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To Contents	Reverse Auctions All Over Again
By formerfed on Monday, August 26, 2002 - 02:56 pm: Like the old movie ad, "Just when you thought it was safe again," GSA brings reverse auctions back to the foreground. I just saw an atricle in Federal Times that GSA recently awarded four contracts to build and maintain a GSA web site. The site contains all the technology, support, and expertise for agencies to conduct reverse auctions. The contracts are valued at $20 million in total over five years. Originally I was sold on the concept. I watched a couple and was so impressed with the results many agenies experienced, I wanted to buy it for the agency I worked at. Then I saw the pricetag. I got out my calculator and figured out my agency would recoup its investment in many, many years. I also talked with several agencies, including GSA, who would help for a fee. However, the logistics of taking my requirements to another agency weren't appealing. Then I started talking with people, reading articles written by some experts, and got feedback from this forum. While some of the benefits from initial pilots like the Navy flight ejection seats (no pun intended) are promising, the quoted time savings didn't take certain things into consideration. Some examples of omissions include the process to evaluate and qualify vendors, the time and effort to deploy the bidding software to vendor sites, and training. All things considered, it wasn't as promising as we all were told. Then I thought things died until this article appeared. My question is does it make sense for GSA to make this kind of investment when there doesn't seem to be interest. Or am I wrong and will agencies use reverse auctions now that GSA has done this work and put up the money? By Vern Edwards on Monday, August 26, 2002 - 03:20 pm: formerfed: I don't have an answer to your question, but I'd like to ask one of you. I looked at the GSA Reverse Auction RFP and it seems to me that what GSA will offer is high-tech services for the conduct of the process. Is all the gimcrackery really necessary in order to conduct a reverse auction? Couldn't you do it by email? Vern By formerfed on Monday, August 26, 2002 - 03:32 pm: Vern, I never thought of that before. I don't see why not. Even if there's concern about disclosing the identity of specific bidders, someone could assign alias email addresses. That approach also minimizes the time and effort to set up the process and train people. Maybe GSA should cancel their awards and advocate your approach. By Vern Edwards on Monday, August 26, 2002 - 03:56 pm: formerfed: In a Part 15 acquisition, reverse auctions are simply a form of discussions. In a reverse auction, the contracting officer simply discloses the offerors' prices to each other and asks for one or more price responses. I simply cannot see any need for the "automated tools" and "real time" capability described in GSA's statement of work, except, perhaps, to facilitate participation by multiple, independent government buyers that are seeking to procure the same commodity. The Navy's original ejection seat component reverse auction was overdone; it was a dog and pony show for the Pentagon brass. Did you read the mandatory technical requirements in the GSA RFP? They can't have ordinary procurements in mind. By K.C. on Monday, August 26, 2002 - 06:42 pm: Slightly off, slightly on topic ... Wouldn't it be an interesting experiment to establish an agreement with GSA to conduct a reverse auction .. and the payment to GSA is based on a formula that increases (or decreases to zero) their fee based on the amount "saved"? By Anon2U on Monday, August 26, 2002 - 11:18 pm: Our agency uses a third party reverse auction company who charges us nothing and collects a fee from the winning contractor. It is internet based and very easy to use. The company reps conducted hours of free training for our employees and are constantly adding new companies to their stable of bidders. Using this process on simplified acquisitions and some credit card purchases has saved thousands of dollars (about 8 to 10%)over the original price quotes. It is fast and fulfills the competition requirements because it can be limited to small business (or any other socio-economic subgroup). It can also be limited to GSA FSS vendors if desired. Any orders over $25K (and not limited to GSA) are advertised on FEDBIZOPPS with instructions on how to participate in the reverse auction. The reverse auctions save a lot on IT purchases but you have to really watch what you are posting in other areas. We have had auctions that ended at a higher price than originally quoted. They were for items that turned out not to have as many competitors as we first thought. These small losses were overcome by large savings on other items that were very competitive. Lesson learned - market research is a must to ensure reverse auction savings. By formerfed on Tuesday, August 27, 2002 - 08:30 am: Vern, I just read the mandatory technical requirements. Obviously GSA put a lot of thought and preparation into this, but I'm at a loss as to what procurements they have in mind. I did talk with GSA some time ago and one of the objectives they have is allow multiple independent buys to consolidate needs and obtain better pricing. That's comenable, but it also poses questions. For example, who coordinates an upcoming buy where multiple agencies participate? Outside of DoD, which does a relatively good job coordinating buys for the same or similar items, other agencies seem to want their own specific items. Which agency takes the lead in defining the requirement? It looks like an overkill solution for a problem seeking a simple answer. By Vern Edwards on Tuesday, August 27, 2002 - 08:45 am: Anon2U: Do you think that the 8 to 10 percent reductions from the original price quotes could reflect padding of initial quotes by the vendor's stable of bidders in expectation of what's to come? formerfed: I'm reluctant to criticize GSA without knowing more about what's up. There must be more to what they've got in mind than I know. However, I admit to being suspicious of overly complex solutions. Vern By formerfed on Tuesday, August 27, 2002 - 10:20 am: Anon2U, What is your experience with simplified acquisition awards to vendors where you have no prior knowledge of their performance? I'm curious because one of the complaints with e-based bidding systems is no one pre-qualifies the firms eligible to participate. Any company with the interest and willingness to pay a fee for orders received plays. Do you rountinely award to the low priced offeror or is past performance a selection factor? If so, how is it evaluated and at what stage? By Anon2U on Wednesday, August 28, 2002 - 02:59 pm: Vern, The savings appear to be real because we were getting the same quotes before we started using the reverse auctions. Former Fed Unless we have had past problems with the vendor on our deliveries, we assume the low bidder will perform. We check the debarred list of coarse. Most of these items are on the shelf and shipped the day after we order them. By formerfed on Wednesday, August 28, 2002 - 04:24 pm: Anon2U, That's good to hear. One big compliant of the old FACNET system is performance problems of the low bidder. It's difficult to conduct extensive past performance verification on companies all over the country for low dollar value acqusitions.

