Solution Provider Opportunity – Teach the Feds about Forward Auctions!

The Associated Press has done some solid homework. Through a series of public records requests, their digging has uncovered that “staffing shortages and budget constraints have made it difficult for federal and state program officials to keep track of all of the property and to prevent police forces from obtaining excessive amounts of used military equipment and other Defense Department-transferred property.”

This is a bit of an understatement. The article has plenty of examples where qualified officials have gotten their Christmas shopping done early. One example from Georgia, where I live, comes from the town of Morven where “the police chief has grabbed three boats, scuba gear, rescue rafts and a couple of dozen life preservers. The town's deepest body of water: an ankle-deep creek.” Morven is located about three hours straight south of Atlanta, well north of the Florida border, and far from any significant body or stream of water. Requesting wading boots might have been more appropriate.

As you read the AP story, it becomes depressingly clear that whoever is nominally “in charge” of the Defense Department’s disposal program is significantly underinformed about the use of forward auctions. There is also the much larger issue of being AWOL when it comes to fiduciary duties and obligations. Though, there is not much I can say that trumps the sinking feeling in your stomach that all you taxpaying readers of the AP story should feel.

One thing the story doesn't mention is all the equipment discarded overseas—simply "given" to the locals in all the far flung places where our troops operate. So, it's even worse mismanagement of our tax dollars than the AP story suggests.

So what could the Feds have done instead? Let’s look at solutions that work. The private sector relies extensively on forward auctions when it comes to disposing of surplus inventory, old equipment, last season’s clothing, etc. The format most known to the public would be eBay of course. The Treasury has used this approach for decades (even creating some of the auction formats) when they sell bills, notes, and TIPS.

In the case of the Department of Defense, the very least they could have done would have been to sell off all the inventory through surplus auctions. Considering the amount to dispose of, they might need to do an initial round to qualified surplus brokers. That said, they could have contracted with eBay and created a cloned instance called FedBay (a domain currently not in use) to run forward auctions on everything they have. Let hoarding police chiefs and other officials use their locally raised tax dollars to pay for the items; that should force a few cost/benefit calculations.  Also, these can be Trojan gifts to the taxpayers, as there is no such thing as equipment that doesn’t need maintenance or storage, if not both.

Which solution provider to pick? Few sourcing solution providers do not provide forward auctions these days. From the solution giants to medium, smaller, and boutique firms, they all have this functionality. Do a search on Spend Matters – or contact me directly.  In other words, no excuse not to use this functionality.

Next time you hear that there is no room to cut federal spending… well, here’s one way.

First Voice

  1. Market Dojo forward auctions:

    Well, we shall hold our hand up as one such provider right away! $775 for your own professional forward auction of unlimited value and bidders. Take home 100% of the final price as well.

    And if that is too dear, use our 1% commission model instead. Practice your forward auction in our Sandpit right now!

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