GSA Issues Notice Regarding Commercial e-Commerce Portals Under NDAA Section 846
Government Contracts Update
Date: December 19, 2017
On December 15, 2017, the U.S. General Services Administration (GSA) issued a notice announcing a public meeting and request for information concerning Section 846 of the National Defense Authorization Act (NDAA) for Fiscal Year 2018, Procurement Through Commercial e-Commerce Portals. Section 846 has been dubbed the “Amazon amendment” because it will permit the Department of Defense and other agencies to procure commercial products through commercial online portals. GSA issued this notice just three days after President Trump signed the 2018 NDAA into law at a White House ceremony. The notice states that GSA and the Office of Management and Budget (OMB) are “interested in conducting an ongoing dialogue with industry about Section 846” and “the dialogue begins with this public notice and request for comment.”
An implementation plan is due to Congress within 90 days of enactment, and GSA is providing external stakeholders the opportunity to provide input. GSA and OMB are also hosting a modified town-hall style public meeting on January 9, 2018, to facilitate their work on the implementation plan. Information on submission of comments and participation in the public meeting can be found in the GSA notice.
Interested parties can attend the meeting in person at GSA Central Office or virtually through GSA’s internet meeting platform, GSA Interact. Comments must be submitted by January 16, 2018 to be taken into account in the drafting of the implementation plan. Further information about the public meeting can be found on the GSA Interact site.
NDAA Section 846, Procurement Through Commercial e-Commerce Portals, directs the GSA Administrator to establish a program to procure commercial products through commercial e-commerce portals. Industry members expect that NDAA Section 846 will provide DoD and civilian agencies with a new alternative to existing GSA procurement vehicles for commercial items. The notice states that “for decades, GSA has provided access to commercial products through a number of channels including GSA Advantage!, GSA eBuy, GSA Global Supply, and the Federal Supply Schedules.” Further, “GSA has long been focused on improving the acquisition of commercial items” and “today, the best available technology [for procurement] includes commercial e-commerce portals.” According to the notice, the government market for commercial products is estimated to be greater than $50 billion annually.
Section 846 instructs the Director of OMB, in consultation with the GSA Administrator and the heads of other relevant departments and agencies, to carry out the program through various implementation phases. Phase I requires, within 90 days of the NDAA’s enactment, an implementation plan and schedule for carrying out the program, including a discussion and recommendations regarding whether any changes to, or exemptions from, procurement laws are necessary for effective implementation.
The notice states, “As a first step, GSA and OMB are seeking feedback from outside stakeholders on initial ideas for general program design and buying practices and, in that context, whether existing laws, Executive Orders, policies or other requirements may hinder effective implementation of the program.” To facilitate comment submission, the notice lists questions from GSA and OMB grouped around three focus areas: “program design, business practices, and implementation.” At the town-hall meeting, GSA intends to organize panel discussions around these topic areas.
Summary of Section 846
NDAA Section 846 provides the framework through which GSA and OMB will implement the new commercial e-commerce portals. We provide below a summary of its most significant provisions.
Multiple Contracts with Multiple Portal Providers
Under paragraph (a), Establishment of Program, the GSA Administrator must establish a program “to procure commercial products through commercial e-commerce portals for purposes of enhancing competition, expediting procurement, enabling market research, and ensuring reasonable pricing of commercial products.” The Administrator must use multiple contracts with multiple commercial e-commerce portal providers and design the program to be implemented in phases, with the objective of enabling government-wide use of the e-commerce portals.
Phased Approach to Implementation
Under paragraph (c), Implementation and Reporting Requirements, the Director of OMB, in consultation with the GSA Administrator and the heads of other agencies, must carry out several implementation phases. Phase I, Implementation Plan, requires, not later than 90 days after the enactment of the NDAA, an implementation plan and schedule for carrying out the program. GSA has initiated this phase with its December 15, 2017 notice.
Phase II, Market Analysis and Consultation, requires, not later than one year after the date of the submission of the implementation plan, recommendations for any changes to, or exemptions from, laws necessary for effective implementation. Phase III, Program Implementation Guidance, requires, not later than two years after the date of the submission of the implementation plan, guidance to implement and govern the use of the program, including protocols for oversight of procurement through the program and compliance with laws pertaining to suppliers, products and related data. There will also be additional implementation phases that will include a selection of agencies to participate and the award of contracts to multiple commercial e-commerce portal providers.