Reverse Auctions All Over Again

By formerfed on Monday, August 26, 2002 - 02:56 pm:

Like the old movie ad, "Just when you thought it was safe again," GSA brings reverse auctions back to the foreground.

I just saw an atricle in Federal Times that GSA recently awarded four contracts to build and maintain a GSA web site. The site contains all the technology, support, and expertise for agencies to conduct reverse auctions. The contracts are valued at $20 million in total over five years.

Originally I was sold on the concept. I watched a couple and was so impressed with the results many agenies experienced, I wanted to buy it for the agency I worked at. Then I saw the pricetag. I got out my calculator and figured out my agency would recoup its investment in many, many years.

I also talked with several agencies, including GSA, who would help for a fee. However, the logistics of taking my requirements to another agency weren't appealing.

Then I started talking with people, reading articles written by some experts, and got feedback from this forum. While some of the benefits from initial pilots like the Navy flight ejection seats (no pun intended) are promising, the quoted time savings didn't take certain things into consideration. Some examples of omissions include the process to evaluate and qualify vendors, the time and effort to deploy the bidding software to vendor sites, and training. All things considered, it wasn't as promising as we all were told.

Then I thought things died until this article appeared.

My question is does it make sense for GSA to make this kind of investment when there doesn't seem to be interest. Or am I wrong and will agencies use reverse auctions now that GSA has done this work and put up the money?

By Vern Edwards on Monday, August 26, 2002 - 03:20 pm:

formerfed:

I don't have an answer to your question, but I'd like to ask one of you.

I looked at the GSA Reverse Auction RFP and it seems to me that what GSA will offer is high-tech services for the conduct of the process. Is all the gimcrackery really necessary in order to conduct a reverse auction? Couldn't you do it by email?

Vern

By formerfed on Monday, August 26, 2002 - 03:32 pm:

Vern,

I never thought of that before. I don't see why not. Even if there's concern about disclosing the identity of specific bidders, someone could assign alias email addresses.

That approach also minimizes the time and effort to set up the process and train people.

Maybe GSA should cancel their awards and advocate your approach.

