On Friday, the General Services Administration (“GSA”) announced that it had awarded three contracts to develop online shopping portals for commercially-available off-the-shelf (“COTS”) items.  The awardees are Amazon Business, Fisher Scientific, and Overstock.com.

GSA’s awards were made to implement Section 846 of the NDAA for FY 2018, which required the agency to develop an online marketplace for COTS items, and to exempt these sales from a broad range of typical procurement rules.  Although implementation details are still in process, in theory, the program would allow government buyers to purchase COTS items with the click of a button, similar to how a private consumer might buy things over the internet.

GSA’s RFP sought contractors to develop an “e-marketplace” model of online shopping, which connects customers to multiple vendors all on the same platform, creating competition among vendors.  GSA had considered using other models, including an “e-commerce” model in which the portal provider would also be the vendor, but decided to table them while it evaluates its options.  For a more detailed discussion of the alternate platform models, we have explained them here.

Under the proposed e-marketplace model, purchases initially will be limited to transactions below the $10,000 Micro-Purchase Threshold, which can be processed using government-issued purchase cards.  Despite this limitation, GSA still estimates that government purchase cards represent roughly $6 billion of government spending annually.

With that much money on the line, the White House appears to have taken an interest in GSA’s procurement.  In an Executive Order issued this year, it directed Customs and Border Protection (“CBP”) to consider debarring vendors that violate customs laws “knowingly” or “with gross negligence.”  The order specifically called out “e-commerce platform operators,” explaining that they “should not facilitate importation involving persons who are suspended or debarred by CBP.”  As a practical matter, this means that platform operators and their vendors may need to establish processes for screening or otherwise identifying vendors who traffic in counterfeit goods or have been debarred by CBP.

In the coming months, the three awardees will deliver proofs of concept, which GSA will then test and potentially scale-up over time.  The contracts are no-cost, and performance may last up to three years.  However, GSA may look to move more quickly, considering that Section 846(c) encouraged GSA to develop the program expeditiously.  As we have reported, GSA began planning for this procurement in 2017, solicited industry input in 2018 and 2019, and issued an RFP in the fall of 2019.

Many questions remain about the future of GSA’s e-commerce procurement, including how the new online marketplaces will interact with GSA’s existing Multiple Award Schedules program and whether traditional procurement regulations will be applied if and when the online marketplaces expand beyond the Micro-Purchase Threshold.  We will continue to closely track these developments and recommend that commercial item contractors do the same.

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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 issues, including TINA/defective pricing…

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, the Government Accountability Office, and the Federal District Courts.

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

  • Prepares CDA claims and REAs;
  • Litigates matters involving CAS compliance, cost accounting practice changes, and cost allowability under the FAR and grant rules;
  • 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; and
  • 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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