You've come a long way

The framers of the past decade's procurement reforms, which released agencies

from old purchasing regulations and bureaucratic red tape, probably couldn't

have imagined just how much and how fast government would transform the

way it buys information technology.

In the past several years, agencies have created electronic computer

stores, blanket purchase agreements and enterprise-wide contracts. The General

Services Administration plans to test the latest craze: a reverse auction

site, which is a way for agencies to pool their buying power to drive down

the price of IT commodities such as PCs, printers, monitors and other equipment.

GSA's decision to jump into the New Economy's online reverse auction

market is a relatively quick one. Online group buying has been around for

only about a year. In the past, government would have taken much longer

to follow the private sector's lead. The fast turnaround here may be a testament

to feds' increasing comfort with trying new IT buying schemes. That's what

procurement reform is all about: Try an idea out in the market knowing that

taking risks will only lead to improved buying processes.

Several commercial online reverse auction companies plan to test the

federal market. The U.S. Postal Service has already formed a partnership

with one. So it's tempting to ask, why not leave the market to them? After

all, doesn't the private sector tend to do things better and cheaper than

government programs?

Sometimes that is true. But competition from GSA can only push those

private companies to do better. If those companies win out in the federal

market, it will be because they offer a better service. That is how the

market is supposed to work.

It still remains to be determined if GSA's reverse auction scheme is

legal. And the question of who will offer warranties and technical support

is still unanswered. Online reverse auctions most likely will find a niche

in the federal market. If the sites deliver lower prices for IT commodities

without compromising IT performance, they will have succeeded.

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