September 25, 2018

September 25, 2018

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September 24, 2018

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GSA Hears Comments from Industry About e-Commerce Portals

As part of ongoing efforts to create an online marketplace for government purchasers, GSA officials held a public meeting yesterday to discuss potential market structures and legal requirements.

A wide range of stakeholders attended the hearing, responding to questions from GSA on issues such as how many online portals should be implemented, who should have privity of contract with the government, and whether certain federal procurement requirements should be waived for program participants.  GSA had previously published its discussion topics in a Federal Register notice on December 15, 2017.

GSA’s town hall took place as part of the implementation of Section 846 of the National Defense Authorization Act for FY 2018.  As discussed in a previous blog post, the 2018 NDAA requires GSA and OMB to develop and implement e-commerce portals for commercially available off-the-shelf (“COTS”) item procurements, rolling out the program under a three-phase plan.  2018 NDAA § 846(c)(1).  Phase I requires the development of a plan for implementing the commercial e-commerce portals program, including recommendations regarding “changes to, or exemptions from, [existing procurement] laws.”  Id.  That Phase I plan is due to Congress on March 12, 2018. Id.

GSA did not answer questions about the program.  Instead, GSA officials explained that the meeting was intended as a listening session, allowing GSA to begin a dialogue with government contractors and to hear and consider their ideas.  Officials from GSA and OMB asked numerous questions of the industry representatives who comprised each panel of the meeting and made clear that the information provided would be considered as the program moves forward.

Structure of the E-Commerce Portals

Industry participants discussed a variety of potential structures that GSA could use to implement the portals.

One model that was discussed would require a portal provider to contract with GSA to provide an online interface.  Under this approach, suppliers would then sign up to use the portal, potentially via a contract with the portal provider.  Next, government purchasers would select suppliers from the portal, entering prime contracts with suppliers directly.

Another approach would require online portal providers to sell directly to the government, providing both a user interface for online purchases and the end items of supply.

Industry participants raised these, as well as a variety of other models, for GSA’s consideration.

Consistent with the text of the statute, which directs the use of “multiple” portals, numerous attendees advocated that multiple online portals would encourage competition among a larger pool of potential contractors and deliver better value to the government.

Enforcement of Legal Requirements

Going forward into the next phases of analysis and implementation, GSA will have to address significant questions about the extent to which participants in these marketplaces will be affected by federal procurement laws.  Although COTS items are already subject to lesser legal requirements than other supplies and services sold to the government, GSA’s questions – and participants’ comments – reflected a broad range of issues related to acquisition statutes, regulations, and policies.  This topic is particularly salient given Congress’s directive to 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.”  Consistent with the statute, some industry participants encouraged GSA to adopt existing commercial terms and conditions—and exempt portal providers from certain procurement regulations—to achieve the efficiencies, value, and transparency of the commercial market. It remains unclear how GSA ultimately will resolve this issue.

The Role of GSA Schedules

Members of the public were also invited to pose questions to the panelists at the public meeting. Some audience members questioned the effect that the e-commerce portal program could have on GSA’s Federal Supply Schedules, and whether GSA would take steps to distinguish schedule contracts from online portals as procurement vehicles.  Although GSA did not clarify its position on this issue, agency officials stated that the agency would be open to further discussion about these kinds of matters.

GSA Invites Further Dialogue with Industry

GSA concluded the town hall by stating that the meeting marked the beginning of a dialogue with industry about the design of commercial e-commerce portals.  GSA further encouraged contractors to submit written comments on Phase I of Section 846 by January 16, 2018.

Commercial item contractors in particular should look for opportunities to engage in future town halls and public comment periods on this issue.

© 2018 Covington & Burling LLP

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About this Author

Susan B. Cassidy, Government Contracts Attorney, Covington Burling, Law Firm
Partner

Susan Cassidy advises clients on the complex rules and regulations imposed on government contractors, with a special emphasis on the defense and intelligence sectors. She combines a sophisticated knowledge of the FAR and DFARS with the practical insight gained from senior in-house positions at both dedicated defense and commercial item contractors.

Ms. Cassidy conducts internal investigations for clients on wide array of government contracts and national security compliance issues. She regularly advises on FAR mandatory disclosure obligations and represents...

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Jennifer Plitsch, Litigation attorney, Covington
Partner

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group where her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as litigation, transactional and legislative issues. She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations and Bayh-Dole Act, and has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements CRADAs, Cooperative Agreements, Grants and Small Business Innovation Research agreements.

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Mike Wagner, Covington, government contracts lawyer
Associate

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations. He also conducts internal investigations of potential compliance issues, advises clients as to FAR mandatory disclosure requirements, and regularly represents clients in suspension and debarment proceedings.

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Evan Sherwood, Covington Burling Law Firm, Government Contracts Attorney
Associate

Mr. Sherwood helps clients solve problems arising from government contracts. He advises government contractors on a wide range of matters, such as compliance with procurement regulations, contract formation, and government investigations. Mr. Sherwood also represents clients in bringing and defending bid protests, including challenges to the terms of competitions.

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