By Vern Edwards on Monday, August 26, 2002 - 03:56 pm:

formerfed:

In a Part 15 acquisition, reverse auctions are simply a form of discussions. In a reverse auction, the contracting officer simply discloses the offerors' prices to each other and asks for one or more price responses.

I simply cannot see any need for the "automated tools" and "real time" capability described in GSA's statement of work, except, perhaps, to facilitate participation by multiple, independent government buyers that are seeking to procure the same commodity. The Navy's original ejection seat component reverse auction was overdone; it was a dog and pony show for the Pentagon brass.

Did you read the mandatory technical requirements in the GSA RFP? They can't have ordinary procurements in mind.

By K.C. on Monday, August 26, 2002 - 06:42 pm:

Slightly off, slightly on topic ...

Wouldn't it be an interesting experiment to establish an agreement with GSA to conduct a reverse auction .. and the payment to GSA is based on a formula that increases (or decreases to zero) their fee based on the amount "saved"?

By Anon2U on Monday, August 26, 2002 - 11:18 pm:

Our agency uses a third party reverse auction company who charges us nothing and collects a fee from the winning contractor. It is internet based and very easy to use. The company reps conducted hours of free training for our employees and are constantly adding new companies to their stable of bidders.

Using this process on simplified acquisitions and some credit card purchases has saved thousands of dollars (about 8 to 10%)over the original price quotes. It is fast and fulfills the competition requirements because it can be limited to small business (or any other socio-economic subgroup). It can also be limited to GSA FSS vendors if desired. Any orders over $25K (and not limited to GSA) are advertised on FEDBIZOPPS with instructions on how to participate in the reverse auction.

The reverse auctions save a lot on IT purchases but you have to really watch what you are posting in other areas. We have had auctions that ended at a higher price than originally quoted. They were for items that turned out not to have as many competitors as we first thought. These small losses were overcome by large savings on other items that were very competitive. Lesson learned - market research is a must to ensure reverse auction savings.

By formerfed on Tuesday, August 27, 2002 - 08:30 am:

Vern,

I just read the mandatory technical requirements. Obviously GSA put a lot of thought and preparation into this, but I'm at a loss as to what procurements they have in mind. I did talk with GSA some time ago and one of the objectives they have is allow multiple independent buys to consolidate needs and obtain better pricing. That's comenable, but it also poses questions. For example, who coordinates an upcoming buy where multiple agencies participate? Outside of DoD, which does a relatively good job coordinating buys for the same or similar items, other agencies seem to want their own specific items. Which agency takes the lead in defining the requirement?

It looks like an overkill solution for a problem seeking a simple answer.

By Vern Edwards on Tuesday, August 27, 2002 - 08:45 am:

Anon2U:

Do you think that the 8 to 10 percent reductions from the original price quotes could reflect padding of initial quotes by the vendor's stable of bidders in expectation of what's to come?

formerfed:

I'm reluctant to criticize GSA without knowing more about what's up. There must be more to what they've got in mind than I know. However, I admit to being suspicious of overly complex solutions.

Vern

By formerfed on Tuesday, August 27, 2002 - 10:20 am:

Anon2U,

What is your experience with simplified acquisition awards to vendors where you have no prior knowledge of their performance?

I'm curious because one of the complaints with e-based bidding systems is no one pre-qualifies the firms eligible to participate. Any company with the interest and willingness to pay a fee for orders received plays.

Do you rountinely award to the low priced offeror or is past performance a selection factor? If so, how is it evaluated and at what stage?

By Anon2U on Wednesday, August 28, 2002 - 02:59 pm:

Vern,

The savings appear to be real because we were getting the same quotes before we started using the reverse auctions.

Former Fed

Unless we have had past problems with the vendor on our deliveries, we assume the low bidder will perform. We check the debarred list of coarse. Most of these items are on the shelf and shipped the day after we order them.

By formerfed on Wednesday, August 28, 2002 - 04:24 pm:

Anon2U,

That's good to hear. One big compliant of the old FACNET system is performance problems of the low bidder. It's difficult to conduct extensive past performance verification on companies all over the country for low dollar value acqusitions.