some breathing room, too.
Daily Intel has asked the HASC for clarification on this point, but the committee staff has not yet responded.
