The federal government has met or exceeded its overall small business spending goal every year since 2013. Despite this achievement, the already low number of small businesses in the federal contracting market has decreased and the government continues to underutilize diverse businesses. Recognizing these shortcomings, the Biden administration has made the expansion of contracting opportunities for small and diverse businesses a centerpiece of its federal procurement policies.
E-marketplaces, such as those participating in the General Services Administration’s Commercial Platforms Initiative, or CPI, offers federal agencies an innovative, market-driven way to work with small and diverse businesses. The CPI provides agencies with access to three e-marketplaces—Amazon Business, Fisher Scientific and Overstock Government—for purchases of commercial off-the-shelf items below the micro-purchase threshold using government purchase cards. The e-marketplaces in the CPI are similar to their commercial counterparts, but as discussed below, offer additional advantages that are unique to the federal customer.
Since the CPI’s launch in August 2020, there has been significant agency interest in the program. In the program’s first year, participating agencies made tens of thousands of purchases from the three marketplaces, roughly a quarter of which were for personal protective equipment and other items related to COVID-19. Since March 2021, there has been increased growth, with more agencies continuing to onboard. When asked about their experiences using the e-marketplaces, participating agencies are responding with overwhelmingly positive feedback, giving the CPI a score of 9.2 out of 10 for customer satisfaction. Participants cite benefits such as time savings, price competitiveness, and access to tools designed for government buyers.
As the program continues to grow, so too do the opportunities offered to small and diverse businesses and federal agencies have also realized significant benefits from GSA’s e-marketplace program.
For small and diverse businesses, e-marketplaces offer opportunities to access the federal market without subjecting a company to the burden and expense of a direct contractual relationship with the government. Products sold by small and midsize sellers, for example, account for more than half of all sales in Amazon’s online stores. And the e-marketplaces participating in the CPI are continually partnering with agencies to actively recruit small and diverse businesses to their platforms.
For agencies, e-marketplaces offer access to a vibrant, competitive market of small businesses who might otherwise be excluded from the market. These online marketplaces promote competition, expedite procurement, and ensure reasonable pricing by having multiple offerors for a given product. The CPI’s advantages do not stop there.
- E-marketplaces in the CPI allow government buyers to designate small and diverse businesses, green products, and mandatory sources (e.g., AbilityOne and UNICOR), as preferred, so offers from these concerns surface higher in search results. The platforms also preclude purchases of restricted items, as well as purchases from excluded vendors listed on SAM.gov.
- Government buyers can utilize tailored features such as business-to-business and volume discounts, workflow approvals, exemptions from state taxes, and tools to document adequate competition.
- Agencies enjoy increased visibility into online spend, enabling better buying decisions. GSA, for example, has developed online dashboards to provide agencies with an overview of their spend through the participating e-marketplaces.
Another often overlooked benefit is the ability to count purchases from small and diverse businesses through participating e-marketplaces toward the agency’s small and diverse prime contracting goals. Traditionally, purchases from e-marketplaces and other online retailers using government purchase cards were not included in the small business prime contracting calculation. To incentivize agency adoption of e-marketplaces, Section 846 of the 2018 National Defense Authorization Act, which led to the CPI’s creation, ensures that such purchases count toward agency small business goals. Section 846 states, in pertinent part, that “[a] procurement of a product made through a commercial e-commerce portal under the [CPI] is deemed to be an award of a prime contract for the purpose of the [SBA’s small business prime contracting goals], if the purchase is from a supplier that is a small business concern.”
Online marketplaces are, without question, transforming public procurement. Long before the CPI, agencies understood that commercial e-marketplaces offer practical and efficient solutions to fulfilling the government’s critical procurement needs. The CPI adds to e-marketplace capabilities, features, and opportunities for small and diverse businesses. In coming years, agencies will continue to realize its benefits, and the volume of purchases from small and diverse businesses will dramatically increase. As a result, agencies will strengthen the small business industrial base and attract new, commercial small businesses to the federal market.
Robert A. Burton is a partner in the Government Contracts Group at Crowell & Moring LLP in Washington, DC. He is the former acting and deputy administrator of the Office of Federal Procurement Policy in the Executive Office of the President.
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