Federal agencies hope to generate lower prices on non-complex commodities and simple services (from office supplies to medical equipment) via reverse auctions but are reverse auctions actually meeting the intended competition and cost intentions? A U.S. Government Accountability Office (GAO) study on this topic was released December 9, 2013. Entitled “Reverse Auctions – Guidance Is Needed to Maximize Competition and Achieve Cost Savings (GAO-14-108)”, the GAO study indicates that the potential benefits of reverse auctions – competition and savings – had not been maximized at the four agencies studied. During FY 2008 through 2012 the Departments of the Army, Homeland Security, the Interior, and Veterans Affairs used reverse auctions to acquire predominantly commercial items and services, primarily information technology products and medical equipment and supplies. Most of the auctions resulted in small dollar value contracts of $150,000 or less, with a high rate of award to small businesses. The study also found that the four agencies used the same commercial services provider (FedBid) to conduct their reverse auctions and paid a variable fee for the service of up to 3 percent of the winning bid amount.
Almost half of reverse auctions were used to obtain items from pre-existing contracts that in some cases resulted in