Should The Defense Department Save Money By Shopping On Amazon?

A new bill known as the 2018 National Defense Authorization Act (NDAA) is part of an annual measure that sets defense policy and authorizes spending on particular defense programs.

And this year’s version had a particularly eye-catching section in the acquisition provision — one that would allow the Department of Defense (DoD) to buy “commercially available off-the-shelf items” from online marketplaces.

Good news for Amazon, since the Pentagon is known for buying tanks but needs toilet paper and pencils just like every other office in America.

“The Pentagon is one of the largest organizations in the world,” said Todd Harrison, a senior fellow at the Center for Strategic and International Studies, a Washington-based think tank. “If you look at it, they employ like 2.2 million people full-time and another 800,000 part-time. It’s a big organization with a lot of bases and office space, so there’s a lot of these mundane purchases of pencils and whatever.”

The reform was created to “improve the way the Pentagon buys commercial off-the-shelf goods, ranging from bottled water to treadmills or even forklifts,” according to the NDAA summary report prepared by the House Armed Services Committee.

Today the DoD has two options, neither of which are terribly efficient: purchase through the contracting process or from the General Services Administration. The new rules would make it possible “to use online commercial sites such as Amazon, Grainger, Staples or Walmart just as businesses do,” the NDAA summary stated. “These portals function like mini-marketplaces, ensuring that the buyer gets the best price without a lot of red tape.”

“It could be very significant over a number of years,” said Roman Schweizer, a defense analyst at Cowen. “Just initially there’s going to be sort of a learning process. Also, the government is going to have to set up the rules of the road and set up some thresholds and procedures on how to do it.”

The federal government’s independent GSA would have a prominent role in helping to create the ground rules for the DoD’s eCommerce program to buy from online marketplaces.

“I’m curious to see how this will actually work in practice,” said Dan Grazier, a defense industry expert at the Project On Government Oversight, a Washington watchdog group. “There’s been all kinds of issues over the years with people abusing the government charge cards, which is exactly how this system will be used.”