Forward thinking states and municipalities have been utilizing reverse auctions for years.  Here are five common reverse auctions that yield big savings.

Vehicles:  12-20% savings. Fire trucks and apparatus, police cars and equipment, loaders and graders, sanitation, maintenance, and utility vehicles are all good candidates for reverse auction.  Kent County states, “the participating local units are experiencing significant cost savings and in many cases, the savings are exceeding 25 percent.”

Fuel: 5-12% savings.  Running a reverse auction typically means consolidating volumes of fuel spend over the life of the contract.  It is especially important to communicate service requirements.  To meet contract objectives it is recommended to tie price to an Index - and yes you can still measure savings.  The City of Oceanside beat spot bidding methods by approximately 4%, and no longer requires the labor for daily bids.

Water and Wastewater Treatment:  7-15% savings.  Water treatment and wastewater treatment reverse auctions require a little research.  Be especially careful to understand tank ownership, acceptable chemical formulations, and delivery methodology.  Once the service requirements are understood the chemicals become a very viable and worthwhile auction candidate.  Utilizing K2 Sourcing the City of Oceanside saved over 7% in a market where chemical prices were increasing.

IT Hardware: 12-20% savings.  Technology prices drop rapidly.  Many hardware bids run on a combination of fixed prices and discounts off list.  Using the reverse auction methodology significantly improves  the amount of the discount off list and the fixed prices paid.  The FAA saved over a million dollars through the application of reverse auctions.  For multiple reasons the reverse auction process usually will beat state contracts. (K2 Sourcing guarantees the same).

Energy: 12-20% savings.  Energy reverse auctions are one of the more commonly run auctions.  One of the easier auctions to run because of the simplicity of negotiating KWH, states and municipalities are finding energy auctions are a fast method to generate savings.  Be careful about terms and peak usage.  The City of Pittsburg reduced cost by a full penny below market conditions - roughly a 12% savings.

Reverse auctions work well with items and services that can be clearly specified.  In such cases, one can expect to see substantial savings over traditional sealed bid and best and final offer methodologies.

A side benefit is the visibility.  One Government Contracting Agent K2 Sourcing worked with stated, “I suspect that reverse auctions level the playing field so much unsuccessful offerors can’t find solid ground for protesting - at least as it relates to price.”

Contact K2 Sourcing to see how reverse auctions can be applied and why they work.