Industry Talks, Government Listens on Pentagon's E-Commerce Platform

Industry leaders warn over-regulating the Defense Department’s ecommerce platform could keep much of the $53 billion the Pentagon spends annually on commercial products in the hands of a small group of massive corporations.

But the General Services Administration should also provide enough oversight to ensure the portal serves the government’s priorities and prevents teenage Army privates from spending taxpayer money on, say, “marijuana muffins.”

On Tuesday GSA hosted a public discussion with representatives from major online retailers to figure out how to develop the platform to uphold federal contract requirements while incentivizing more companies to do business with government. Panelists stressed agencies should work to get as close to commercial buying practices as possible without sacrificing their needs.

The ecommerce platform stems from the Defense Acquisition Streamlining and Transparency Act, a section of the National Defense Authorization Act that some dubbed the “Amazon amendment.” Because the original legislation would have granted a monopoly to a single e-commerce provider, critics claimed it was written to favor the Seattle-based retail titan.

Lawmakers ultimately passed a version of the bill that requires a phased rollout with multiple contracts and e-commerce providers. Still, some have lingering concerns that small companies will be excluded from the federal marketplace.

GSA plans to begin developing the portal in March and have market research completed within a year, said Laura Stanton, assistant commissioner of the Office of Strategy Management in the Federal Acquisition Service. The agency is scheduled to roll out guidance for implementing the portal within two years, she said.

GSA officials declined to take questions during the event, and said they instead wanted to focus on gathering feedback from private-sector leaders.

Brock Lyle, associate general counsel to Overstock.com, said the project will limit federal business “to retailers who can be all things to all people” unless proper steps are taken. The government will find itself with very few options if it only considers retailers that can sell “bottled water, treadmills and MRI equipment” at the same time, he said.

Creating relatively standard requirements for contractors not only opens the federal marketplace to more companies, Lyle said, but the increased competition would ensure the government is getting the most bang for its buck. If groups aren’t competing with one another for contracts, he warned, they can get away with charging more for lower quality products.

Rob Bohn, senior corporate counsel to Amazon Business, also advocated for GSA to stick as close as possible to the usual requirements for commercial contracts when cutting deals with companies. Doing so would “promote transparency, efficiency and competition” allow “nontraditional vendors to compete in the marketplace,” he said.

While they pushed GSA to mirror commercial buying practices, panelists recognized that government has different needs than a private company and standard conditions may not always suffice.

Anytime it comes to taxpayer dollars, “there is going to be scrutiny on how this money is spent,” said former congressman Todd Tiahrt, who now represents the National Association for the Employment of People Who Are Blind. He said software that sifts out non-compliant products from the portal could increase the number of vendors while maintaining accountability for officials’ online spending.

Overall, panelists agreed striking a balance between the efficiency and oversight will be central to designing an ecommerce platform for any agency.

“The more regulations, the more rules, the more impediments you place on commerce, the harder it’s going to be for small businesses, large businesses … to compete,” Lyle said. “Per product competition as opposed to per vendor competition, that’s one way to ensure the government gets the best deal. The more you allow specialization, the more companies you will see.”