Image via WikipediaHere's an article about the renewed focus on reverse auctions as part of an overall procurement savings program being undertaken at the DLA (Defense Logistics Agency). Here at the Reverse Auction Research Center (http://www.reverseauctionresearch.com/), we're excited not only about this effort to produce significant savings through competitive bidding in the DoD (Department of Defense), but the fact that our white paper, "Moving Forward by Going in Reverse: How U.S. Customs and Border Protection Has Achieved Important Efficiency Gains and Significant Dollar Savings through the Strategic Use of the Online Reverse Auction Marketplace in Its Procurement Operations," (available here - http://www.reverseauctionresearch.com/2010/12/announcing-release-of-reverse-auction.html), is used as Exhibit A for their undertaking!
Read the complete press release on their efforts below:
Reverse auctions save time, money by Cathy Hopkins, DLA Aviation Public Affairs
Feb. 2, 2011
DLA Aviation is re-emphasizing the use of reverse auctions to meet DLA Director Navy Vice Adm. Alan Thompson's challenge to reduce cost by 10 percent this year. .One of Defense Logistics Agency's top three focus areas is stewardship excellence – the management of processes and resources to deliver effective warfighter support at optimal cost.
In the wake of recent Defense Department budget reductions, DLA Director Navy Vice Adm. Alan Thompson issued a challenge across the agency to reduce cost by 10 percent this year.
To help meet that challenge, DLA Aviation is re-emphasizing the use of reverse auctions, a strategic initiative it first put to successful use in 2007 in support of America's military aviation community.
In reverse auctions, government contractors bid against each other in a real-time online auction. The auction is used as a pricing technique during discussions to establish the final offered prices from each bidder. Awards are made by taking those final prices into consideration with other evaluation factors identified in the original solicitation.
"It [reverse auctions] has a lot of visibility by flag officers and senior executive service leaders in DLA, to include our own leaders," said DLA Aviation's Marine Lt. Col. Shaun McDoniel, chief of its Aviation and Airframes Division I and team lead for its Cost Management Focus Group. Cost Management is one of five Aviation focus areas in 2011. He said reverse auctions are one of the initiatives under the "10 Percent Material Price Reduction Campaign Plan" that fall to his group.
"Aviation's management team is taking several steps to revitalize the tool including, assigning onsite support, mandating use of the reverse auction clause in all solicitations greater than $500,000," said Floyd Moore, deputy director for Aviation Supplier Operations. "We are also briefing the importance of the tool at various work force forums and reporting results on auction efforts."
Moore said the tool fell into disuse because of a small-dollar buy focus and a lack of onsite training and guidance.
Gwen Pearson and Donna Carter, who work as analysts in DLA Aviation's Procurement Process Support Directorate in Richmond, share the responsibility of supporting the program as its managers. Pearson said she's currently looking for parts solicitations that are good candidates for reverse auctions.
"Donna and I are coordinating with management and buyers to determine eligible solicitations," Pearson said, adding that some of the currently targeted commodities are electric components/cables, bearings, instrumentation and aircraft components.
To be eligible, buyers must have received two or more offers for competitive solicitations. Offerors have to agree to the terms of the solicitation and of the service provider in order to participate in the auction and be considered for contract award.
Inclusion of the reverse auction clause is mandatory for DLA Aviation competitive solicitations greater than $500,000 and Moore said acquisition specialists are encouraged to use reverse auctions for all competitive acquisitions greater than $150,000.
According to a white paper published by the Reverse Auction Research Center in December, research shows that the competition and opportunity afforded by reverse auctions can benefit both the buying organization and sellers. David Wyld, a professor of management at Southeastern Louisiana University, authored the paper, “Moving Forward by Going in Reverse: How U.S. Customs and Border Protection Has Achieved Important Efficiency Gains and Significant Dollar Savings through the Strategic Use of the Online Reverse Auction Marketplace in Its Procurement Operations.”
“For reverse auctions to work as a part of an organization’s acquisition strategy over the long-term, it is critical that there be tangible benefits for both sides – sellers and buyers – of the procurement equation,” Wyld wrote.
Michael Massello, a contracting officer in DLA Troop Support's Construction and Equipment Directorate, said his Philadelphia-based activity realized a better final cost through two 2010 auctions.
"The auction we held for air evaporative coolers resulted in a unit price savings for $134.80 with a 5-year savings projection of $215,680," he said. Massello also reported success on their fire extinguisher auction for which a 5-year savings of $4,366,254 is projected.
