BATON ROUGE, La.--(BUSINESS WIRE)--A study released by the Reverse Auction Research Center today found that the U.S. federal government could be saving at least $4 billion per year if federal agencies broadly adopted the use of reverse auctions for the procurement of all commodity buys and simple services.
The study found that the largest potential savings could be achieved by the Department of Defense, with nearly $2 billion in potential savings; Department of Veteran Affairs, with $542 million; Executive Branch, with $271 million; Department of Homeland Security, with $172 million; Department of Justice, with $162 million; Department of Heath and Human Services, with $153 million; and Department of Interior, with $150 million in potential savings. Ten other federal agencies could save between $3 and $124 million each through use of such auctions.
“There are a lot of tough choices to be made in cutting federal spending, but one solution is a no-brainer: use more reverse auctions for simple buys,” said Professor David Wyld, Director of the Reverse Auction Research Center and author of the study. “This study showed that reverse auctions are an easy and painless way to save the federal government nearly $4 billion per year on its commodity buys and simple services. Although many agencies are aggressively adopting reverse auction tools to save money, we believe that this process should be accelerated further, given the no-cost opportunity for increased savings and efficiencies in acquisition.”
Beyond the agency totals, the study also specifically examined each branch of the Department of Defense to determine how much each could save through the further use of reverse auctions. The study found that the greatest potential savings could be achieved by the Defense Logistics Agency, with nearly $791 million in savings. The Army could save $598 million, the Navy $267 million, the Air Force $216 million, and other defense agencies more than $63 million.
For more information, please visit www.reverseauctionresearch.com. The complete study can be found at http://goo.gl/1R3Po.
Methodology
The study, “A Simple Equation to Produce Billions in Acquisition Savings: An Analysis of the Applicability of Reverse Auctions Across the Federal Government,” was conducted by professor David Wyld for the Reverse Auction Research Center. The study analyzed purchases that would have been most appropriate for competitive bidding through reverse auctions, as reported by major agencies in the Federal Procurement Data System in FY2010. The study’s data filtering methodology, designed to produce a very conservative data set, showed more than $32 billion in applicable purchases in the last fiscal year. The study then applied the average historical savings rate for the use of such auctions to those purchases on both an agency-by-agency and cross-government basis.
About the Reverse Auction Research Center
The Reverse Auction Research Center is a nexus for research and news in the expanding world of competitive bidding. The Director of the Center is David C. Wyld, the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. Wyld is the Director of the College of Business’ Strategic e-Commerce/e-Government Initiative, the Founding Editor of the International Journal of Managing Information Technology, and a frequent contributor to both academic journals and trade publications. He has established himself as one of the leading academic experts on emerging applications of technology in both the public and private sector.