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Navy Sets Sail for the New World

by Robert Antonio

May 21, 2000

  On May 8, 2000, the Naval Inventory Control Point (NAVICP) announced that it had completed an online "reverse auction" and that it had awarded a contract using this process.  Under an online reverse auction, suppliers compete electronically in a real-time environment for the government requirement.  To federal contracting types, this is big news.  

The auction took place on May 5, 2000 with FreeMarkets, Inc. operating the online auction process.   NAVICP estimated that the 51-minute auction saved it 28.9 percent over the historical price for the items--recovery sequencers.  The winning offeror was Hi-Shear Technology Corporation with a price of $2.375 million.  NAVICP awarded the contract within an hour of the auction closing.

The table below provides details of the contents of the solicitation.

Item Description
Contracting Office Naval Inventory Control Point--Mechanicsburg
Mechanicsburg, PA 17055-0787
Solicitation N00104-00-R-K057
Method of Contracting Competitive Negotiation.  The solicitation did not identify an exception to full and open competition in block 22 of the Standard Form 33.
Items acquired Two Contract Line Item Numbers (CLIN) for "recovery sequencers" with National Stock Numbers 1377-01-180-1915 and 1377-01-053-9320.

CLIN 1 required 1 lot of 60 articles plus 8 test articles.   CLIN 2 required 7 lots of 90 articles and 1 lot of 66 articles plus 8 test articles per lot.  Technical data was required under each CLIN.

Solicitation issuance date March 23, 2000
Solicitation closing date April 24, 2000
Solicitation Amendment 1 Effective on April 13, 2000, highlights of the amendment included:
  • additions to Sections L and M of the solicitation, providing instructions for submission of proposals, evaluation criteria and basis for award, procedures for the "reverse auction" called a "Competitive Bidding Event (CBE)," and information for the CBE.

  • Added FAR Clause 52.215-1, Instructions to Offerors (Oct 97), Alternative 1.
Listed suppliers of part numbers Hi-Shear, Teledyne, and Quantic.
Evaluation and Award Procedures Submissions of initial proposals:  

Initial proposals were to consist of a 

  • Standard Form 33, 
  • Schedule of supplies and services with prices, and
  • Representations, certifications, etc.

Establishment of Competitive Range:

The initial pricing proposal was to be used to establish the competitive range.  

Discussions with offerors:

Offerors in the competitive range were to be invited to participate in discussions and discussions were to be conducted through the reverse auction called a Competitive Bidding Event (CBE).  FreeMarkets provided offerors with passwords, training, and software for input to and monitoring of the CBE.

Offerors were to make revisions to their initial pricing proposals with electronic offers during the CBE.  During the auction, offerors were to see each others' offers in real-time but the offers were to be anonymous.  The initial time period for the auction was to be set by the contracting officer.  If an offer was submitted within the last minute of the time period, the time period was to be extended for an additional minute beyond the time of that offer (provided the offer was the lowest offer received).  The time period could be extended for additional one-minute periods if a lower offer was submitted within the last minute.

Final Proposal Revisions:

An offeror's final price revision of an offer during the CBE was to be considered the offeror's Final Proposal Revision (FPR).

Contract Award:

Award was to be made to the low-priced, responsible offeror.  

Copyright 2000 by Robert Antonio


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