Debunking the Myths of Reverse Auctions in the Public Sector

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

Reverse auctions have been big news inside the Beltway and beyond in recent days, mainly due to the release of the recent GAO (Government Accountability Office) report on the subject. As Steve Kelman, a Professor of Public Management at Harvard University‘s John F. Kennedy School of Government and the former Administrator of the Office of Federal Procurement Policy, recently commented: “You know that a new practice has ‘arrived’ in government when it becomes the subject of its very own GAO report.” The GAO report highlighted that while the four federal agencies they reviewed had achieved significant savings, the government was not maximizing the true power of reverse auctioning due to some issues it uncovered in regards to competitive and regulatory concerns.

As noted in the conclusion of the first of this two-part series for Public Spend Forum, the very fact that the GAO report on reverse auctions has drawn such attention makes it “especially crucial that all interested policymakers and stakeholders and yes, the average taxpayer, understand the true power of competitive bidding to not just save money for the government, but to use the power of the marketplace to help small businesses grow through equal participation in federal contracting opportunities.” Thus, when this author’s years of research conducted as Director of the Reverse Auction Research Center was used by the American Legion’s Legislative Director, Lou Celli, in written testimony offered to a joint meeting of two U.S. House subcommittees (the House Committee on Veterans’ Affairs Subcommittee on Oversight & Investigations and the House Committee on Small Business Subcommittee on Contracting & the Workforce), this writer had to address the concerns raised by this respected organization regarding the use of competitive bidding in federal contracting.

The first article in this two-part series clearly showed the success that 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 had competing in federal agencies’ reverse auction-based competitions conducted throughthe FedBid Online Marketplace. In this follow-up piece, we look beyond the numbers, addressing a number of the American Legion’s principal concerns about how reverse auctions might harm small businesses owned by veterans, and demonstrating how in reality, competitive bidding empowers small businesses to grow and prosper.

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