Government spending: We need more info on small purchases

A penny here, a penny there, and pretty soon we’re talking about $6 billion. Every year, the government spends more than $6 billion in small purchases. Surprisingly, we don’t have good visibility into what we’re buying with those dollars. Under federal law, these micropurchases don’t require an existing contract. While this lets agencies efficiently buy goods and services worth less than $10,000—such as printing services or office supplies—it also means the federal government has little or no visibility into those transactions. This opens the door to counterfeit goods and security risks.

As we enter a new decade, we owe it to citizens to ensure this $6 billion is spent transparently and responsibly, without adding unnecessary bureaucracy.

E-commerce has revolutionized how people and organizations buy and sell things. It’s rewired the American economy and shifted the purchasing process; however, the federal government has not kept pace with these trends. The last major round of acquisition reform was a generation ago—before the Internet and all things digital dominated how business got done. Online retailers were untested novelties.

Fast forward to today, where federal purchases and procurement spending through commercial e-commerce portals are increasing at a rapid pace. Agency charge card spending through commercial online portals has grown 92% from fiscal year 2014 to fiscal year 2018; that trend will only increase. And that’s just the tip of the iceberg, as it only captures spending to those companies who exclusively have an online presence. It doesn’t account for spending with companies who have both brick-and-mortar and online storefronts.

While this growing trend offers promise when it comes to efficiencies, it is not without risk. These one-off purchases add up quickly, leaving the government with limited visibility into online spending, increasing exposure to supply chain risk, and posing significant accountability and fraud-related concerns. It also risks missing opportunities to buy from disadvantaged socioeconomic groups and small businesses. We can do better.

Congress has challenged the U.S. General Services Administration (GSA) to provide a solution. The agency was charged with establishing a program to procure commercial products through partnerships with commercial e-commerce portals, as part of the fiscal year 2018 National Defense Authorization Act (NDAA).

To answer Congress’s call, GSA established the Commercial Platforms Initiative and is launching a proof of concept this year, partnering with e-marketplace platforms that offer business-to-business capabilities. Federal agencies will be able to manage their accounts, approve real-time purchases, and access large numbers of suppliers that are selling on these e-marketplaces—all through a modern buying experience. Furthermore, companies can highlight their platforms’ advanced technology when selling to the government.

This whole-of-government approach will provide agencies with critical insight into their spending, leverage the government’s buying power, take advantage of constantly evolving pricing to include sales and bulk discounts, ensure small business participation, and increase supply chain visibility. This initiative enables GSA to move forward on a small scale and expand the program based on lessons learned.

By enabling government buyers to use modern tools and technologies, we’ll have immediate visibility into their order status and spending trends. The proof-of-concept approach will modernize the buying experience and offer a solution that better serves our government and American taxpayers. Not only is GSA leveraging capabilities offered in the commercial market, but doing it at a time when a number of Fortune 500 companies are considering the same actions. In this sense, the government is helping lead this change.

Agencies across government are eager to participate in the proof of concept, having expressed a strong desire to gain better visibility into their online purchasing, including key insights on buying patterns. GSA has met with close to a dozen agencies to better understand how the commercial platforms can improve their procurement process, provide value, and ensure we are even better stewards of taxpayer money.

Don’t forget about transparency. Federal agencies want to know what’s being bought, who’s selling it, and where it’s coming from. Today, if a federal employee with a government charge card buys a prohibited product under the $10,000 threshold, or receives an item from a prohibited company, it’s very difficult to track. However, if those same products are bought through commercial platforms in the proof of concept, agencies will receive real-time data so they can take the appropriate corrective action.

To that end, some agencies are already forming partnerships with online marketplaces to get access to their data to help mitigate supply chain and purchasing concerns. But these ad hoc e-commerce agreements will lead to a fragmented view of spending data and inconsistent terms and conditions, limiting the government’s buying power and contributing to a largely inconsistent federal market. A better, more unified solution starts with launching the proof of concept. The unique role GSA plays in government provides an opportunity to strategically bring together federal buying by offering a unified, cross-agency approach to e-commerce purchasing.

I’m confident that the Commercial Platforms Initiative will take an important step in bringing increased transparency and purchasing discipline into the small-dollar procurement space—unlocking purchase trends and insights to better serve Americans. At the front end of a new decade, the time to make this change is now.

Emily W. Murphy is administrator of the U.S. General Services Administration.