We here at the Reverse Auction Research Center (Stating the Case for Reverse Auctions: The U.S. Department of State Demonstrates the Power of Competitive Bidding to Save Significantly on Acquisitions." The complete study can be found at�http://goo.gl/fAYtt.)�are proud to today announce the release of a new research brief, entitled, "
In this report analyzing the most recent four years of procurement data from the State Department, we were able to show how the agency's acquisition team effectively used reverse auctions as a vital part of its acquisition strategy, producing significant benefits for the agency, for the taxpayer, and for small businesses in the process. Over the period analyzed (from Fiscal Years 2007-2010), State more than doubled both the number of acquisitions competed and the dollar amounts awarded annually through reverse auctions, with the assistance of FedBid, Inc., the agency's partner in conducting competitive bidding through the use of the FedBid online marketplace. Our analysis showed that in Fiscal 2010 alone, State saved over $27 million dollars for the taxpayer.�With annual reverse auction procurements fast approaching a quarter of a billion dollars, the acquisition staff at State is seeing dramatic savings across the board, especially in the IT (information technology) area.� In FY2010, State procured over $180 million worth of IT hardware, software, peripherals and other computing equipment, where using real-time market pricing is especially important today to maximize spend effectiveness.
Finally, our work here at the�Reverse Auction Research Center has consistently found that�competition is at the heart of what makes reverse auctions work for making federal procurement more competitive, transparent and accessible. Our analysis of the State Department's acquisition data showed that through using reverse auctioning through the FedBid online marketplace, the increased level of competition dramatically improved opportunities for small businesses. In the case of State, we found that fully three-quarters of their business opportunities that are made available through competitive bidding are being won by small businesses - much of this occurring abroad and opening-up new opportunities for American companies to expand their reach internationally. Due to the worldwide buying needs of State, much of its procurement takes place Outside the Continental United States (OCONUS). �In fact, in FY2010, almost a quarter of all the agency's reverse auction buys were made OCONUS. Our analysis showed that while State saved an average of 11% overall on its reverse auction procurements made through the FedBid online marketplace during the four years under review, the agency saved over 26% on its internationally-conducted buys. In fact, in FY2010 alone, the agency saved over three times as much – on a percentage basis – on its OCONUS buys than its CONUS procurements, with much of these awards being made to American small businesses. This has significant ramifications in terms of making American firms more competitive and able to provide jobs and opportunities at home by helping support our diplomatic efforts abroad.
What lessons can be learned and applied to other agencies from the U.S. Department of State’s use of reverse auctions? State’s acquisition leadership has urged its contracting staff to make increased use of reverse auctioning, and the results have been dramatic, as:
- tens of millions of dollars have been saved,
- competition has increased, and
- small business opportunities have improved.
Speaking on the success of State’s use of reverse auctions, Cathy Read, Director of the Office of Acquisition Management, commented:
“We view the use of FedBid as integral to our acquisitions success. With FedBid, we save time, we save dollars, and we create opportunities for small businesses. Now, I can simply not imagine doing acquisitions without the support of our partners at FedBid.”
Glenn Richardson, FedBid’s President, remarked that:
“The State Department’s historical use of FedBid has generated significant savings, facilitated multiple process efficiencies, enhanced small business utilization, and increased competition. �Department leadership embraced the changes inherent in the introduction of reverse auctions, consistently communicated the benefits associated with those changes, and have the documented results as proof that reverse auctions provide a viable and sustainable procurement strategy.”
Again, you can read the complete report free of charge at�http://goo.gl/fAYtt. And for press inquiries or more information, please contact David Wyld, the Executive Director of the Reverse Auction Research Center and the author of this research brief.
From the Reverse Auction Research Center:