Reverse Auctions Return
from the that-old-thing? dept
During the waning days of the boom years, it seemed like everyone had a B2B strategy for letting companies use "reverse auctions" to get supplies. There were all sorts of wild predictions about how thousands of these reverse auction marketplaces would thrive in the coming years. Then, the money stopped flowing, and most of those marketplaces (or companies that built them) shut down. Now, like so many things from the boom years, the good ideas that got overhyped to death, are starting to peak through. For example, the Navy says it's saving millions of dollars using a reverse auction process to have suppliers bid on contracts. My first though on hearing this was that it sounded like a terrible idea - since there should be more than just price that goes into these types of buying decisions (do you really want the cheapest air craft carrier or the best air craft carrier?), but it sounds like they're only using the system for very clearly definied commodity items, where price is really the only distinguishing factor.
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There are quality contractors that deserve to be paid for their overhead and minimal profit, but this system is designed to reward those who are either fly-by-nights or who aniticipate getting change orders and running up the price post-bid by inflating their costs after they get the job.
And, as another poster mentioned, the bids were poorly run and adhere to no particular standard.
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