Federal E-Commerce Portal Cheaper Than Amazon: Report

Daily Report for Executives provides in-depth coverage of unfolding legislative, regulatory, and judicial news from the nation’s capital, the states, and around the world. This daily news service...

By Sam Skolnik

The General Services Administration’s “GSA Advantage!” online sales platform is a cheaper and speedier option for smaller federal agency purchases than Amazon.com Inc.'s comparable portal, according to a recently released report.

The report by the Naval Postgraduate School compared GSA Advantage with Amazon Business, looking at prices of the 60 commercially available items most frequently purchased by the Air Force in fiscal 2015.

The Air Force is considering entering into a pilot program with Amazon as a vehicle to make online “micropurchases,” according to the 121-page report. Officials with the Air Force Installation Contracting Agency, eager to do a “proper spend analysis” of micropurchases at the agency—defined as purchases of goods or services under $5,000—reached out to the naval school to conduct the study.

Of 300 vendors that offered the 60 items, the report found that GSA Advantage offered the lowest price 241 out 300 times, or 80 percent. At the same time, as opposed to GSA Advantage, Amazon had no stated minimum order requirement.

Some of the price discrepancies were dramatic. For example, a six-pack of Skilcraft brand Gregg-ruled steno books cost $22.14 on Amazon Business—versus just $8.29 on GSA Advantage, according to the report.

The feds also beat the vaunted Seattle-based retail giant when it came to shipping. On Amazon Business, average shipping time came to 9.25 days, and the average cost was $2.33. On GSA Advantage, the average shipping time was almost four full days faster at 5.45 days—and it was free.

“There’s a persistent misperception that GSA prices are ‘too high,’ ” Larry Allen, president of Allen Federal Business Partners, told Bloomberg Government in a written statement. “While it’s true that GSA Advantage can be improved as a platform, federal buyers should ask themselves this question: ‘Do I need the best platform, or do I need the best value to meet my agency’s mission?’ ”

Multiple Providers

Amazon Business “approached the Air Force offering incentives,” according to the report. The company likewise has made a concerted effort to implant itself into other federal agencies in recent months, spurring worries from competitors that the government in effect would grant Amazon a type of online sales portal monopoly.

Concerns hit their peak during the formulation of the 2018 National Defense Authorization Act. An e-commerce portal provision in the NDAA originally would have allowed for just one provider—with potentially billions in profits at stake—with Amazon seen as the odds-on favorite. The version that became law calls for “multiple contracts with multiple commercial e-commerce portal providers.”

An Air Force spokeswoman didn’t respond to a list of questions by press time.

Asked for comment on the report, an Amazon spokeswoman told Bloomberg Government in a written statement: “Amazon Business is pleased to provide government customers with another option for their purchasing needs. We have combined the selection, convenience and value that consumers love with features and benefits tailored to the needs of businesses, including public sector organizations. These features and benefits simplify the procurement process and increase efficiency for procurement officials, who can spend more of their time focusing on mission-critical projects.”

The Department of Homeland Security, the U.S. AbilityOne Commission—and according to the report, Department of Energy as well—also have been formalizing different types of sales relationships with Amazon.

‘Value and Vitality’

The survey had some high notes for Amazon. Compared to other online ordering platforms, 70 percent of the report’s respondents said Amazon’s website was easier to use. Likewise, 64 percent of those surveyed said Amazon’s shipping policies were better than those of other websites.

According to its authors, though the report was commissioned by the Air Force, its conclusions have broader applications.

“While the results contained in this report are specific to the Air Force, we have no reason to believe they are not generalizable to the entire federal government,” the report found.

“The results of the study may be surprising in light of the recent legislative activity and discussions surrounding on-line acquisition options for government,” wrote Roger Waldron, president of the Coalition for Government Procurement, in a recent blog. “Ultimately, this report addresses some perhaps unfair urban myths about the GSA Schedules, and it is great news for GSA.”

To contact the reporter on this story: Sam Skolnik in Washington, D.C. at sskolnik@bgov.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bgov.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Daily Report for Executives