Saturday, March 31, 2012

VA Investigating Reverse-Auction Bids

According to this article on the Government Contractor website, the Veterans Administration began in internal investigation into the use of reverse auctions for outsourcing and privatization, which seems to have led to repeated abuses and lack of oversight by the Administration.  While advocates and politicians tout privatization and outsourcing as cost-saving measures, the savings often do not materialize, partly because of the government's chronic incompetence or inefficiency in procurement of services from outside firms, and partly because of the logistical problems with the government providing adequate oversight for the privatization and outsourcing process.  Here is my favorite quote from the article:


Frye's memo alleges that contracting officers, when conducting reverse auctions, had handed over too much of the rein to FedBid, the company that hosts the reverse auctions for the VA, without proper oversight by "cognizant contracting officers."  "We simply did not think through all of the unintended consequences of reverse auctions when we recently made the decision to allow their use," Frye also wrote.  
In a reverse auction, companies bid to sell their products to the government and the price goes down with more competition for an agency's bid. 

The Wikipedia article on reverse auctions is not a bad place to start for quick background on this method of procurement, although the article is not critical enough.



-Dru Stevenson

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