Amazon, Overstock Win Lucrative E-Commerce Portal Contracts
(Bloomberg) -- Amazon.com Inc., Overstock.com Inc., and Fisher Scientific Inc. have won highly lucrative U.S. government e-commerce contracts, giving them the power to control how vendors sell billions of dollars in goods to federal agencies.
The General Services Administration announced on Friday that it had chosen the companies to develop portals to sell products such as office supplies to federal agencies, opening up a new multi million-dollar revenue stream for the firms.
The GSA has said the project, known as the Commercial Platforms Initiative, is intended to streamline the government’s Byzantine acquisition process by making it, faster, cheaper and more transparent.
The portals are an “important step in offering a solution for purchasing commercial products online that protects our federal supply chain against malicious and counterfeit goods, furthering our national security,” GSA administrator Emily Murphy said in a statement.
Under the deal, Amazon, Overstock, and Fisher Scientific, now known as Thermo Fisher Scientific Inc., will participate in a three-year pilot project to create digital portals that connect federal buyers with a wide range of vendors. The government will study the efficacy of the effort before potentially expanding the program.
The GSA isn’t awarding a specific amount of money to each company but they’ll be able to collect fees on transactions between government agencies and third-party sellers. Government buyers can use the e-marketplaces for purchases of $10,000 or less, according to the GSA.
The federal government spends about $6 billion annually on these kinds of small purchases, according to GSA figures. That means that the initiative could deliver tens of millions of dollars in fees to the winning companies each year.
The government started the program in 2018 but faced objections from trade groups who said the effort appeared tailor-made for the e-commerce giant Amazon.
In 2019 the National Association of Wholesaler-Distributors, an industry group representing retailers, wrote a letter to more than a dozen lawmakers, demanding that the government scale back the program. The group said the GSA’s proposal to raise the maximum limit that federal agencies could buy through the program to $25,000 from $10,000 would unfairly benefit Amazon.
The Coalition for Government Procurement, a Washington-based group representing federal contractors, also claimed the move gave the winners of the deal advantages in the marketplace over smaller businesses trying to reach federal buyers.
Overstock filed a protest of the procurement policy with the GAO in January but withdrew it in late February without giving a reason.
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