American Legion Wrong About Reverse Auctions Being Bad for Small Businesses

- December 16, 2013 3:46 PM
Categories: Industry News, Public Sector | Tags: ,

This post, written by David Wyld, originally appeared on Public Spend Forum

This writer must issue a disclaimer at the start of this article, as some people and entities are hard to sit at the keyboard and criticize. How could one write an article taking down the Dalai Lama or Santa Claus (sorry kids!), or criticize organizations such as food banks or child advocacy groups for the work that they do? And so, writing an article criticizing the American Legion is done only with the sober reality that whatever the facts might be, some readers will automatically believe that when an organization whose mission is to help America’s proud veterans of the past and present day, takes a stance against a government practice, the American Legion’s brand—its name and reputation for good works—makes their position above reproach. However, the American Legion was simply wrong in using Congressional testimony this past week to criticize the use of reverse auctions in federal procurement for the alleged harm that the practice has on small business owners and in particular, those which are owned by veterans.

The organization set forward the notion that competitive bidding forced small businesses into an exploitative relationship, with the federal government holding all the cards and forcing small businesses to underbid and lose money on any business gained through the competitive bidding process. In reality, the facts demonstrate exactly the opposite. Indeed, thousands of entrepreneurs with military experience, who are in federal contracting terms labeled as veteran-owned small businesses(VOSB), and a particular subcategory of this group—the most-honored military veterans who are amongst the country’s service-disabled veteran-owned small businesses (SDVOSB)—have built their firms and are thriving today in large part thanks to their participation in federal agencies’ use of reverse auctions. And these veterans, like the range of other categories of small and disadvantaged businesses, are making informed and, in the end, profitable bidding decisions which are both guided by the technical support afforded to them and protected through the mechanics of how the online marketplace operates.

As director of the Reverse Auction Research Center, this researcher has had the opportunity to analyze the many ways reverse auctioning has impacted federal procurement over more than a decade. He has documented how the reverse auction process has saved the government, and in turn, taxpayers, hundreds of millions of dollars through the level playing field and structured competition provided for through competitive bidding for the simple goods and services that federal agencies buy each and every day. Even more importantly, he has had the chance to meet with small business owners who may not have ever thought of becoming involved with the perceived highly complex, “Inside the Beltway” world of federal procurement before being given the opportunity to compete with the “big boys” in fair, open, transparent competitions through reverse auctioning. These small businesspeople have used the level-playing field that competitive bidding provides to grow their business and create jobs through gaining their share of federal contracting dollars for the things or services that their small firms specialize in providing.

And thus, when this writer’s Google Alert yielded a story with the headline of “Fed auctions bad for vet business, says Legion,” he could not help but be curious as to why the American Legion would take such a stance…

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