As agencies ramp up their use of reverse auctions, they are struggling to maximize their benefits, according to a Government Accountability Office report released Dec. 9.
The GAO said the use of reverse auctions at the Interior and Veterans Affairs departments, the Army and the Department of Homeland Security have more than doubled since fiscal 2008 — from about $400 million in 2008 to $828 million in 2012.
Agencies mostly use reverse auctions for the purchase of IT equipment or medical supplies, according to the GAO.
But in many cases surveyed by the GAO the reverse auctions attracted no “interactive bidding” — where companies bid against each other to sell their products or services — which serves to lower prices and is a key feature in successful reverse auctions.
Agencies were also still paying contract fees for existing contracts while paying the variable fee to conduct a reverse auction, according to GAO.
“As a result, confusion exists about their use and agencies may be limited in their ability to maximize the potential benefits of reverse auctions,” GAO said.
The GAO recommends the Office of Management and Budget develop governmentwide guidance on the use of reverse auctions and at what cost thresholds agencies should consider using the process.
OMB should also advise agencies to collect reverse auction data and analyze the fees and costs involved so agencies came determine how cost-effective reverse auctions are and to identify best practices.