The Federal Government Procurement Process Could Go Digital

Alston & Bird

In order to keep up with online marketplaces available at the “one touch” of a smartphone, the federal government is doing its part to bring its procurement process into the digital age. Legislation passed earlier this year by the House of Representatives would allow the U.S. military and civilian government agencies to buy products directly from new online marketplaces instead of following the current procurement process for purchases above the “micro-purchase” threshold (i.e., a few thousand dollars). The newly proposed process would present many opportunities for online retailers and marketplaces and is seen by supporters as a way to drive down prices for the government. However, such a transition would create many compliance and regulatory issues likely introducing new costs; and opponents, such as Steve Ellis, the vice president of advocacy group Taxpayers for Common Sense, argue that it will foster a less competitive environment and create waste.

Although lawmakers are aiming to streamline the procurement process and increase competition, it will be difficult to harmonize the open marketplaces with competition and documentation requirements currently mandated by the law. The devil, of course, will be in the details. Should this bill become law, there will be many new and important considerations companies will need to keep in mind before pursuing future contracts. Because there are so many existing competition requirements in the Federal Acquisition Regulation (FAR), and so many other regulatory strings attached by law to purchases over a certain threshold, it will be hard to reduce burdens without reducing compliance. Accordingly, this bill will likely create major traps for unwary sellers who won’t realize that the buyers have the force of the DOJ behind them if the seller (or the government contractor operating the online marketplace) does not turn square corners.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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