The New Auction Block

It was just a matter of time before an Internet-savvy state or local government became bold enough to get in on the cyberauction frenzy. After all, millions of Americans each day click on popular World Wide Web sites to buy everything from Beanie Babies to baseballs slugged by the likes of Mark McGwire and Sammy Sosa.

Pennsylvania stepped up to the plate this winter, locking in an agreement with FreeMarkets OnLine Inc. The deal provides for a series of online auctions that the state's Department of General Services will use to buy simple commodities such as fuel and office furniture. By the time baseball's spring-training season rolls around, Pennsylvania and several of its vendors will have traded online to the tune of about $20 million. Said Glenn Meakem, FreeMarkets' chief executive officer and co-founder, "You would have expected a state like California to do this since California is very progressive."

It turns out that Pennsylvania's deal with Pittsburgh-based FreeMarkets is progressive for two reasons. First, it's central to the state's economic development strategy. The announcement of the agreement was timed to coincide with some political posturing: Pennsylvania Gov. Tom Ridge is signaling that he will deliver a plan to put the state ahead in the race to build an electronic-commerce infrastructure.

But second, and perhaps more importantly, the use of online auctions puts Pennsylvania at the forefront of modernizing government purchasing. It's also a sign of the times, another signal that government procurement is swiftly becoming more market-driven.

But Pennsylvania is not the only state breaking free of confining procurement practices while still upholding fair and open contracting practices. That quest to break free is the driving force behind the Massachusetts-led electronic shopping mall, or E-Mall, another experiment that is pushing the procurement envelope. Given the current climate, we're predicting that progressive government buying strategies will continue to open up on other fronts in the coming months.

It's easy to see where this is heading. If a person can buy a $3 million baseball with the click of a mouse, why couldn't state officials bargain for computers in an online auction?

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