Members lead MICC in reverse auction savings of $21 million
November 7, 2013
- MICC saves $21.8 million through reverse auctions
- Reverse auctioning is an online, fully automated process
- Process offers greater efficiencies for customers
JOINT BASE SAN ANTONIO-FORT SAM HOUSTON, Texas (Nov. 7, 2013) -- Two Mission and Installation Contracting Command members are among the many who helped champion more than $21.8 million in savings for the Army in fiscal 2013 through reverse auctioning.
Reverse auctioning allows Army requirements to be solicited online through a fully automated process offering greater efficiencies for both MICC customers and contracting personnel in a fiscally challenging environment.
Laura Cannady, a contracting officer with the 900th Contingency Contracting Battalion at Fort Bragg, N.C., led the MICC and Army Contracting Command by saving her Army Reserve Command customers more than $2.3 million through reverse auctions last fiscal year.
Topping the list of MICC members with the most actions awarded through reverse auction in fiscal 2013 with 68 was Marvene Falgout, a contract specialist responsible primarily for purchasing at Fort Stewart, Ga.
A rewrite of the Federal Acquisition Regulation in 1997 removed the prohibition of auctions and paved the way for the Department of Defense to establish reverse auctioning as an option in the sourcing process over the next few years. Employed sparingly throughout the Army, it was not until August 2012 that a command policy memorandum made its use mandatory by members of the MICC, according to Kimberly Drake, the chief of the MICC Policy and Acquisition Training Division.
The policy directs the use of reverse auctions for all acquisitions above micro-purchase thresholds defined in the Federal Acquisition Regulation when competitively purchasing commercial supplies and services in a specific number of product and service codes. Those include information technology, furniture, clothing and individual equipment, office supplies, construction and building materials, training aids, and utilities and housekeeping services. A complete list of relevant product and service codes can be found in MICC Command Policy Memorandum 12-15, available on the MICC SharePoint site.
Recognizing the benefit of savings, ACC followed suit and issued similar policy in February 2013.
Cannady, a member of the contracts management division, said she was able to leverage the use of reverse auction with an Army Reserve requirement for the procurement of laptops and peripherals. She said organizations whose requirements fall under North American Industry Classification System Code 334111, Electronic Computer Manufacturing, stand to realize greater savings through reverse auction regardless of being restricted to the Army's Computer Hardware, Enterprise Software and Solutions program as a contracting vehicle.
"Contractors actively compete against each other's prices in order to obtain the contract, which resulted in … very competitive prices that may not have been realized through another procurement method," she said.
Falgout said familiarity and buy-in of the process by MICC customers is critical. A majority of the her awards did not fall in to any particular product code, but she said the education element involved with convincing her customers that reverse auctioning is the best sourcing avenue for supply items made believers of them.
"At first they were hesitant about vendors who could not perform or deliver the products they needed, but 98 percent of the time they get just what they asked for," said Falgout, "and they actually wind up spending less."
Reverse auction requirements are similar to conventional contract vehicles but instead are conducted online and rely on interactive bids during a defined period. Similar to private, personal auction sites, a number of bids may be made over the course of the auction window, each disclosed to other bidders. This nature typically achieves greater savings as the bidding process generates increased competition and allows the requirement to be awarded to the lowest bidder so long as they meet a pre-award survey and review.
After careful review of customer requirements, Cannady recommends the use of reverse auctioning to take advantage of its efficiencies in the speed of the solicitation by minimizing the need to contact individual vendors for quotes and reduction in the acquisition timeline to five days or fewer.
"My peers have expressed satisfaction with the benefits of the reverse auction process, and we have all benefited from the clone feature that saves time by allowing you to clone a similar purchase then tailor to the specific needs of the requirement," Cannady said.
Reverse auctioning also incorporates an added benefit of documentation for audit integrity, which Cannady found helpful in avoiding a potential protest regarding a discrepancy in the closing time.
"After receiving complaints from some of the offerors, we were able to obtain a detailed report regarding rejected offers submitted and were able to successfully avoid any formal complaints," she said.
Falgout agrees the process maintains the integrity of contracting process as her market research extends beyond the bidding process and includes examining vendors, online product availability and any documents attached to the bid.
The $21 million saved through reverse auctions was part of more than $852 million in overall savings by the MICC in fiscal 2013. Contracting professionals throughout the command achieved the savings through contract negotiations, reverse auctioning and Government Purchase Card Program rebates. The savings achieved allowed Army organizations to reallocate their monies toward other mission priorities.
The MICC is responsible for providing contracting support for the warfighter at Army commands, installations and activities located throughout the continental United States and Puerto Rico. In fiscal 2013, the command has executed more than 43,000 contract actions worth more than $5.3 billion across the Army, including more than $2.1 billion to American small businesses. The command has also managed more than 780,000 Government Purchase Card Program transactions this fiscal year valued at an additional $880 million.