B2B Payments

US Government’s eProcurement Push Raises Amazon Dominance Fears


The U.S. government is continuing its efforts to promote the use of online marketplaces and broaden its eProcurement activities, reports in Digital Commerce 360 said, but efforts could continue to raise fears that eCommerce giant Amazon will dominate and limit competition for other online marketplace providers to take part.

The publication recently reported that the General Services Administration (GSA) revealed its government payments program, GSA SmartPay, saw $250 million worth of online transactions in fiscal year 2018 resulting from government department procurement on a range of online eCommerce platforms. That compares with $135 million in FY2014, the administration said.

GSA SmartPay provides commercial payment services to federal agencies, organizations and Native American tribal governments that aim to reduce friction in their payment processes. The initiative, launched in 1998, deploys charge cards to those entities, enabling purchases made on behalf of the federal government.

“Prior to using a GSA SmartPay payment solution, the Federal Government used traditional paper-based payment processes such as purchase orders for small dollar purchases,” the GSA explains on its SmartPay webpage.

As an initiative that aims to digitize government payments, GSA SmartPay represents the federal government’s broader efforts to modernize its procure-to-pay practices. The latest stats from GSA suggest the government’s adoption of eCommerce portals is on the rise. The GSA noted, however, that the $250 million worth of GSA SmartPay transactions used on those platforms represents less than 1 percent of the total $30.6 billion that federal government agencies spent using the GSA SmartPay program in FY2018.

It’s unclear how the rest of those payments were made, whether in person at the point of sale, or through government suppliers’ direct payment portals.

“Analysis of the government purchase card program found a significant and growing portion of federal spending is taking place via commercial eCommerce portals,” a spokesperson for the GSA said, but did not remark on which eCommerce portals saw transactions by the estimated 560 government agencies that use GSA SmartPay.

Amazon could be a significant portion of that government eCommerce spend, though, with Amazon’s B2B unit, Amazon Business, striking an agreement last year with government purchasing alliance group OMNIA Partners, formerly known as U.S. Communities. Though the agreement impacts local governments, it is not a stretch to imagine federal government agencies are also embracing Amazon Business to procure goods, particularly considering Amazon Business’s record-setting growth.

GSA’s eCommerce Push

With government agencies’ eCommerce spend on the rise, the GSA announced earlier this month the launch of a proof-of-concept pilot to “establish a program to procure commercial products through commercial eCommerce portals,” according to reports.

“Commercial technology has made buying easier, increased transparency, and opened opportunities to a broader pool of suppliers” the GSA said in its plan outlines submitted to Congress earlier this month. “The online markets continue to evolve through new technology, streamlining commercial business practices and emerging suppliers.”

The initiative will see GSA solicit eMarketplace service providers to develop an online marketplace specific for government agency procurement, which, the GSA noted, will ease friction in the procurement process and provide greater visibility into agency spend.

“There are purchase card holders across government that are buying from the consumer sites already,” said Mark Lee, assistant commissioner in the Office of Policy and Compliance in the GSA’s Federal Acquisition Service, Federal News Network reported earlier this month. “What GSA is looking to do is enter into a business-to-business arrangement, where generally you get more favorable terms and have a centralized management.”

The initiative represents the implementation of the Section 846 eCommerce congressional mandate, which has raised concerns in recent months over whether eCommerce giant Amazon will be unfairly favored as the federal government continues to push for procurement from eMarketplaces, a concern that has been particularly high in the Department of Defense’s similar eCommerce procurement policy under Section 801 of the National Defense Authorization Act.

Yet according to Digital Commerce 360, the GSA’s eMarketplace pilot will involve collaboration with multiple eCommerce solution providers, which may or may not include Amazon Business.

“GSA does not intend to start with specialized marketplaces/product categories until it has performed appropriate research to know when and how such specialty marketplaces fit,” the agency said in a statement. “GSA’s intent is to launch an initial proof of concept with multiple eMarketplace providers by the end of calendar year 2019, as by law this cannot go to a single provider.”



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.