Let the bids begin

eAuctions, sometimes called reverse auctions or procurement auctions, allow suppliers to bid against each other online in order to win a contract. They can factor in both price and quality measures to arrive at the most competitive bid and can deliver highly competitive pricing and, often, considerable savings compared to existing contracts.
   
The use of eAuctions by the public and private sectors has been patchy. The public sector has not made much use of eAuctions whilst the private sector enthusiastically adopted eAuctions but, with some unsatisfactory outcomes, is now reluctant to continue.
   
It is possible, though, to find examples of good practice and evidence that, properly managed, eAuctions can deliver greater efficiencies. There are organisations that have consistently got eAuctions right from private firms running many hundreds of eAuctions every year to the public sector running successful and effective eAuction programmes. The series of OGC IT hardware eAuctions has delivered savings of £50 million for the public sector.

Keeping e-auctions on the agenda

These successes have maintained a level of interest in eAuctions although participation has varied particularly in the public sector. There has been renewed interest following the publication of the pan-government eProcurement policy to encourage more procurement to be undertaken electronically. As part of this policy, OGC has taken the lead and set up the first pan-government Centre for eAuctions. The Centre will build on experience and reputation of OGC and be rolled out to other categories of spend to continue to generate measurable cash savings for organisations that collaborate through eAuction.   
   
The OGC Centre for eAuctions will provide co-ordination and support for eAuctions across central and local government, particularly where there is scope for increased collaboration. The intent is to build on existing eAuctions and to use the Centre to facilitate planned future eAuctions and to ensure that collaboration occurs at all times. There is a definite emphasis on “value add” in not only delivering a successful eAuction but also in training stakeholders in how to identify and project manage an eAuction through to competent delivery.
   
The Centre will look to harness greater efficiencies from the existing eAuction programmes across Whitehall and the wider public sector by supporting the co-ordination of resource, establishing a consistent approach and providing a platform for coalitions. It will aim to influence public sector spend of £820 million and help achieve savings of over £250 million by the end of 2010/11.

Supporting e-auctions
The Centre of Excellence will build on existing activity and work closely with Regional Improvement and Efficiency Partnerships, Buying Solutions and other Professional Buying Organisations to recruit participants, sponsor the activity and support implementation. This will be in addition to providing the focus and support for public sector eAuction activity more widely. Another significant role of the Centre will be to establish sustainable coalitions of public sector organisations post-eAuction to ensure that all supplier issues are handled by the coalition and thus growing greater supplier awareness and supplier management.
    
The Pro5 group of Professional Buying Organisations is supportive of the OGC’s eAuction programme. Plans for a specific eAuction for local government in ICT hardware is already underway built from a Pro5 framework. This is likely to be the first eAuction managed by the Centre with more to follow. The work programme will be available on the OGC website from early 2010 with details how the public sector and suppliers can get involved.

Building on success
The OGC has been running a rolling programme of IT hardware eAuctions since September 2005. These are collaborative projects with up to 47 participating organisations at any one time working together to conduct a single procurement. To date 11 eAuctions have been completed, sourcing products worth £158 million (at pre-auction prices), delivering savings of £50 million (31 per cent). The 11 eAuctions have enabled over 600 public sector organisations to access best in class prices for desktops, laptops, printers and servers.
   
As well as delivering savings, the ICT hardware eAuction programme has created a network of individuals who are experienced in operating the eAuction projects. It has identified organisations that are keen to collaborate with and learn more from each other.
   
eAuctions do need careful preparation and must adhere to EU procurement regulations. A key feature of public sector eAuctions is that the most competitive bid on the day must result in being sourced as the business. OGC has developed a well-defined and engineered implementation process where quality and whole life cost are central. The competitiveness of bids is determined by a combination of quality scores and pricing.
   
Preparation is challenging when eAuctions are run collaboratively. To help this process, OGC has developed a particular capability in the area of collaborative eAuctions. It enables several public sector organisations to combine their requirements and offer large contracts to suppliers.

What are the centre’s aims?
Through the Centre of Excellence, OGC will provide technical expertise to manage the eAuction process to get organisations to the right result. This hands-on element is especially valuable in transferring skills to participating organisations. This philosophy will underpin the Centre for eAuctions as it expands to:

  • run more eAuctions – the target is two per month in any suitable category of spend. This will go beyond OGC’s initial focus on IT hardware and will deliver greater savings and communicate, both to suppliers and to taxpayers, the importance of quality and value for money as part of the process
  • build the public sector’s capability to run eAuctions – OGC has always offered training through hands-on experience and will be broadening this work through formal training programmes and the creation of more substantial and detailed guidance in the practical side of running eAuctions. This will develop the skills within OGC and,  as importantly, across the public sector.

Adoption of eAuctions can be accelerated rapidly with practical and comprehensive support from OGC.

Procurement going electronic

The announcement of the Centre for eAuctions follows the recent publication of the pan-government policy on the use of electronic systems to support procurement activity. This new policy requires public sector organisations to make progress towards achieving the outcomes outlined in the HM Treasury’s Operational Efficiency Programme (OEP) by maximising existing public sector investment in e-procurement systems and tools. The benefits this investment should create include:

  • increased value for money
  • improved management information
  • better visibility of collaborative contracts
  • increased process efficiency
  • enhanced operational capacity
  • prompt payment of suppliers.

For more information
Contact OGC service desk and register to get involved with the rolling programme of OGC eAuctions –
E-mail: service.desk@ogc.gsi.gov.uk
Tel: 0845 000 4999. Download our policy on eProcurement at www.ogc.gov.uk

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