President Donald Trump waves as he boards Air Force One for a trip to White Sulphur Springs, W.Va., for an event on tax policy, Thursday. (Evan Vucci / AP Photo)

President Donald Trump waves as he boards Air Force One for a trip to White Sulphur Springs, W.Va., for an event on tax policy, Thursday. (Evan Vucci / AP Photo)

Law Trump signed could benefit Amazon, big online retailers

Under the law, federal agencies would be able to spend more money on commercially available products.

By Christian Davenport and Aaron Gregg / Washington Post

WASHINGTON — President Trump in recent days has railed against Amazon.com, claiming it is perpetrating “a scam” and its deliveries cost the Postal Service “a fortune.” But with a law he signed late last year, Trump gave Amazon and other online retailers a huge opportunity to expand how much business they can do with the federal government.

Under the law, federal agencies would soon be able to spend significantly more money on all sorts of commercially available products from an approved list of online retailers — without having to go through cumbersome procurement regulations.

Today, federal purchasers can spend between $3,500 and $10,000 for basic products without going through the government’s lengthy acquisitions process. But under the new system, that threshold could initially jump to $25,000 for online retailers and eventually climb to as high as $250,000. Sites such as Amazon could be delivering far more products — whether its staplers or paper towels — to the White House and other federal agencies. (Amazon’s founder and chief executive, Jeffrey P. Bezos, owns The Washington Post.)

The effort is part of a broader attempt to bring government processes more closely in line with the business world, where information-age processes such as buying online are the norm. And it could inject Amazon further into the business of the federal government.

The Pentagon is also pursuing a separate effort to move government computing systems to the cloud, another major opportunity for the online retailing giant.

Many in industry are concerned that Amazon has a leg up in the competition for that contract, valued at billions of dollars over many years. At a private dinner at the White House this week, Safra Catz, Oracle’s chief executive, raised her concerns about the fairness of the bidding process with Trump, according to people with knowledge of the situation who spoke on the condition of anonymity to talk freely about the meeting. The dinner was first reported by Bloomberg.

Trump referred her to the Pentagon, the people said, and White House press secretary Sarah Huckabee Sanders said this week that “the president is not involved in the process” and that the Defense Department “runs a competitive bidding process.”

Navy Cmdr. Patrick Evans, a Pentagon spokesman, said the department is conducting a “full and open” competition and has “no favorites.”

The law creating the online marketplace with government-approved online vendors was part of the Pentagon’s 2018 spending bill, which ran 2,427 pages long, and a key part of a congressional push to streamline the federal government’s often cumbersome acquisitions process.

The law does not specifically mention Amazon, and lawmakers went to great lengths to ensure that multiple companies, such as Office Depot, Home Depot and Grainger, would be part of the competitive process of determining the list of approved vendors. But as the dominant online retailer, Amazon is in a prime position and could stand to profit from the new purchasing system, government and industry officials said.

Recently, Trump has been on a crusade against Amazon, claiming that it pays “little or no taxes” to state and local governments and that it has forced the Postal Service to suffer “tremendous losses,” even though experts say the company has helped the agency’s finances. He also incorrectly claimed that The Post serves as a lobbyist for Amazon.

“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon,” Trump wrote Saturday on Twitter. “That amounts to Billions of Dollars.”

Initially, the online-marketplaces bill would have applied only to the Defense Department, but it was eventually expanded to include the entire the federal government, allowing purchasers to buy more goods at work the way they do at home.

Amazon already does some business with federal agencies. But if it became one of the federal government’s chosen online vendors, it could see a huge boost. “Clearly some agencies are using it, but it’s nowhere near what they anticipate coming,” said Alan Chvotkin, executive vice president and counsel with the Professional Services Council, a trade group that represents government contractors.

By creating a list of online vendors approved by the General Services Administration, the government would get better insight into what government purchasers are buying and the amounts they are spending. It also would make the federal bureaucracy more efficient, proponents say.

“Everybody understands what a difference Amazon has made,” Rep. Mac Thornberry (R-Tex.), the chairman of the House Armed Services Committee, said about the online-marketplaces proposal last year.

In a statement Thursday to The Post, Thornberry said that “one of the challenges the [Pentagon] has faced is that there is currently no quick, cost-effective path to buy off-the-shelf items. To meet the military’s needs in a timely way and at a fair price, it only makes sense to let DoD purchasers use the same e-commerce sites at work that they would trust when buying for their families at home.”

Amazon said in a statement that it “offers procurement professionals the Amazon buying experience, with the controls and competition they require. Doing so frees them up from busy, transactional work so they can focus on their agency’s core missions.”

The bill initially called for a single contract to be awarded to just one e-commerce company without full and open competition, leading some to jokingly refer to it as “that Amazon bill.” The language was later amended to explicitly call for more than one e-commerce contract after complaints from business groups.

Under the new online purchasing system, which the GSA plans to implement initially by 2019, agencies could be able to buy basic goods, such as office equipment, tools and cleaning supplies that are available commercially. It would not apply to development programs, weapons systems or services.

But it could “significantly” affect the way the government does business, Chvotkin said. While such basic supplies may constitute a relatively small portion of the federal budget, totaling in the millions to tens of millions of dollars annually, they make up “an overwhelming number of transactions” for the federal government, he said.

Josh Dawsey contributed to this report.

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