Delivering for Best-in-Class Wholesaler-Distributors
January 11, 2017

Last spring, House Armed Services Committee Chairman Mac Thornberry (R-TX-13) introduced defense acquisition reform legislation (H.R. 2511, Defense Acquisition Streamlining and Transparency Act).  Included in the Chairman’s bill was a provision authorizing the Department of Defense (DoD) “to buy commercial off-the-shelf (COTS) products through the same online marketplaces that businesses use to acquire goods.”  NAW engaged this issue, pulling together a working group comprised of companies from various lines of trade which had expressed interest in working with us on this topic.

There were several broad issues that provided the glue that held the working group together:

  • Concern that just one company (Amazon) would qualify as a “marketplace.”
  • Concern that marketplaces would have too much leeway to charge access fees to, and hold too much sway over features critical to, “third-party” vendors operating through the marketplaces.
  • Concern that the language permitted marketplaces (particularly in instances where the marketplace was also a competitor) virtually unlimited access to and use of “third-party” vendors’ transactional data.
  • Skepticism regarding the appropriateness of the application of the online purchasing model in certain lines of trade.

An expanded (i.e., federal government-wide) version of the COTS online purchasing provision was included in the House Armed Services Committee’s FY ’18 defense authorization bill (Sec. 801, H.R. 2810, National Defense Authorization Act (“NDAA”)) which was passed by the House shortly after the July 4th recess.  The Senate Armed Services Committee subsequently reported and the Senate passed its version of the NDAA without any provision corresponding to Sec. 801 of the House-passed bill.

As a result of the advocacy efforts of the NAW working group, a government-wide but clearly improved – and what has been described as a “workable” – online purchasing regime was included in the conference report and enacted on December 12th (PL 115-91).

With the legislative process complete, focus now shifts to the mandated three-phase implementation process.  Here is the legislative language) detailing Phase 1:

Not later than 90 days after the date of the enactment of this Act (emphasis added), an implementation plan and schedule for carrying out the program … including a discussion and recommendations regarding whether any changes to, or exemptions from (emphasis added), laws that set forth policies, procedures, requirements, or restrictions for the procurement of property or services by the federal Government are necessary for effective implementation of this section.”

On December 15th, the General Services Administration (GSA) published a notice in the Federal Register launching Phase I, announcing that on January 9, 2018 GSA and OMB will host a “modified town-hall style public meeting to help inform the Phase I submittal.”

Recommendations under Phase II are due “not later than one year after the date of the submission of the implementation plan and schedule required” in Phase I.  The guidance required under Phase III is due one year after that.

The NAW-led working group will remain “in business” throughout this process.