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Amazon is About to Take Over Almost All Federal Purchases

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If the current iteration of the House-passed National Defense Authorization Act moves forward, Amazon potentially has a lot to gain. In Section 801, the General Services Administration (GSA) would be required to contract with “online marketplaces” for the acquisition of specific commercial-off-the-shelf products. One caveat is that the marketplaces must provide access to multiple suppliers, limiting which companies may qualify.

A GSA contract doesn’t necessarily mean the Defense Department would be required to use a particular retailer, like Amazon, for the procurement of specific goods. Instead, it sets a standard regarding how the purchases are managed on both the government agency’s end and the retailer’s, formalizing a purchase-oriented relationship.

However, not all online retailers would qualify for the contracts outlines in Section 801. The “online marketplaces” must provide “a dynamic selection of products and prices from numerous suppliers.” This means multi-seller options, like Amazon’s third-party seller arrangements, must be present on the site.

Amazon wouldn’t be the only major retailer to meet the requirements as companies like Walmart have third-party sellers on their sites as well. However, Amazon is considered a powerhouse in the space. Additionally, Amazon Business Prime, a membership program that provides two-day shipping specifically for business-to-business (B2B) products could give them an advantage.

Section 801 expresses that “online marketplaces provide a substantial opportunity to greatly streamline procurement of COTS products” and “ensure competition and price reasonableness.”

Approved purchase types made through the contract would not require “competitive procedures,” allowing purchases to go through more quickly than with certain other traditional methods. It also limits situations where prices defined in GSA contracts with a single retailer would become non-competitive, causing government agencies to spend more for an item then it would cost most everyday consumers through commonly used “private sector” stores.

Additionally, not all purchases could be made through an online marketplace as “some commercial products” would be subject to “traditional acquisition processes.”

The use of marketplaces like Amazon’s also supports Federal government initiatives to make purchases from small businesses, as some third-party sellers on marketplace platforms would qualify for the category.

However, Amazon does get a cut of third-party business, regardless of who makes the purchase, and the arrangement proposed by Section 801 does position the company to get a significant piece of the $53 billion federal purchasing budget. There are also questions regarding whether making such arrangements harms the government’s purchasing power in comparison to acquiring certain items in bulk.

The Senate version of the National Defense Authorization Act does not include language pertaining to the use of online marketplaces, so further discussions in Congress will take place before a finalized version of the NDAA is fully passed.

h/t The Intercept