Strategic Sourcing Europe

A very clear recommendation from Texas comptroller, published in 2000: Use “Reverse Auctions” to Reduce Procurement Costs!

In an on-line “reverse auction,” the suppliers, rather than the buyers, bid for contracts to provide goods; prices start high and go lower as the bidding continues. Numerous governments are using this technique to save money and increase competition in the bidding process. State government should use this technique to obtain goods and services.

Using reverse auctions, the State of Pennsylvania cut its expenditures for aluminum for license plates and coal for heating by 10 percent and saved 31 percent on office furniture. (Some of these savings may be attributable to aggregated buying power, since these reverse auctions marked the first time the state had bought some of these commodities on a statewide, rather than a regional, basis.)

The federal government has recognized the potential of reverse auctions, and the federal General Services Administration (GSA), the US Postal Service (USPS) and the US Navy are all using or planning to use reverse auctions.

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