Reverse Auction

What it is and How it can work for you.

What is a Reverse Auction?

A reverse auction is an on-line bidding process which allows vendors to bid as often as they wish during the auctioning period. Three or more vendors should be available to participate in a reverse auction.

 It is important to remember that a reverse auction is only a pricing tool. It does not preclude any other aspect of the acquisition process. It is simply a technique to capture the best pricing available at auction time.

 Reverse auctions are secure, web-based, downward price auctions during which pre/post-qualified suppliers lower their prices real-time for Government products. Reverse auctions are relatively new to the Federal government. This procurement, bidding, and e-Gov tool appears to be best suited to buying a large volume of simple, well-defined, or standardized commodities. However, reverse auctions are consistent and compatible in making best value awards. During an auction, bidders are aware of when the prices change; however, they do not know the names of their competitors. The dynamic competition inherent in reverse auctions has resulted in pricing that is closer to that of the true market. On average, reverse auctions result in a 10% to 24% price reduction over that of traditional pricing methods.

What are the Roles and Responsibilities of Participants?

NIH Reverse Auction Team

Lead/Coordinate Effort Assist in Commodity Selection Assist in Enabler Selection Develop Specifications Monitor Reverse Auction Assist with any aspect of the acquisition process

Enabler

Coordinate Reverse Auction requirements with vendors Educate vendors to the Reverse Auction process Instruct vendors in Reverse Auction procedures Ensure vendor equipment is appropriate and properly connected Conduct a successful mock Reverse Auction Monitor/support the Reverse Auction Provide Reverse Auction documentation

Vendors/Bidders
Abide by all conditions of the solicitation

Submit samples if applicable Have proper web/internet connections Be punctual Abide by the rules of Reverse Auction Participate in the instructional mock reverse auction Participate in the live Reverse Auction

Who makes up the NIH Reverse Auction Team?

The NIH Office of Logistics and Acquisition Operations (OLAO) has various types of expertise and can assist or perform all aspects of the Reverse Auction for your organization. The OLAO staff includes:

Technical Specification Writers

Contracting Officers Computer/Equipment Specialists Certified Government Project Officers These proven capabilities are available to your organization and can be used in full or to supplement your existing staff and resources

What type of Documentation do you get for your file when the Auction is over?

The information listed in the slides to follow can be provided within days after the conclusion of the Reverse Auction. This Reverse Auction Report, or portions of it, may be useful to Contract Specialists, Purchasing Agents, and Program Officials for populating their acquisition files and planning subsequent actions.

A Reverse Auction Summary generally contains the following types of information: Vendors

Date
Time Number of extensions, if any Bid results/ranking

Detailed vendors list including appropriate demographics Detailed requirements list Bidding History

Price reductions as a result of the Reverse Auction Summary of vendor bids Connection log, demonstrating proof of online capability

Completed Reverse Auctions

CUSTOMER: Office of Logistics and Acquisition Operations COMMODITY: Handiwipes & Pipette Tips DATE: May 10, 2001 GOVERNMENT COST EST: $1,363,448.00 COST SAVING% ACHIEVED: 29% DECREMENT USED: $0.01 (Handiwipe); N/A (Pipette Tip) ACTUAL COST SAVINGS: $395,400.00 ENABLER COST: Gratis ENABLER: Oracle LENGTH OF CONTRACT: 1 Base - 4 Options Starting Price Used ____________________________________________________________________________________ CUSTOMER: Clinical Center COMMODITY: Paper Towels & Toilet Tissue DATE: December 14, 2001 GOVERNMENT COST EST: $1,980,399.00 COST SAVING% ACHIEVED: 25% DECREMENT USED: $ ACTUAL COST SAVINGS: $495,099.75 ENABLER COST: $2,500.00 ENABLER: CIS Global LENGTH OF CONTRACT: 1 Base - 4 Options Starting Price Used ____________________________________________________________________________________ CUSTOMER: COMMODITY: DATE: GOVERNMENT COST EST: COST SAVING% ACHIEVED: DECREMENT USED: ACTUAL COST SAVINGS: ENABLER COST: ENABLER: LENGTH OF CONTRACT: Food & Drug Administration Copier Paper September 2, 2002 $1,297,302.00 16.70% $500.00 $216,649.43 $10,000.00 CIS Global 1 Base - 1 Option

