Reverse Auctions are a proven way to save millions of dollars in government procurement. With the Obama Administration seeking substantial savings on federal purchasing, competitive bidding – dubbed "eBay in reverse" – has emerged as a vital part of their strategy. Here we report an update on the federal government’s efforts overall and highlight what is being done at the U.S. Customs and Border Protection Service (CBP), in combination with FedBid, their private sector online marketplace provider.
Introduction
ell, one thing we know, when governments at any level – and around the world – want to save taxpayer’s monies in their procurement operations, the easiest – and often the best – strategic move they can make is to employ reverse auctions as a strategic part of their purchasing of all kinds of goods, commodities, and services.
The Director of the White House’s Office of Management and Budget (OMB), Peter Orzag, last week released a report updating the American people on President Obama’s procurement reform efforts. These efforts target procurement reforms to to save $19 billion in FY 2010, and $40 billion in FY2011. In announcing this effort in December 2009, President Obama stated: ”After years of irresponsibility, we are once again taking responsibility for every dollar we spend, the same way families do.” At the same time, Jeffrey Zients, the OMB’s Deputy Director for Management, observed: “No business, large or small, could survive the continued waste and mismanagement the federal government has experienced. It’s illogical, it’s unacceptable, and we will fix it.” (Source: Obama’s EBay in reverse aims to cut costs).
Reverse Auctions
Reverse auctions – dubbed with the marketing title of “eBay in reverse” by the Administration – are a big part of the effort and endorsed as a major way to save the federal government – and all of us as taxpayers – big dollars through introducing new levels of competition and transparency in the contracting process. And the effort is paying huge dividends in terms of savings for federal agencies who have made the switch to using reverse auctions. Director Orzag calls attention to the work being done by the Department of Homeland Security (DHS) (http://www.DHS.gov/) and the U.S. Customs and Border Protection Service (CBP) (http://www.CBP.gov/) by highlighting the DHS success story:
* DHS Saves $40 Million in Reverse Auctions
Reverse auctions – where vendors bid prices down to win an agency’s work – are helping agencies increase competition and save millions of dollars on their purchases of commercial off-the-shelf products. In FY 2009, DHS conducted more than 2,500 reverse auctions for approximately $340 million in goods, resulting in savings of more than $40 million. Documentation of each auction is captured on-line so that contracting officers and other agency officials can consider this information in developing more informed costing strategies for future needs.
Source: Cutting Waste and Saving Money Through Contracting Reform: July 7, 2010
This effort has been endorsed by many groups, including the Project On Government Oversight (POGO) (http://pogo.org/), which in a piece entitled, “Fed Contracting: So Hot!,” stated that: “POGO has promoted the use of reverse auctions in the past, and we believe that it is a great way to effectively use competition to get deals.” (Source: http://pogoblog.typepad.com/pogo/2010/07/fed-contracting-so-hot.html)
Analysis
So, kudos to John Ely, Executive Director of the Office of CBP Procurement, and to all the CBP leadership and contracting staff for “taking the ball and running with it” to help revolutionize the way the federal government does business and to save a great deal of precious taxpayer dollars (with the help of their private sector partner on the project, FedBid {http://www.fedbid.com/}, a Vienna, VA-based online marketplace provider). If more federal and state agencies adopted reverse auctions as a strategic part of their procurement efforts, just imagine how much more effective – and efficient – we could make the public sector!
Biography
David C. Wyld (dwyld@selu.edu) is the Director of the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/). He currently serves as the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a noted expert on reverse auctions and e-procurement topics, being widely published on the topic and a recognized academic expert/consultant/speaker in the area.
Read more:
How to Revolutionize Governmental Buying: The Customs and Border Protection Service Blazes The Way in The Federal Sector with Reverse Auction Buying
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