Reverse Auctions

Webinar Series

May 31, 2012

Agenda

• Introduction

• What are Reverse Auctions?

• What are the benefits of Reverse Auctions?

• Savings using BidSync

Procurement issues facing government

• Don’t get best prices or value for money

• Unsustainable growth in spend

– More demand, restricted budgets

• Overspend due to uncompetitive bidding environment

• March 2009

– President directed agencies (federal) to save $40 billion in contracting annually by FY 2011

– Initiative promoted to adopt fiscally responsible acquisition practices

– Reduced average spend from 12% to 4% in FY 2009 = $19 billion in savings for FY 2010

– One of the strategic sourcing methods = Web-based electronic Reverse Auctions

What is a Reverse Auction?

• Roles of buyers and vendors/suppliers are reversed

• Prices decrease as vendors/suppliers underbid each other

• Supplier name is kept confidential

• Real time bidding

• Extremely successful for procuring commodities, rather than services

Benefits of Reverse Auctions

• Obtain more favorable pricing from vendors from our national database of over 700,000 vendors.

• Significantly reduce your sourcing/bidding cycle • Vendors have immediate access to the current

lowest offer • Lower overall supply costs • Vendors don’t need to wonder if their bid was

too high or too low • Lessens the time it takes vendors to win business.

How can Reverse Auctions save me money?

• In addition to robust reporting and audit trail capabilities, our Reverse Auction functionality allows agencies to:

• Define and configure bid ending parameters • Allow bidding activity to be viewed in real-time • Competitive bidding environment by displaying other vendors’

offers • Tiered or multi-step bidding and pre-bid document facilitation • System-generated event notifications and electronic offer

submission • Post award detailed tabulation and reports • Effortless electronic awarding

Agency Benefits • Promotes a severe competitive bidding

environment = substantial savings

• Purchase of commercial commodities that have:

– Well-defined specifications

– Universally accepted standards

– Bulk purchases

– Products with an established, qualified base of suppliers

Vendor Benefits • Bidders don’t just get one shot at getting the

business – Re-bidding by lowering their price depending on their

competition until they are successful or unwilling to go any lower to continue in the process.

– Your agency is the winner!!

• Your agency can still evaluate the bidder per business rules

• BAFO use in reverse auctions – after initial RFI pre-qualifying bidders and market research

Examples of savings on BidSync • Bids released on the system since December of 2001 – 956 Reverse Auctions • Over $25.3M awarded on the system since 2003 by agencies across the

country • An average savings of $23,000 on goods and services including:

– IT/Computer – copy paper – construction related goods – food – office supplies – law enforcement/safety support materials – vehicles

• Suppliers able to place price offers with an average discount of over $5,700 • Saved almost $1M in purchasing flour for prison system – Maricopa County,

AZ • Savings of almost $6M on life insurance

Average Savings by Agency Type – School Districts & Universities:

• Savings of average of $9,800 on IT/computer, office & classroom supplies, copy paper • Average of over 5 suppliers placing legitimate offers • Over $5M awarded on the system since 2003

– Counties • Savings of average of $24,000 on IT/computer, office & classroom supplies, copy paper • Average of over 7 suppliers placing legitimate offers • Over $5.8M awarded on the system since 2003

– Cities & Towns • Savings of average of over $30,000 on IT/computer, office & classroom supplies, copy

paper • Average of over 5 suppliers placing legitimate offers • Over $4.9M awarded on the system since 2003

– States • Savings of average of over $18,000 on IT/computer, office & classroom supplies, copy

paper • Average of over 4 suppliers placing legitimate offers • Over $9.3M awarded on the system since 2003

*Awarded on BidSync since 2003

Average Savings by Industry – Computer/IT/Electronics

• Over $2.9M awarded - savings on an average of $17,000

– Copy Paper • Over $13M awarded - savings on an average of over $23,900

– Construction & street maintenance related materials • Over $3.9M awarded - savings on an average of over $37,000

– Office/school supplies • Almost $180,000 awarded - savings on an average of over $4,300

– Law enforcement/safety support materials • Over $225,000 awarded - savings on an average of over $2,600

– Landscaping & maintenance materials • Over $577,000 awarded - savings on an average of over $5,300

– Vehicles/trailers • Over $67,000 awarded - savings on an average of over $3,200

*Awarded on BidSync since 2003

Some Agencies using BidSync for Reverse Auctions

• Maricopa County, AZ • State of Connecticut

– Department of Administrative Services

• State of Utah • Contra Costa County, CA • Collin County, TX • City of Lubbock, TX • City of Grand Prairie, TX • Alpine School District, UT • Idaho Falls School District, ID

Other Examples • Department of General Services, State of Pennsylvania

– They were the first government entity in the nation to use Reverse Auctions.

– They purchased: • Rock salt for roads achieving a $2.5 million savings on a $30 million purchase

(about an 8 percent reduction); • Rolls of aluminum for license plates at a 10 percent savings; and • Coal to be used for heating state buildings

– While it cost Pennsylvania $1.3 million in fees, they saved $8.5 million!

• Homeland Security Department as an important new user of reverse auctions. – Department’s acquisition officials held more than 2,000 such

procurements in fiscal 2010.

• Naval Supply Systems Command – Savings have ranged from 2-25%, with a weighted average of 18%.

Bid Detail Overview

Bid History

Agency View: Bid detail

Line Item Overview

c

Line Item Overview – bidding activity (graphical view)

Agency View: Bid detail

Vendor View: Bid detail page

Vendor view: Placing an offer

Vendor view: Reviewing an offer

Vendor view: Confirmation of an offer

BidSync Security Standards • SAS70 type II certification and audit processes • Disaster recovery and business continuity plans in place for BidSync headquarters

and support services • Customer Solutions ticket history available for review via the BidSync portal • Physical Security

– Data center access limited to data center technicians – Biometric scanning for controlled data center access – Security camera monitoring at all data center locations – 24 x 7 onsite staff provides additional protection against unauthorized entry – Additional offsite backup and recovery measures to enhance fail-safe redundancy efforts

• System Security – System patching configured to provide ongoing protection from exploits – All communications and data transfers are encrypted using high-grade encryption practices – Access to BidSync’s on-demand platform of applications is only available via secure sessions

(https) and only via authenticated login and password.

About BidSync • Since 1999

• Over 1,000 registered agencies

• Over 700,000 vendors in our database

• Headquarters in American Fork, Utah

• SaaS-deployed eProcurement solutions

– BidSync eProcure™

– BidSync Builder™

– BidSync ProcurePointe™

Questions?