Reverse Auctions - National 8(a) Association

Growing Your Business

“A Type of e-auction that is conducted online, in real-time, between a single buying organization and pre-qualified suppliers. Suppliers compete in presenting bids to the buyer…whose specifications for design, quality, deliver, and related terms and conditions have been clearly defined.” -Institute for Supply Management

RA’s are auctions that enable Sellers to proactively compete in real time to win business opportunities

Several factors affecting government operations required it to identify new, innovative and affordable ways to meet mission needs, including:

 Budget

and staff management challenges  A push for openness and increased competition  Advancements in technology

14 of 15 Cabinet Level Organizations Agriculture

Health & Human Services

Commerce

Homeland Security

Transportation

Defense

Interior

Treasury

(incl. Army, Navy, Marine Corps)

Education

Energy

Justice

State

Veteran Affairs

Labor

5

Use of reverse auctions quickly proved to improve numerous core business functions, including:

 Selecting

suppliers without rounds of manual negotiations  Disseminating information easily  Reducing inventory levels/costs due to quicker cycle times  Enhancing transparency

 Keeps

with FAR requirement that $3K$150K go to small business  Use is on the rise and expanding  Recommends updating the FAR to include reverse auction  Preferred tool of buyers in FYQ4

Traditional auctions are designed to help the Seller maximize profit of a particular good or service through an increasing bid process

SELLER

BUYERS

SELLER

Looking to sell a good or service to the highest bidder posts a Buy

Increasingly bid against each other to purchase the good or services

Sells good or service at the highest price

Reverse auctions are designed to help the Buyer maximize competition while the Seller grows their business

BUYER

SELLERS

BUYER

SELLER

Posts a solicitation for a requested good or service.

Decreasingly bid against each other to provide the good or service.

Procured a good or service at a competitive price.

Grew business by gaining a customer and making a sale.

 Optimized

efficiencies  Competitive prices  Increased small business utilization  Documented, auditable results  Compliance

 Access

to real opportunities  Customer base growth  Opportunity to actively compete  Process standardization across agencies

•

FY13: $1.25 Billion awarded by Federal Governments to U.S. small businesses, including $368M for Minority-Owned Small Businesses

2013 SMB Award Volume ($M) $1.25B

22.7% $518M

77.3%

Small Business Other

$368M $333M

$265M $259M $218M

Knowing the right type of commodity or simple service good for a reverse auction is key to a success

Clear Specifications

Compelling Spend

Competitive Supply Base

 No

costs  No risk  Government is using more and more  Your competition is using more and more

 Register

at FedBid (www.FedBid.com)  GSA Schedule holders: LOGIN to GSA (http://reverseauctions.gsa.gov)  Talk to local buyers about possible reverse auction events being held

 Reverse

Auctions

-

Continue to be a best practice for effective procurement strategies

-

Rapidly becoming a leading procurement process throughout the public and private sectors

 Small

Businesses

-

Increased pipeline while reducing level of effort

-

Maintain control of bids and improves competitive intelligence

 Government

Small Business Programs

-

Improves goal achievement

-

Support awareness for growth opportunities