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GCN Home > June 12, 2000 issue

Navy, Army find savings in initial reverse auctions

By Bill Murray
GCN Staff

Pricing dropped more than 28 percent for the Navy during a 51-minute online reverse auction among three pre-approved vendors last month, officials said.

The sale, one of the federal government’s first reverse auctions, was a success despite network connectivity problems, Navy officials said.

Meanwhile, the Army Communications–Electronics Command made two small buys in mid-May through reverse auctions. CECOM officials from both services said such sales are consistent with the Federal Acquisition Regulation (FAR) and let the Navy make buys based on best value rather than just low price.

In a reverse auction, sellers bid their prices for specified items and the lowest bidder generally, though not always, wins.

FreeMarkets Inc. of Pittsburgh, which hosted the auction, holds real-time Web-based auctions, said Karen Kovatch, a company spokeswoman. Through FreeMarkets’ Web-based BidWare software, bidders’ names were protected from one another, but Navy officials could see the names of all the companies, she said.

In addition to names or aliases for the companies, BidWare lists the scheduled closing time for the auction, as well as lots, if the auction has been broken down into components, she said. Auction participants can find out through BidWare which parts or services each auction requires, as well as any special delivery data, Kovatch said. The software lets them know if the auction is closed, open or pending, meaning it’s about to close. Bidders can also find the price the Navy has historically paid for the parts, she said.

Hi-Shear Technology Corp. of Torrance, Calif., won a $2.37 million Naval Inventory Control Point (NAVICP) delivery order for 756 recovery sequencers used in B-1, F-15, F-16 and F-117 aircraft ejection seats, said David McCormick, public-sector business president at FreeMarkets, which collects a percentage of each auction made through its site.

Although the government typically awards a contract after weeks of reviewing sealed competitive proposals, Hi-Shear Technology won its contract within an hour after the reverse auction’s closing.



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