Enhancing
Business Through
Reverse Auctions
Glenn Richardson
GovConNet Member Meeting
November 14, 2012
Reverse Auction
What is a Reverse Auction?
“A real-time online competitive bidding
event where the buyer sends out a
request for quotation and suppliers bid on
the business, decreasing their selling
prices until optimally a true market price
has been reached.”
-- Dr. Tobias Schoenherr
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, delivery, and related terms and
conditions have been clearly defined.”
-- Institute for Supply Management
Simply Put…
RA’s are auctions that enable sellers to bid
down prices for their goods and services.
Reverse Auction: Advantages…
• For Buyers
• Increased small business utilization
• Optimized efficiencies
• Realized savings
• Documented results
• Compliant
Reverse Auction: Advantages…
• For Sellers
• Access
• Accessibility
• Real opportunities
• Transparency
• Standardization
RA’s in Public Sector – Additional
Benefits
• Determine supplier selection without
rounds of negotiations
• Disseminate information easily
• Reduce inventory levels/costs due to
quicker cycle times
• Enhance transparency
Public Sector Drivers: Why RA’s?
• Budgetary and staffing challenges
• A push for openness
• Advancements in technology
DepSecDef Ashton Carter: “Doing
More Without More”
Goals
Target Affordability and Control Cost Growth
Incentivize Productivity & Innovation in Industry
Promote Real Competition
Improve Tradecraft in Services Acquisition
Reduce Non-Productive Processes and Bureaucracy
Reverse Auctions
Who uses Reverse Auctions?
Partial List of RA Providers in Public
Sector
•
•
•
•
•
•
•
•
Ariba
BidSync
eBridge
Exostar
FedBid
iASTA
OnDemand Sourcing
Sorcity
Fed·Bid Mar·ket·place
/fed/ /bid/ /ˈmärkətˌplās/
Noun:
1. The online portal where government buyers
go to procure commodity products and simple
services
2. A managed network of 50,000+ qualified
sellers - and growing
3. A Reverse Auction Model that makes real
time competition possible.
Synonyms: innovative. simplified. effective. proven.
The Reverse Auction Process
Buyer Posts
Requirement
Reverse Auction
Initiated
Sellers Bid Down
Price During Auction
Buyer Evaluates Offers
and Makes Award
Decision
14
FedBid Opportunities
Agency Buy Statistics
Buy Metrics
Number of Buys
Total Dollars Awarded
Average Buy Size
2011
20,321
$1.2B
$66,283
Dollars to Small Businesses
79%
Dollars to VSOB
15%
Dollars to SDVOSB
10%
Maximizing Small Business Utilization
US Army Example: FedBid Awards under SAT ($3k to $150k)
Small Business
$102,905,401
85%
85.54%
85.54%
15%
Large
Business
$18,484,306
How Can I Get Access?
• Register
– www.FedBid.com
– Cage Code & DUNs
• Setup Profile
– Buy view preferences
– Email Preferences
• Bid
– Find a Buy
– Place your Bid
• Lead/Lag
• Rebid if you choose
Reverse Auctions…The Future
“Reverse auctions have a become a best
practice for procurement across the corporate
landscape, not as a way to squeeze suppliers
to reduce costs, but as a way to automate the
negotiation process… For both sides of the
procurement equation, reverse auctions today
offer a streamlined way to communicate and
collaborate …”
-- Dr. David C. Wyld
Discussion/Q&A
For Further Information
Glenn Richardson
glenn.richardson@fedbid.com
(202) 320-9762
Zach Ennis
Zach.ennis@fedbid.com
(703) 839-7005