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
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.