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Trump railed against Amazon, but a law he signed could have the government paying it a lot more

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Trump railed against Amazon, but a law he signed could have the government paying it a lot more
Trump railed against Amazon, but a law he signed could have the government paying it a lot more
President Trump speaks before signing the National Defense Authorization Act in December. (Joshua Roberts/BloombergNews)

President Trump in recent days has railed against Amazon.com, claiming it is perpetrating “a scam” and that 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 they be 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.)

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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.

 

President Trump speaks before signing the National Defense Authorization Act in December. (Joshua Roberts/BloombergNews)

President Trump in recent days has railed against Amazon.com, claiming it is perpetrating “a scam” and that 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 they be 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 Switch newsletter

The day's top stories on the world of tech.

 
Sign up
 
 

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.

 

“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.

READ MORE:

If Trump really wants to go after Amazon, he has options

The Washington Post stories that preceded Trump's tweets

Why Trump went after Bezos: Two billionaires across a cultural divide

 
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Christian Davenport covers the defense and space industries for The Washington Post's Financial desk. He joined The Post in 2000 and has served as an editor on the Metro desk and as a reporter covering military affairs. He is the author of "The Space Barons: Elon Musk, Jeff Bezos and the Quest to Colonize the Cosmos" (PublicAffairs, 2018).
Follow @wapodavenport
Aaron Gregg covers the national security contracting industry and Washington-area businesses for the Washington Post's financial desk.
Follow @Post_AG
Pub Time : 2018-04-08 15:11:01 >> News list
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