Adaptation to Existing e-Commerce Practices
Under paragraph (d), Considerations for Commercial e-Commerce Portals, the GSA Administrator must consider commercial e-commerce portals for use under the program that are “widely used in the private sector and have or can be configured to have features that facilitate the execution of program objectives, including features related to supplier and product selection that are frequently updated, an assortment of product and supplier reviews, invoicing payment, and customer service.” Under paragraph (g), Use of Commercial Practices and Standard Terms and Conditions, a procurement of a product through a commercial e-commerce portal “shall be made, to the maximum extent practicable, under the standard terms and conditions of the portal relating to purchasing on the portal.”
These provisions indicate a congressional intent for the government to adapt to existing e-commerce practices and standard commercial terms and conditions. The Joint Explanatory Statement of the conference committee stated, “The conferees encourage the Administrator, General Services, 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. Pursuant to a diligent review of existing law and regulation, the conferees direct the Administrator to be judicious in requesting exceptions.”
Role of Simplified Acquisition Threshold
Under paragraph (i), Simplified Acquisition Threshold, a procurement through a commercial e-commerce portal “shall not exceed the simplified acquisition threshold in section 134 of title 41, United States Code.” The December 15, 2017 GSA notice states that “Section 846 envisions that the program would be available to acquisitions under the simplified acquisition threshold (SAT), which pursuant to NDAA … will be $250,000.” Section 805 of the NDAA increases the SAT from $100,000 to $250,000. The Joint Explanatory Statement of the NDAA conference committee demonstrates that this limit to the use of e-commerce portals could change in the future, given that the conference stated this provision “limits initial implementation to procurement of items in contract amounts below the [SAT]” (emphasis added).
Role of U.S. Government Accountability Office
Under paragraph (j), Comptroller General Assessments, not later than 90 days after the Director of OMB submits the implementation plan to Congress, the U.S. Comptroller General must submit to Congress an assessment of the plan. Thus, GAO will weigh in within six months after enactment. The Comptroller General must also submit a report to Congress on implementation within three years after the first contract with a commercial e-commerce portal provider is awarded.
Definitions of Portal and Product
Paragraph (k), Definitions, includes the following definitions:
- “The term ‘commercial e-commerce portal’ means a commercial solution providing for the purchase of commercial products aggregated, distributed, sold, or manufactured via an online portal. The term does not include an online portal managed by the Government for, or predominantly for use by, Government agencies.”
- “The term ‘commercial product’ means a commercially available off-the-shelf item, as defined in section 104 of title 41, United States Code, except the term does not include services.”
Additional NDAA Provisions Focusing on Commercial Items
Section 846 is part of a broader congressional push toward greater use of commercial items. The NDAA’s Title VIII, Acquisition Policy, Acquisition Management, and Related Matters, includes Subtitle E, Provisions Relating to Commercial Items. These include further reforms for commercial item procurement.
For example, Section 848, Commercial Item Determinations, requires that a contract for an item acquired using commercial item procedures under part 12 of the Federal Acquisition Regulation serves as a prior commercial item determination with respect to future procurements. Section 849, Review of Regulations on Commercial Items, signals future simplification of DoD regulatory requirements that apply to commercial items and COTS items. Section 850, Training in Commercial Items Procurement, requires the president of the Defense Acquisition University to establish a comprehensive training program on FAR part 12, which covers commercial items.
NDAA Signals Shift in Favor of Commercial Items
These provisions signal congressional intent to support the DoD’s use of commercial item procurements and to reduce the regulatory burdens on industry. Combined with Section 846’s embrace of e-commerce portals, the 2018 NDAA signals a shift in favor of commercial items that is likely to continue to be supported through future congressional, administration and agency actions.
FOR MORE INFORMATION
For more information, please contact:
Joseph R. Berger
Francis E. Purcell, Jr.
*Ray is not admitted to practice in the District of Columbia; he is admitted only in California and Virginia. His practice is supervised by principals of the firm.
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