Reverse auctions: How electronic auctions can aid governments in significantly cutting their procurement spending and introduce greater competition in public sector contracting

Abstract

This article examines the pressures affecting procurement practices in the federal government and how reverse auctioning represents a significant change in the way acquisition will be carried out going forward. Specifically, the article describes how a major federal agency has made use of a reverse auction-centered online marketplace to revamp its procurement processes. The researcher analyzed the agency's spending data over the past four fiscal years, finding that the public-private partnership has mirrored results found across the public and private sectors. With the increased competition to be found by tapping into the power of the power of the competitive online marketplace with an ever-expanding network of suppliers, the agency has been able to achieve both significantly less reliance on sole sourced contracts and heightened participation of small and disadvantaged businesses. The agency has also seen significant improvements in its procurement processes and in the ability to better communicate and work with internal customers and suppliers. The implications of this shift are discussed. © 2013 Springer Science+Business Media.