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Creating a Simple Online Marketplace

In the post below, Jeff Koses, GSA Senior Procurement Executive, discusses “impossible” things that GSA believes can be reality when it comes to the Commercial e-Commerce portal initiative.

 

In Through the Looking Glass, and What Alice Found There, Alice was encouraged to practice believing in the impossible.  When it comes to e-commerce portals, some have argued that GSA’s vision for the online marketplace – built around a more simplified and less expensive transactional experience for both buyers and sellers – is well intentioned but largely impossible. However, GSA believes our vision for the online marketplace is fully achievable and that some aspects require, like Alice, that we be willing to embrace new ideas and envision what could be possible.

 

Those who are skeptical of the online marketplace point to a trend involving commercial purchases. Almost 25 years ago, the Federal Acquisition Streamlining Act (FASA) created a statutory preference to adopt standard commercial practice to the maximum extent practicable in the purchase of commercial items. Despite this mandate, the Section 809 Panel has reported that the number of government-unique requirements in the Federal Acquisition Regulation (FAR) and Defense FAR Supplement applicable to these purchases has grown almost three-fold, from 57 in 1994 to more than 160 today. And, amazingly, the number of requirements applicable to commercial off-the-shelf (COTS) products – the most commercialized, market-tested items -- is even higher! Hardly a formula for simplification.

 

This understandably leads skeptics to argue, “why should anyone believe the government’s acquisition ecosystem is capable of supporting easy, commercial-style online shopping in the face of a tide that has been steadily moving the federal market in exactly the opposite direction?”. However, there are several promising countervailing forces that can help reverse the path and lead us to a simplified and more affordable online marketplace.

 

First is the President’s Management Agenda (PMA), the Administration’s long-term vision for modernizing the federal government, focus on effectively using data and providing the tools for our workforce to better serve our country.  As OMB’s Deputy Director for Management recently testified before the House Oversight and Government Reform Committee, “It’s not uncommon to see a large company change and realign its business model to respond to evolving technologies and customer needs.  Even though its mission and priorities are different, the Federal government should be similarly responsive to changing customer expectations and technology-enabled opportunities to enhance mission delivery.” The PMA empowers GSA and other buying agencies to rethink and refresh acquisition rules and practices to leverage modern technology and to appropriately reflect the relatively limited risk that most small dollar transactions pose and avoid complicated business processes not tied to achieving value for the taxpayer.  We are committed to seizing the opportunity that the PMA provides.

 

Second, E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, has created a strong mandate to reduce the cost and complexity of existing regulations.  Its direction has enabled GSA to think more broadly and thoughtfully about the various types of compliance costs that contractors incur doing business with the government and, in the context of commercial item purchasing, whether they are consistent with customary commercial practice.  

 

Third, there is a deep appetite for acquisition reform, streamlining, and simplification across the acquisition community.  In recent years, the Office of Federal Procurement Policy has pushed the creation of agency Acquisition Innovation Advocates, Congress has advanced a number of bills to reform the process, and a number of agencies have embraced piloting new methods and approaches to bettering their acquisitions.

 

Last month, GSA issued two RFIs – one focused on portal providers and the other focused on suppliers – to figure out which of the clauses and provisions currently applied to commercial buys would be considered “standard terms and conditions” by portal providers and sellers.  GSA’s hypothesis is that not all the normal FAR clauses and provisions should apply to this program. But we need help from portal providers and sellers to determine which of the existing FAR clauses and provisions are inconsistent with standard commercial practice and, where possible, to provide information on the cost of the burden created by the non-commercial requirement.  Equally important, we need to understand what clauses (whether or not presently in the FAR) should be included in contractual transactions conducted under this program to further the taxpayer’s ability to get best value. This input is critical to our ability to make the vision of a less costly transactional relationship a reality, rather than an impossibility.

 

To facilitate analysis of existing FAR clauses GSA will employ a multi-pronged test, based on an analysis rooted in 41 USC 1906-07 (addressing the inapplicability of laws to commercial item and COTS acquisitions) and 41 USC 3307(e) (addressing clauses to be applied to commercial acquisitions).

 

For portal provider contracts, we will apply a four-question test.  If the answer to any of the questions is “yes” then the clause or provision will be applied.  

  1. Does the FAR clause/provision come from appropriation law?
  2. Does the FAR Clause/provision contain criminal or civil penalties?
  3. Does the specific statute explicitly state it applies?
  4. Is the FAR clauses/provision consistent with current standard commercial practice for the e-commerce industry?

Based on our preliminary analysis, only a handful of existing FAR clauses are pulled in based on the first two questions. Further, we found no FAR clauses where the statute explicitly states it applies.  That leaves us with the fourth question, which requires your input to inform our analysis. If a clause or provision is consistent with the current standard commercial practices, it should be included in the contracts.  

 

Next, we turn to suppliers interested in selling COTS through portals.  Here, we will ask six questions, reflective of the analysis called for in 41 USC 1907:  

  1. Does the FAR clause/provision come from appropriation law?
  2. Is it required to implement Section 15 of the Small Business Act?
  3. Is it needed to implement a bid protest procedure?
  4. Does it contain civil or criminal penalties?
  5. Does the specific statute explicitly state it applies? (no FAR clauses met this requirement)
  6. Is it consistent with the current commercial practice for the e-commerce industry?

For the same reasons explained above, contractor input on question 6 will be critical. We need to hear from you to get this right!

 

We’ve also asked a further question of whether there are public policy reasons why a clause/provision should still be included, even if not technically required. That question will help us ensure that we’ve hit the appropriate balance in the commercial e-commerce portals program.

 

In short, responses to the current RFIs are important in helping us understand more about how the markets operate.  They’ll also help us perform the market research for the phase II report directed by Congress. They’ll help us make decisions about program design.  We’ll consider your responses in finalizing which clauses/provisions apply. While there will be further opportunities to continue the conversation through these blogs, additional meetings, and other communication strategies, we hope you will take the opportunity to provide feedback to these RFIs.  

 

Finally, as part of phase I and phase II deliverables, Congress invited GSA to include recommendations for changes in law.  With the phase I report, GSA proposed statutory changes necessary to stand up the proof of concept. Some of these changes are contained in the House version of the National Defense Authorization Act (NDAA) for fiscal year 2019.  Within the RFIs, GSA has also asked industry for thoughts about additional legislative changes which may be necessary to make the commercial e-commerce portal program successful. With the phase II report, we are open to making additional legislative proposals and are committed to working with Congress to make it happen.  We’re anxious to hear from you on this point, as well, either through your RFI or even through this Interact site.

 

Section 846 is an inflection point, but all stakeholders must do their part.  If this happens, the acquisition community, unlike Alice in Wonderland, can overcome the stigma of impossibility and realize the vision of simpler and less costly transactions.

 

Jeff A. Koses

Senior Procurement Executive

U.S. General Services Administration

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