“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
RA’s are auctions that enable Sellers to proactively compete in real time to win business opportunities
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 14 of 15 Cabinet Level Organizations State Defense (incl. Army, Navy, Marine Corps) Education Homeland Security Transportation Justice Interior Treasury Labor Energy Commerce Health & Human Services Agriculture Veteran Affairs
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
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
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
Reverse auctions are designed to help the Buyer maximize competition while the Seller grows their business SELLERS Decreasingly bid against each other to provide the good or service. SELLER Grew business by gaining a customer and making a sale. BUYER Procured a good or service at a competitive price. BUYER Posts a solicitation for a requested good or service.
Optimized efficiencies Competitive prices Increased small business utilization Documented, auditable results Compliance
Access to real opportunities Customer base growth Opportunity to actively compete Process standardization across agencies
FY13: $1.25 Billion awarded by Federal Governments to U.S. small businesses, including $368M for Minority-Owned Small Businesses
Knowing the right type of commodity or simple service good for a reverse auction is key to a success Clear Specifications Compelling SpendCompetitive Supply Base
Register at FedBid (www.FedBid.com)www.FedBid.com GSA Schedule holders: LOGIN to GSA (http://reverseauctions.gsa.gov)reverseauctions.gsa.gov Talk to local buyers about possible reverse auction events being held No costs No risk Government is using more and more Your competition is using more and more
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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