Pearson and 18 other procurement analysts attended training at DLA Troop Support in November. Since then, she has been learning to use Ariba Sourcing Professional, the auctioning system DLA uses to conduct auctions. The system provides bidding companies with online access to the auction, which is competitive and anonymous. Companies that already submitted offers for a solicitation prior to its inclusion in an auction can change their bids once the auction starts.
Carter is also developing training for buyers and plans to have an updated process available in mid-February. Once updated, acquisition specialists will be able to access it on ElkNet under DLA Aviation Acquisition Papers.
Feb. 2, 2011
DLA Aviation is re-emphasizing the use of reverse auctions to meet DLA Director Navy Vice Adm. Alan Thompson's challenge to reduce cost by 10 percent this year. .In the wake of recent Defense Department budget reductions, DLA Director Navy Vice Adm. Alan Thompson issued a challenge across the agency to reduce cost by 10 percent this year.
To help meet that challenge, DLA Aviation is re-emphasizing the use of reverse auctions, a strategic initiative it first put to successful use in 2007 in support of America's military aviation community.
In reverse auctions, government contractors bid against each other in a real-time online auction. The auction is used as a pricing technique during discussions to establish the final offered prices from each bidder. Awards are made by taking those final prices into consideration with other evaluation factors identified in the original solicitation.
"It [reverse auctions] has a lot of visibility by flag officers and senior executive service leaders in DLA, to include our own leaders," said DLA Aviation's Marine Lt. Col. Shaun McDoniel, chief of its Aviation and Airframes Division I and team lead for its Cost Management Focus Group. Cost Management is one of five Aviation focus areas in 2011. He said reverse auctions are one of the initiatives under the "10 Percent Material Price Reduction Campaign Plan" that fall to his group.
"Aviation's management team is taking several steps to revitalize the tool including, assigning onsite support, mandating use of the reverse auction clause in all solicitations greater than $500,000," said Floyd Moore, deputy director for Aviation Supplier Operations. "We are also briefing the importance of the tool at various work force forums and reporting results on auction efforts."
Moore said the tool fell into disuse because of a small-dollar buy focus and a lack of onsite training and guidance.
Gwen Pearson and Donna Carter, who work as analysts in DLA Aviation's Procurement Process Support Directorate in Richmond, share the responsibility of supporting the program as its managers. Pearson said she's currently looking for parts solicitations that are good candidates for reverse auctions.
"Donna and I are coordinating with management and buyers to determine eligible solicitations," Pearson said, adding that some of the currently targeted commodities are electric components/cables, bearings, instrumentation and aircraft components.
To be eligible, buyers must have received two or more offers for competitive solicitations. Offerors have to agree to the terms of the solicitation and of the service provider in order to participate in the auction and be considered for contract award.
Inclusion of the reverse auction clause is mandatory for DLA Aviation competitive solicitations greater than $500,000 and Moore said acquisition specialists are encouraged to use reverse auctions for all competitive acquisitions greater than $150,000.
According to a white paper published by the Reverse Auction Research Center in December, research shows that the competition and opportunity afforded by reverse auctions can benefit both the buying organization and sellers. David Wyld, a professor of management at Southeastern Louisiana University, authored the paper, “Moving Forward by Going in Reverse: How U.S. Customs and Border Protection Has Achieved Important Efficiency Gains and Significant Dollar Savings through the Strategic Use of the Online Reverse Auction Marketplace in Its Procurement Operations.”
“For reverse auctions to work as a part of an organization’s acquisition strategy over the long-term, it is critical that there be tangible benefits for both sides – sellers and buyers – of the procurement equation,” Wyld wrote.
Michael Massello, a contracting officer in DLA Troop Support's Construction and Equipment Directorate, said his Philadelphia-based activity realized a better final cost through two 2010 auctions.
"The auction we held for air evaporative coolers resulted in a unit price savings for $134.80 with a 5-year savings projection of $215,680," he said. Massello also reported success on their fire extinguisher auction for which a 5-year savings of $4,366,254 is projected.
Pearson and 18 other procurement analysts attended training at DLA Troop Support in November. Since then, she has been learning to use Ariba Sourcing Professional, the auctioning system DLA uses to conduct auctions. The system provides bidding companies with online access to the auction, which is competitive and anonymous. Companies that already submitted offers for a solicitation prior to its inclusion in an auction can change their bids once the auction starts.
Carter is also developing training for buyers and plans to have an updated process available in mid-February. Once updated, acquisition specialists will be able to access it on ElkNet under DLA Aviation Acquisition Papers.
David Wyld, Professor of Management at Southeastern Louisiana University and Director of the Reverse Auction Research Center (http://www.reverseauctionresearch.com/)
1 comments:
Logistics has a lot of issues and firms are trying to procure. This is a good auction.
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