Postal Service makes bid for Internet auctions
- By William Matthews
- Apr 11, 2000
Joke about "snail mail" all you want, but the U.S. Postal Service has just
pulled ahead of other government agencies in the e-commerce race. The mail
service has decided to start buying some goods and services through Internet
In an alliance with a company that specializes in conducting reverse auctions
over the Internet, the Postal Service expects to go online in May to buy
preprinted, prestamped envelopes, to lease trailers to haul mail, and to buy fuel.
Postal Service auctions will be "hosted" in Pittsburgh at the headquarters
of auction company FreeMarkets Inc. Companies interested in selling envelopes
or leasing trailers to the Postal Service will submit bids over the Internet
from computers at their home offices. The bids will come in to Pittsburgh.
Postal Service chiefs, who will be "passive participants," will probably
watch the action on computer screens at the Postal Service headquarters
in Washington, D.C.
Unlike the standard procurement process, where companies send agencies sealed
bids and contracts are awarded on the basis of a single offer per bidder,
online auctions are "dynamic." Companies typically submit several bids over
the course of an hour or two, driving the price steadily lower as they jockey
to win the contract.
Such competition usually cuts costs from 2 percent to 25 percent in auctions
conducted for businesses and state government agencies, said David McCormick,
head of FreeMarkets' public sector division.