As the U.S. government turns to Amazon for procurement, many observers are raising red flags about the competitiveness of the contracts and the lack of accountability for local governments using Amazon Business to procure goods and services.

The Institute for Local Self-Reliance (ILSR) says that Amazon’s 11-year, $5.5 billion contract to supply local governments with office and classroom supplies lacks transparency in pricing.

Read the ILSR paper here.

An article from states:

“The report warns that the government contract may undercut competition, with the biggest red flag raised over the contract’s use of dynamic pricing, instead of fixed, when local governments procure goods via Amazon Business. The ILSR also pointed to terms of the contract that allow governments to procure from local suppliers if they become third-party sellers on Amazon Business. “Amazon is thus leveraging its growing relationship with local governments to induce more businesses to join its Marketplace, fortifying its position as the dominant platform for online commerce and taking a cut of every purchase,” the ILSR’s announcement stated.

“In a statement, Olivia LaVecchia, a senior researcher at the ILSR, said that local governments should reject the contract. “There’s even more at stake than higher prices and a lack of public accountability,” she said. “There’s also the danger of a less competitive economy, in which companies must go through Amazon in order to do business.”