Image via WikipediaThe success stories simply keep coming on reverse auctions: Dan Gordon, the OMB’s Administrator for Federal Procurement Policy, Testifies before the Senate and Highlights the Experience of the Department of Health and Human Services and Its “Electronic Commodities Store”.
Let’s throw “another shrimp on the barbie, “log on the fire,” or whatever metaphor you would personally use to describe how to add another success story about the Obama Administration’s emphasis to move agencies to use reverse auctions as part of their overall procurement strategies to not only save taxpayer dollars, but just as importantly, add transparency and enhance competition in the massive world of federal procurement.
Last week, Dan Gordon, who serves as the Administrator for Federal Procurement Policy for The Office of Management and Budget (OMB), testified before the U.S. Senate’s Committee and Task Force on Government Performance. The hearing was an update on the progress being made on the OMB’s efforts to help federal agencies meet the Obama Administration’s targets for tens of billions in procurement savings and process reforms. If you’ll recall, the President issued a mandate in March 2009 calling on federal agencies to save $19 billion in Fiscal Year (FY) 2010, rising to a target of $40 billion by FY2011.
Mr. Gordon reported that “two promising cost-savings trends have already emerged” and one of these was the fact that “agencies are driving competition by using innovative buying tools such as online reverse auctions.” While we here at the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com) have previously spotlighted the work being done by the U.S. Customs and Border Protection Service – a part of the Department of Homeland Security (DHS) (See: http://bizcovering.com/business/how-to-revolutionize-governmental-buying-the-customs-and-border-protection-service-blazes-the-way-in-the-federal-sector-with-reverse-auction-buying/), on this occasion, Mr. Gordon spoke of the savings achieved by the Department of Health and Human Services (DHHS). He reported that:
* Online reverse auctions
Agencies are increasingly obtaining the economies and efficiencies made possible by conducting web-based “e-procurements.” In particular, agencies are using electronic reverse auctions, where vendors use an online site to bid prices down to win an agency’s work, in order to generate greater competition. This practice is helping agencies obtain lower prices, especially on their purchases of commercial off-the-shelf products, and these web-based tools have become a routine part of how we conduct procurements in the 21st century: agencies conducted thousands of electronic reverse auctions last year. The Department of Health and Human Services, for example, offers on-line reverse auction services to customers who use its “Electronic Commodities Store” (ECS) – a government-wide acquisition contract for IT hardware and software products. Last year, agencies placing orders under ECS using reverse auctions reduced their costs by roughly 17 percent. Beyond the immediate savings, electronic reverse auctions provide a convenient way for agencies to maintain documentation of each auction online for use in the development of better price estimates and purchasing strategies for future requirements.
Analysis
This is truly becoming the ultimate “Win-Win” scenario for the federal government and more importantly, for taxpayers. Everywhere reverse auctions have been used in the public sector, from the largest users in national and state governments to even the smallest towns, we have seen reverse auctions produce significant dollar savings and – with the capabilities we find being offered by third-party auction providers today – significant improvements in the transparency and intensity of the competition for government contracts. It is a laudable effort being undertaken by not just the Obama Administration, but all in the many “procurement shops” in the various federal agencies that are joining forces for this cause, which Mr. Gordon framed as:
Our current fiscal challenges underscore the importance of maximizing the effectiveness of every tax dollar we spend. With approximately one of every six of these dollars going to contractors, it is imperative that federal contracts provide the best value for the taxpayer.
Thus, whatever your political stripes, whether you are a Democrat, Republican, Tea of Green Partier, Libertarian, etc. and whether you are from a Blue State, Red State, or even a Purple State, to back the move toward greater use of reverse auctions. This effort to shift more and more federal procurement spending to being competed through online reverse auctions, which has saved – in documented terms – hundreds of millions already – may well save tens of billions of precious taxpayer dollars in ensuing fiscal years! Therefore, the impact of greater use of this new, yet proven, e-procurement tool to be able to actually cut the federal budget deficit and/or to be able to continue to fund necessary federal services may well be huge over the next few years.
We here at the the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/) will keep monitoring these efforts. And if you are involved in federal procurement efforts in any agency, please contact us to share your success story online with our ever-increasing readership.
Source: Senate Budget Committee Hearing, TMC News, July 19, 2010 (http://www.tmcnet.com/usubmit/2010/07/19/4907345.htm).
* Note, you can read his entire testimony in a .pdf file at budget.senate.gov/democratic/testimony/2010/Gordon_testimony_715.pdf.
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:
Millions Today, Billions Tomorrow: A Report on Reverse Auction Implementation at The Department of Health and Human Services
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From the Reverse Auction Research Center: http://reverseauctionresearch.blogspot.com/
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