Starting Price Used

CUSTOMER: DHHS-wide COMMODITY: Copier Paper DATE: September 13, 2002 GOVERNMENT COST EST: $6,171,400.00 COST SAVING% ACHIEVED: 17.50% DECREMENT USED: $1,000.00 ACTUAL COST SAVINGS: $1,079,995.00 ENABLER COST: $15,000.00 ENABLER: CIS Global LENGTH OF CONTRACT: 1 Base - 1 Option Starting Price Used __________________________________________________________________________________ CUSTOMER: Clinical Center COMMODITY: Can Liners & Bags DATE: January 9, 2003 GOVERNMENT COST EST: $327,460.00 COST SAVING% ACHIEVED: 35.06% DECREMENT USED: $ ACTUAL COST SAVINGS: $114,807.47 ENABLER COST: $12,238.80 ENABLER: Global e Procure LENGTH OF CONTRACT: 1 Base - 4 Options Starting Price Used __________________________________________________________________________________ CUSTOMER: COMMODITY: DATE: GOVERNMENT COST EST: COST SAVING% ACHIEVED: DECREMENT USED: ACTUAL COST SAVINGS: ENABLER COST: ENABLER: LENGTH OF CONTRACT: Office of Logistics and Acquisition Operations Shipping Boxes July 9, 2003 $266,139.00 9.26% $665.00 (.25%) $24,644.47 $10,000.00 Global e Procure 1 Base - 2 Options No Starting Price Used

CUSTOMER: Office of Logistics and Acquisition Operations COMMODITY: Surgical Mask DATE: July 31, 2003 GOVERNMENT COST EST: $160,557.30 COST SAVING% ACHIEVED: 15% DECREMENT USED: $0.01 ACTUAL COST SAVINGS: $24,083.60 ENABLER COST: $4,000.00 ENABLER: Procuri LENGTH OF CONTRACT: 1 Base - 2 Options No Starting Price Used __________________________________________________________________________________ CUSTOMER: Office of Logistics and Acquisition Operations COMMODITY: Surgical Gloves DATE: July 31, 2003 GOVERNMENT COST EST: $341,155.58 COST SAVING% ACHIEVED: 16.3% DECREMENT USED: $100.00 ACTUAL COST SAVINGS: $55,608.36 ENABLER COST: $4,000.00 ENABLER: Procuri LENGTH OF CONTRACT: 1 Base - 2 Options Starting Price Used __________________________________________________________________________________ CUSTOMER: COMMODITY: DATE: GOVERNMENT COST EST: COST SAVING% ACHIEVED: DECREMENT USED: ACTUAL COST SAVINGS: ENABLER COST: ENABLER: LENGTH OF CONTRACT: Clinical Center Toner Cartridges September 22, 2003 $504,952.53 59.35% $250.00 $299,697.08 $10,000.00 Global e Procure 1 Base - 1Option

No Starting Price Used

CUSTOMER: Office of Research Services COMMODITY: Bottled Water DATE: April 20, 2004 GOVERNMENT COST EST: $1.4 Million COST SAVING% ACHIEVED: 43% DECREMENT USED: $500.00 ACTUAL COST SAVINGS: $605,000.00 ENABLER COST: $10,000.00 ENABLER: CIS Global LENGTH OF CONTRACT: 1 Base - 4 Options No Starting Price Used __________________________________________________________________________________ CUSTOMER: Office of the Director COMMODITY: Box Delivery Trucks DATE: July 13, 2005 GOVERNMENT COST EST: $356,830 COST SAVING% ACHIEVED: 34.7% DECREMENT USED: $100.00 ACTUAL COST SAVINGS: $91,830.00 ENABLER COST: $10,000.00 ENABLER: e Federal Procure LENGTH OF CONTRACT: Single Buy No Starting Price Used __________________________________________________________________________________ CUSTOMER: COMMODITY: DATE: GOVERNMENT COST EST: COST SAVING% ACHIEVED: DECREMENT USED: ACTUAL COST SAVINGS: ENABLER COST: ENABLER: LENGTH OF CONTRACT: Clinical Center Trash can liners July 26, 2006 $614,257.50 25.97% $ .10 $159,529.50 $10,000.00 Global eProcure 1 Base - 4 options

Starting Price Used

TOTAL COST SAVINGS ACHEIVED:

$3,564,344.66

http://www.olao.od.nih.gov/Acquisitions/PlanningAndSupport/