NDAA Section 846 – Who Can Be an Online Portal Provider

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This blog post series was created with materials from our lobbying expert, Tonya Saunders at Washington Premier Group.

As we continue our analysis of NDAA Section 846’s online marketplace provisions, let’s look at who can be a portal provider, and how they will work. We can see that the new language significantly reduces (but does not eliminate) the obstacles to becoming an official portal provider. Previously, Section 801 incorporated requirements only a handful of companies in the world (if that many) could have met.

Section 846 is less restrictive. It defines an acceptable portal as a “commercial solution providing for the purchase of commercial products aggregated, distributed, sold, or manufactured via an online portal.” It directs GSA to “consider” portals that are “widely used in the private sector” and that “have or can be configured to have” frequently updated supplier and product selections, as well as an assortment of product and supplier reviews.

As before, the language still expressly states the portal cannot be managed by the Government or designed for the primary use by the Government. Thus, neither GSA Advantage nor FedMall can satisfy the Section 846 requirements.

Unlike the House version of the bill, Section 846 does NOT state the portal providers will be selected without competition – a provision that greatly concerned not only industry, but many GSA officials as well. To the contrary, Section 846 states that current procurement laws will apply to the program unless explicitly exempted. This new language suggests GSA will have to develop some sort of competitive process to select the portal providers.

Whether that means GSA will conduct a full-and-open, head-to-head competition among potential portal providers or an everyone-who-meets-the-requirements-gets-in type competition (like GSA uses to award Schedule contracts) is unclear. In either case, the removal of the “non-competitive” language from Section 801 is a material improvement over the House bill.

As with Section 801, Section 846 vests significant responsibility in GSA to come up with a means to ensure products sold through the portals are screened to meet applicable statutory requirements. This likely refers to regimes like the Trade Agreements Act (“TAA”), the Buy American Act (“BAA”), environmental requirements, security requirements, and the like.

The language leaves it to GSA to figure out whether it will provide the necessary product data to the portal providers or will develop a mechanism for the providers to obtain those date on their own, presumably directly from the suppliers/manufacturers.

In either case, the continuing importance of product attribute data suggests neither suppliers nor portal providers should view the new procurement process as one devoid of obligations and/or risks.

On the flip side of the obtain-data-from-GSA coin, the new compromise language includes an expected submit-data-to-GSA obligation on the part of portal providers. Specifically, pursuant to Section 846, portal providers will have to collect and provide “order information” to GSA.

While GSA is left to determine what sort of “order information” it needs, chances are the resulting list will be similar to the data currently required through GSA’s TDR program.

Notwithstanding the Section 846 language directing OMB and GSA to ensure the awarded portals meet certain requirements, the compromise bill clearly reflects an effort on the part of Congress to minimize meddling in the structure of existing commercial ordering platforms.

In fact, the Conference Report accompanying the compromise bill encourages 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.”

This encouragement becomes a bit more pointed in the next sentence: “Pursuant to a diligent review of existing law and regulation, the conferees direct the Administrator to be judicious in requesting exceptions.”

Section 846 doesn’t have much to say about how agencies will purchase through the portal. Rather, it leaves most of that to GSA and OMB to figure out down the road. At this point, however, the language provides the authorized portals will be limited to COTS purchases. (The language actually uses the term “commercial products,” but strangely redefines the term to mean COTS items.)

Importantly, the language no longer includes the prior indecipherable provision that purchases would be deemed to meet all competitive requirements merely by virtue of there being more than one supplier selling the product.

Here again, the removal of the non-competitive language represents an improvement over the prior language. (The new language, however, provides no insight regarding the “protestability” of orders placed through the new portals, which currently is one of the only means industry has to hold agencies accountable for flawed purchasing decisions.)

Probably the most important change regarding purchasing relates to the prior Section 801 language that precluded ordering agencies from altering the marketplace provider’s standard terms and conditions.

That prohibition raised serious concerns over how fair a marketplace’s standard terms would be in a near-monopoly situation. The prohibition also raised significant questions about how the Government would deal with critical policy imperatives; things like data security, the Anti-Deficiency Act, socio-economic goals, country of origin rules, and the like.

The new language resolves at least some of those questions by providing that purchases through the portals “shall be made, to the maximum extent practicable, under the standard terms and conditions of the portal….”

This is not unlike the language currently used in FAR Part 12 procurements requiring that “contracts for the acquisition of commercial items shall, to the maximum extent practicable, include only those clauses … determined to be consistent with customary commercial practice.”

Since it will not be easy to define when a commercial term must be accepted by the Government or not, however, this likely will be an area for future litigation – just as it has been under FAR Part 12.

Stay tuned for a final look at this new language, and some concerns that remain.


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