REVERSE AUCTIONS
Growing Your Business
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
SIMPLY PUT…RA’s are auctions that enable Sellers to proactively compete in real time to win business opportunities
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
WHAT AGENCIES USE REVERSE AUCTIONS?
5
14 of 15 Cabinet Level Organizations
State
Defense(incl. Army, Navy, Marine Corps)
Education
HomelandSecurity Transportation
Justice
Interior Treasury
LaborEnergy
Commerce
Health &Human Services
Agriculture
Veteran Affairs
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
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
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
SELLERLooking to sell a
good or service to the highest
bidder posts a Buy
BUYERSIncreasingly bid
against each other to purchase the
good or services
SELLERSells good or service at the highest price
HOW DOES IT WORK? REVERSE AUCTION
Reverse auctions are designed to help the Buyer maximize competition while the Seller grows their business
SELLERSDecreasingly bid
against each other to provide
the good or service.
SELLERGrew business by
gaining a customer and making a sale.
BUYERProcured a good or
service at a competitive price.
BUYERPosts a solicitation
for a requested good or service.
ADVANTAGES FOR BUYERS Optimized efficiencies Competitive prices Increased small business utilization Documented, auditable results Compliance
ADVANTAGES FOR SELLERS Access to real opportunities Customer base growth Opportunity to actively compete Process standardization across
agencies
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
77.3%
22.7%
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Women
-Owne
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Other
$1.25B
$368M $333M $265M $259M $218M
$518M
2013 SMB Award Volume ($M)
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
WHY NOT GET INVOLVED?
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?
No costs No risk Government is using more and more Your competition is using more and
more
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