Military salutes online auctions
- By George I. Seffers
- May 15, 2000
Following recent Pentagon approval of online auctions for procuring supplies
and equipment, the military services are rapidly adopting the new way of
doing business.
The Navy has awarded its first contract resulting from an online auction,
and the Army's Tank-automotive & Armaments Command (TACOM), Warren,
Mich., is preparing to do the same by early June. The moves come less than
two months after David Oliver, the Pentagon's deputy undersecretary of defense
for acquisition and technology, approved the use of online auctions for
procuring military equipment.
TACOM turned to Suppliermar-ket.com, a public
auction house that provides its services to all buyers free of charge, so
the pilot will cost the Army nothing. Suppliermarket.com charges the winning
contractor a fee based on the value of the award.
If successful, the pilot would grow into a full-blown program, said
Prince Young, TACOM's director of acquisition process management. The command
likely will continue doing its online auctioning business with firms that
offer free services, another TACOM source said.
Although the online effort is expected to save money, TACOM is not yet
estimating how much.
"The Army is conducting the pilot to gauge the benefits that might accrue
from using online auctions," said Sandy McCarroll, chief of TACOM's Electronic
Contracting Group.
The focus of the TACOM effort is to explore whether items built using
military specifications can be purchased using online auctions. TACOM has
not determined what specific items might be purchased. Other Army commands,
such as the Communications-Electronics Command, Fort Monmouth, N.J., and
Space and Missile Defense Command, Redstone Arsenal, Ala., also are expected
to initiate pilot programs.
TACOM's first online auction will be a so-called reverse auction in
which contractors try to out-bid one another for the lowest price. The Navy
recently used the reverse auction technique for its first online auction.
The Naval Supply Systems Command, Mechanicsburg, Penn., on May 5 awarded
a $2.375 million contract to Hi-Shear Technology Corp., Torrance, Calif.,
for 756 recovery sequencers, which are described as the brains for the Advanced
Ejection Seat for the B-1 bomber and F-15, F-16 and F-117 fighter aircraft.
The contract award followed a 51-minute reverse auction.
Navy officials estimate they saved both time and money.
"[The auction was] very successful," said Elizabeth Van Wye, a spokeswoman
for Naval Supply Systems Command. "We achieved a 28.9 percent savings over
the historical price for these items and awarded the contract within an
hour of the auction. In standard procurements, awarding a contract can take
from days to weeks after the opening of the bids."