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Federal government now turning to Amazon, Overstock for ‘micro-purchases’

The GSA pilot is expected to fast-track the procurement process for pens, desk chairs and other office needs that fall within the $10,000 cap

General Services Administration, seen in 2013. Federal workers will soon be able to purchase office supplies and equipment through an e-commerce platform. (Jeffrey MacMillan for the Washington Post)

For the first time, federal workers will be able to purchase supplies and equipment — including office furniture, desk supplies and more — in a dedicated channel through massive online retailers, a move experts say will increase efficiency, save money and help the government keep track of smaller purchases.

The General Services Administration, the primary agency that oversees real estate and acquisitions for the federal government, announced contracts last week with Amazon, Overstock and Thermo Fisher Scientific under a three-year pilot. The program, which the GSA expects to be operational within 30 days, will allow authorized personnel to make “micro-purchases,” or items costing less than $10,000, through the online marketplaces.

The contracts represent a major step forward for the government when it comes to routine purchases, experts say. It fast-tracks the procurement process for pens, desk chairs and other easily attainable items through Amazon Business, the company’s business-to-business platform, Overstock or Thermo Fisher. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

GSA estimated open-market purchases on government credit cards amount to $6 billion annually.

“It’s kind of absurd that they don’t have something like this already,” said Bradley Safalow, chief executive of PAA Research. “This presents an opportunity to save a lot of money for the federal government and in a way where they’ll know more about what’s being bought.”

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GSA Administrator Emily Murphy said the contract, which comes at no cost, was “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.”

Amazon Business public sector director Anne Rung said in statement that the company would provide “an efficient, cost-effective option for federal purchasing that brings savings to taxpayers while also supporting independent small and diverse businesses selling in our stores.” She called the program a “great example” of the federal government turning to the private sector for innovation.

“If there’s anything we’ve learned this year, it’s that Amazon Business can serve as a resource to the government during uncertain times,” she said.

Thermo Fisher did not respond to a request for comment.

Analysts say the contract is a major triumph for Overstock, which has struggled with the likes of Amazon, Wayfair and traditional brick-and-mortar competitors such as Ikea in the low-margin home furnishings business. It also spent years investing heavily in blockchain and cryptocurrency at the expense of its retail operations under former chief executive Patrick Byrne. Longtime Overstock executive Jonathan Johnson took the helm in fall 2019 and refocused the company on its retail operation.

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Margins on retail sales improved in 2019 and the company was more efficient in its customer acquisition costs than in years prior. Most importantly, Safalow said, it put more energy into the areas where it had a competitive advantage as the economy online home and office goods provider: creating shipping efficiencies, building supplier relationships, leveraging logistics technology.

“This company was already turning the corner,” he said.

Overstock leaders say they see the pilot program as a way to generate more momentum for the retail side of the business and expand its developing business-to-business operation.

“We’re mostly a home furnishings company. I’ve never been in a government office that didn’t have office chairs, artwork, all the kind of stuff we sell,” Johnson said in an interview. “There’s no bigger business than the federal government.”