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

GoalsReverse Auctions 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 DepSecDef Ashton Carter: “Doing More Without More”

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/ / ˈ märkət ˌ plās/ 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.

The Reverse Auction Process 14

FedBid Opportunities Agency Buy Statistics Buy Metrics2011 Number of Buys20,321 Total Dollars Awarded$1.2B Average Buy Size$66,283 Dollars to Small Businesses79% Dollars to VSOB15% Dollars to SDVOSB10%

85.54% Maximizing Small Business Utilization 85.54% Small Business $102,905,401 Large Business $18,484,306 US Army Example: FedBid Awards under SAT ($3k to $150k) 85% 15%

How Can I Get Access? Register – –Cage Code & DUNs Setup Profile –Buy view preferences – 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 (202) Zach Ennis (703)