Government agencies have been testing the use of "reverse auctions". What about participation in "traditional auctions"?

In a reverse auction, multiple sellers of products are vying for the business of a single buyer, therefore, the price is driven down. Bidding continues until a pre-established bidding period ends or until no seller is willing to bid any lower, whichever comes first.

A traditional auction normally involves a seller offering an item(s) for sale while potential buyers compete with each other for the purchase. During this competition, the price is driven steadily up until no buyer is willing to go any higher.

Can Government agencies participate in traditional auctions to buy supply items?

Are there any regulations that prohibit the use of traditional auctions? How do we overcome the requirements for competition, synopsis, CCR, EFT, etc.?

By Anonymous on Monday, July 02, 2001 - 06:25 pm:

Curious:

Just out of curiosity, why would an agency want to bid the price up against other buyers? What kind of supply or service would it be buying that would make it want to do that?

Art?

By Anon#2 on Monday, July 02, 2001 - 08:23 pm:

Traditional auctions are to benefit the seller. It works best when the item is fairly limited in quantity and where it is clear demand is greater than supply (Imagine an auction of chewing gum on the street corner. Huh?). A buyer pusing to use that process to buy something makes no sense whatever.

Where it makes sense, where the government has something of limited quantity (electromagnetic spectrum, oil drilling rights, etc.) that it is selling it uses traditional auctions. On the other hand it never tries to auction off dimes, quarters and dollar bills either.

By Curious on Monday, July 02, 2001 - 10:26 pm:

Anon#2 and Anonymous (Monday, July 02, 2001 - 06:25 pm):

I'm not asking about use of "traditional auction" to sell things ... I'm asking if agencies can participate in "traditional auctions"...if it is not prohibited, and it makes sense to do.

An agency would want to bid the price up in situations where it would be beneficial. For example, many "dot.com" are going out of business and are selling equipment at 25 cents on the dollar. Many of these equipment are nearly new and "state of the art".

I guess we could issue solicitations for these equipment and award a contract to someone that bought the equipment at the auction. However, we could save a lot of money if we purchased them directly at the auctions.

Thus, my "curious" question:

Are there any regulations that prohibit the use of traditional auctions? How do we overcome the requirements for competition, synopsis, CCR, EFT, etc.?

By Anon#2 on Tuesday, July 03, 2001 - 12:01 am:

We know you are not asking about selling things. That is why we question your logic. Even more so after reading "An agency would want to bid the price up in situations where it would be beneficial"! It would be "beneficial" to run the price up? Maybe to get an "auction" price, but not to run it up!

Before going to your agency's contracting and legal experts for a real ruling instead of haphazard advice on a discussion site reconsider the basic logic here. Miscellaneous stuff is going at fire sale prices so you want to go grab a bunch of things without warranty, without any maintenance strategy, "as is," that may be mismatched and cause integration nightmares all around? (I sure would like to see this agency's requirement!)

Buying IT at auction may make some sense for purely office desk tops but if you are after more sophisticated stuff I question your sanity. Do you have the internal expertise to put this Humpty Dumpty collection back together? Even with systems people studying the offerings it would be difficult unless entire, known to fit, pre-integrated systems are the subject of auction.

You would probably be better off seeing if your agency is allowed to make and negotiate an offer for this used equipment collection of uncertain suitability. If so, a full scale audit of what is available against agency requirements would be a sensible first step. The .com people would probably be willing to talk about some certainty rather than the risk of auction.

If you insist on this course go see people who you can put on the hook for an answer. Get it in writing.

By Anonymous on Tuesday, July 03, 2001 - 07:57 am:

Actually there is one area that I know of where the government does participqte in traditional auctions. The procurement of subsistence is often purchased this way and the govt finds itself bidding against other buyers . Especially fresh produce. Otherwise no.

By joel hoffman on Wednesday, July 04, 2001 - 12:09 pm:

Curious, by the response you received, it is apparent that Government participation in traditional auction techniques is rare.
1) It is different than the safe approach of asking for prices. People don't feel comfortable bidding against others, even though the object is to obtain a bargain.
2) It involves more risk. The BUYER must know the market value of the merchandise and whether they are getting a good deal. Duh, you can kiss that opportunity goodbye, in my opinion.
3) The biggest obstacle is this. Since you are bargaining with only one vendor, you aren't allowing competition on the selling side. That does not promote competition in contracting. Therefore, "competition in buying" is not in alignment with public policy, which transcends simply obtaining goods and services at the best price. Happy Sails! joel hoffman

By Anon#2 on Thursday, July 05, 2001 - 09:32 am:

"Curious" has shown why rules allowing Government agents to buy at auction need to be very tight.

Just remember the oft used comedy ploy of the innocent at the art auction. Go into an auction with a fuzzy idea of what you are about and, most important, the business principle involved and getting burned will be an understatement. Joel's #1 and #3 aren't that important here. It is #2 that is most on point.

Simply look at commercial auctions. They tend to fall at two extremes. At the high end are the rarities where no market price is established and it is done so at an auction. It is a seller's market entirely. To obtain a "priceless" object of American history we might be forced to acquire it throug auction. Send experts.

At the other end we tend to have auctions of estate remnants and "unclaimed goods." There is no particular shortage of the goods, just no clear market. People expect to get something good for little.

The professionals don't usually go out and bid in the audience. If they see a good lot being considered for auction they move in, buy it at a negotiated price, take what they need and then auction the junk. That would be the more sensible appoach for "Curious" in obtaining a good lot from an expired dot com. Send well prepared technical and business experts first.

Otherwise, you will have an ill assorted pile of stuff you've paid more than real market price for and then, guess what, you will see it auctioned off as Government surplus. More likely it will gather dust in a warehouse. IT hardware has a short shelf life. Just go around and look at all the expensive stuff of a few years ago acting as door stops and dust catchers.

By Loki on Wednesday, July 11, 2001 - 10:53 am:

https://www.gsaauctions.gov/index.htm - or if that won't work for you -http://www.fss.gsa.gov/property/forSale/ and then drill down to auctions.

www.buyers.gov (reverse)

By joel hoffman on Wednesday, July 11, 2001 - 12:03 pm:

Loki, the current discussion concerns the feasibility of Government buying at auctions. I believe your link is to Government auctions. happy sails! joel