REVERSE AUCTIONS

Growing Your Business

WHAT IS A REVERSE AUCTION?“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

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

WHY DID THE GOVERNMENT START TO USE REVERSE AUCTIONS?

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

WHAT AGENCIES USE REVERSE AUCTIONS?

5

14 of 15 Cabinet Level Organizations

State

Defense(incl. Army, Navy, Marine Corps)

Education

HomelandSecurity Transportation

Justice

Interior Treasury

LaborEnergy

Commerce

Health &Human Services

Agriculture

Veteran Affairs

PROVEN RESULTS OF REVERSE AUCTIONS

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

GAO HIGHLIGHTS

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

HOW DOES IT WORK? TRADITIONAL AUCTION

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

SELLERLooking to sell a

good or service to the highest

bidder posts a Buy

BUYERSIncreasingly bid

against each other to purchase the

good or services

SELLERSells good or service at the highest price

HOW DOES IT WORK? REVERSE AUCTION

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

SELLERSDecreasingly bid

against each other to provide

the good or service.

SELLERGrew business by

gaining a customer and making a sale.

BUYERProcured a good or

service at a competitive price.

BUYERPosts a solicitation

for a requested good or service.

ADVANTAGES FOR BUYERS Optimized efficiencies Competitive prices Increased small business utilization Documented, auditable results Compliance

ADVANTAGES FOR SELLERS Access to real opportunities Customer base growth Opportunity to actively compete Process standardization across

agencies

TANGIBLE RESULTS FOR SMALL BUSINESS• FY13: $1.25 Billion awarded by Federal Governments to U.S. small

businesses, including $368M for Minority-Owned Small Businesses

77.3%

22.7%

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$1.25B

$368M $333M $265M $259M $218M

$518M

2013 SMB Award Volume ($M)

WHAT ITEMS ARE GOOD FOR A REVERSE AUCTION?

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

WHY NOT GET INVOLVED?

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

HOW TO GET INVOLVED?

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

more

SUMMARY 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