Procurement

GAO: Take account of reverse-auction growth

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The government's watchdog agency recommended that federal acquisition rules be amended to better account for agencies' growing use of reverse-auction platforms for buying IT gear and products.

In a Dec. 9 report, the Government Accountability Office said it had monitored the use of reverse auctions by the Army and the departments of Homeland Security, Interior and Veterans Affairs to buy IT products and medical gear from 2008 to 2012. Most of the auctions resulted in contracts with relatively small dollar values -- typically $150,000 or less -- and a high rate of awards to small businesses.

According to GAO, the four departments have steadily increased their use of reverse auctions during that time period and awarded about $828 million through them in 2012.

Reverse auctions have been gaining steam because they are structured to spur sellers to compete for business by lowering their prices. The approach can also reduce agencies' acquisition processing time and costs, improve the transparency and collection of data, and encourage the participation of small businesses.

In a Dec. 3 blog post, Mary Davie, assistant commissioner of the General Services Administration's Office of Integrated Technology Services, said reverse auctions were among a panoply of acquisition techniques GSA is using to reduce costs for other agencies. Davie said that as of Sept. 30, the agency's six-month-old ReverseAuctions.GSA.gov site had saved 17 agencies an average of 7.27 percent, or $161,549.

In its report, GAO noted that another reverse-auction user, the Defense Logistics Agency, has issued internal guidance stating that the pricing platform should be used for all competitive purchases of more than $150,000.

GAO recommended that the director of the Office of Management and Budget take steps to amend the Federal Acquisition Regulation to address the growing use of reverse auctions and issue governmentwide guidance instructing agencies to collect data and share best practices on how to maximize competition and savings when using reverse auctions.

OMB officials mostly agreed with the recommendations but wanted to discuss them with the FAR and Chief Acquisition Officers councils.

About the Author

Mark Rockwell is a staff writer at FCW.

Before joining FCW, Rockwell was Washington correspondent for Government Security News, where he covered all aspects of homeland security from IT to detection dogs and border security. Over the last 25 years in Washington as a reporter, editor and correspondent, he has covered an increasingly wide array of high-tech issues for publications like Communications Week, Internet Week, Fiber Optics News, tele.com magazine and Wireless Week.

Rockwell received a Jesse H. Neal Award for his work covering telecommunications issues, and is a graduate of James Madison University.

Click here for previous articles by Rockwell. Contact him at mrockwell@fcw.com or follow him on Twitter at @MRockwell4.


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Reader comments

Tue, Dec 10, 2013 Peter

GAO has legitimized reverse auction use in the Federal Government. Looks like the FAR will be updated to include reverse auction guidance soon.

Tue, Dec 10, 2013 John Falls Church

Reverse Auctions need to be seriously looked at. They generally result in the Government spending MORE money than blind bid quoting. The reverse auction mechanism allows vendors to hold selling prices up, only reducing them to just below their competitor instead of submitting an aggressive price to capture the business. Then, many agencies pay a fee to reverse auction companies, making it an even worse deal.

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