In the latest step towards delivering on the long-promised “Procurement Through Commercial e-Commerce Portals” program, the General Services Administration has announced plans to build a proof-of-concept for federal online shopping, aiming to issue an RFP by the end of the year for web-based acquisition platforms.

According to GSA’s notice, the platforms will be based on an “e-marketplace” model — one that connects federal customers to a range of competing vendors, similar to online shopping websites in the private sector.  These “e-commerce portals” will carry “routine commercial items found on today’s commercial e-commerce platforms (with office supplies and industrial products being amongst the most common)[.]”  Purchases will be limited to the micro-purchase level, which is currently set at $10,000.

The agency expects to award multiple prototype contracts, and it indicated that further proof-of-concept contracts may be needed to test other online purchasing models.  These other purchasing models include an “e-commerce model,” under which each portal provider would serve as the seller of goods, and an “e-procurement model,” under which the acquiring agency would manage the platform using software supplied by a contractor to facilitate sales through multiple vendors.  On this point, GSA explained that “the one model that best fits GSA’s priorities for an initial proof of concept is the e-marketplace model.”

GSA’s plan is the second phase of its e-commerce portal program, which was established by Section 846 of the National Defense Authorization Act for FY 2018.  Under Section 846, GSA must create online portals that federal employees can use to purchase basic commercial commodities.  We have previously written about GSA’s e-commerce portal program in blog posts here and here.

Notably, Section 846 permits GSA to consider “exemptions” from various federal procurement regulations for e-commerce portals, while also using standard commercial portal terms “to the maximum extent practicable.”  But it has proven difficult to determine how best to strike a balance between standard commercial practices and longstanding principles of government procurement (e.g., domestic sourcing requirements, socioeconomic preferences, etc.).  To date, GSA still has not decided what exemptions it will permit or what commercial terms it will use, and the recently published Notice indicates that GSA will rely on the upcoming prototypes to help decide those issues.

GSA will also use the prototypes to evaluate data usage and protection issues.  On this point, GSA noted that Congress amended Section 846 of the 2018 NDAA to impose limits on the ability of certain contractors to maintain or track data on “purchasing trends or spending habits.”  Yet the specifics of how e-marketplace data will be collected and tracked remain unresolved at this time.

To help with this proof-of-concept procurement — which, as noted, will be limited to the micro-purchase threshold — GSA’s Notice also requested that Congress raise the micro-purchase threshold from its current $10,000 standard to $25,000.  By starting at the micro-purchase level, GSA indicated that it will be in a better position “to assess the impacts and benefits of the program, without the complexity or rules that apply over the [threshold], prior to making significant investments in the program.”

Contractors interested in the program should stay tuned for additional developments in the coming months.  GSA already has indicated that before issuing a solicitation late this year, it will publish a draft solicitation and take additional steps to further coordinate with industry.  Over the last 18 months, GSA has held several “industry days” that have substantially shaped the Government’s approach at this proof-of-concept phase, and other similar opportunities to engage may yet arise before year’s end.

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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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Photo of Evan R. Sherwood Evan R. Sherwood

Evan Sherwood counsels federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), contract terminations for convenience / default, and related audits, litigations, and investigations. He also advises on contract compliance and formation…

Evan Sherwood counsels federal contractors on Contract Disputes Act (CDA) claims, the cost accounting standards (CAS), cost allowability, requests for equitable adjustment (REAs), contract terminations for convenience / default, and related audits, litigations, and investigations. He also advises on contract compliance and formation issues, including TINA / defective pricing, data rights, mandatory disclosure rules, ethics, conflicts of interest, teaming arrangements, and other transaction agreements (OTAs). He has litigated matters before the Court of Federal Claims, the Armed Services Board of Contract Appeals, and the Government Accountability Office. Evan was partially seconded to Northrop Grumman from 2019 to 2022 as business unit counsel.

In his work for defense and civilian agency contractors, Evan:

  • Prepares CDA claims and REAs;
  • Litigates and counsels on matters involving CAS compliance, cost accounting practice changes, and cost allowability under the FAR and agency supplements;
  • Defends contractors during audits and investigations involving the Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), and the Office of the Inspector General (OIG);
  • Advises on constructive changes, work delays, defective specifications, stop-work orders, government-furnished property, CPARS, warranty matters, data rights, and quality controls;
  • Counsels on disputes between primes and subcontractors, including teaming disputes;
  • Conducts internal investigations and defends clients in federal investigations involving whistleblower allegations and retaliation claims.

Evan is a Vice Chair of the ABA Public Contract Law Section’s Contract Claims & Disputes Resolution Committee. He routinely writes and speaks about legal issues in federal contracting.

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