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Reverse Auctions

Reverse Auctions. Growing Your Business. What is a Reverse Auction?.

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Reverse Auctions

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  1. Reverse Auctions Growing Your Business

  2. What is a Reverse Auction? “A Type of e-auction that is conducted online, in real-time, between a single buying organization and pre-qualified suppliers. Suppliers compete in presenting bids to the buyer…whose specifications for design, quality, deliver, and related terms and conditions have been clearly defined.” -Institute for Supply Management

  3. Simply Put… RA’s are auctions that enable Sellers to proactively compete in real time to win business opportunities

  4. Why Did the Government Start to Use Reverse Auctions? Several factors affecting government operations required it to identify new, innovative and affordable ways to meet mission needs, including: • Budget and staff management challenges • A push for openness and increased competition • Advancements in technology

  5. What agencies use Reverse Auctions? 14 of 15 Cabinet Level Organizations Homeland Security Treasury State Defense (incl. Army, Navy, Marine Corps) Education Agriculture Commerce Veteran Affairs Interior Transportation Justice Labor Health & Human Services Energy

  6. Proven Results of Reverse Auctions Use of reverse auctions quickly proved to improve numerous core business functions, including: • Selecting suppliers without rounds of manual negotiations • Disseminating information easily • Reducing inventory levels/costs due to quicker cycle times • Enhancing transparency

  7. GAO highlights • Keeps with FAR requirement that $3K-$150K go to small business • Use is on the rise and expanding • Recommends updating the FAR to include reverse auction • Preferred tool of buyers in FYQ4

  8. How Does it Work? Traditional Auction Traditional auctions are designed to help the Seller maximize profit of a particular good or service through an increasing bid process SELLER Looking to sell a good or service to the highest bidder posts a Buy BUYERS Increasingly bid against each other to purchase the good or services SELLER Sells good or service at the highest price

  9. How Does it Work? Reverse Auction Reverse auctions are designed to help the Buyer maximize competition while the Seller grows their business BUYER Posts a solicitation for a requested good or service. SELLERS Decreasingly bid against each other to provide the good or service. BUYER Procured a good or service at a competitive price. SELLER Grew business by gaining a customer and making a sale.

  10. Advantages for Buyers • Optimized efficiencies • Competitive prices • Increased small business utilization • Documented, auditable results • Compliance

  11. Advantages for Sellers • Access to real opportunities • Customer base growth • Opportunity to actively compete • Process standardization across agencies

  12. Tangible Results for Small Business • FY13: $1.25 Billion awarded by Federal Governments to U.S. small businesses, including $368M for Minority-Owned Small Businesses

  13. What Items are Good for a Reverse Auction? Knowing the right type of commodity or simple service good for a reverse auction is key to a success Clear Specifications Compelling Spend Competitive Supply Base

  14. Why not get involved? • No costs • No risk • Government is using more and more • Your competition is using more and more • Register at FedBid (www.FedBid.com) • GSA Schedule holders: LOGIN to GSA (http://reverseauctions.gsa.gov) • Talk to local buyers about possible reverse auction events being held How to get involved?

  15. Summary • Reverse Auctions • Continue to be a best practice for effective procurement strategies • Rapidly becoming a leading procurement process throughout the public and private sectors • Small Businesses • Increased pipeline while reducing level of effort • Maintain control of bids and improves competitive intelligence • Government Small Business Programs • Improves goal achievement • Support awareness for growth opportunities

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