FedBid's reverse auction business booms

Agencies are saving more money and using the reverse auction more often, the company says

Sales through online reverse auctions have grown by more than 50 percent since 2008, FedBid, one of the leaders in hosting the auctions, reported today.

Government agencies bought $1.15 billion worth of products and commodities through the company’s online marketplace in fiscal 2010, which is more than 30 percent higher than in 2009 and 50 percent higher than in 2008, the company said. There was $875 million in sales in 2009, and $728 million in 2008.


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In 2010, agencies used FedBid for more than 14,000 purchases, which is 16 percent higher than in 2009, the company said. Agencies that used this style of auctioning in 2010 saved 12 percent over the amount they expected to pay on their purchase, FedBid said.

In an online reverse auction, companies compete against each other by offering lower bids for a government contract. It’s the opposite of a traditional auction where multiple buyers compete for a purchase, which drives the price up.

FedBid’s sales growth has come as agencies hunt for new ways to conserve resources. Last year, Daniel Gordon, administrator of the Office of Federal Procurement Policy, mentioned these types of auctions as one way to get better prices from contractors.

In a memo from September, Jeffrey Zients, federal chief performance officer and deputy director of management at the Office of Management and Budget, told agencies to continue to use “innovative procurement methods, such as the use of web-based electronic reverse auctions.”

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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