Infighting May Delay Fed Reverse Auctions

By eweek  |  Posted 2001-05-14

The U.S. government could soon operate a plethora of new reverse auction e-marketplaces — if internal turf issues can be resolved within the General Services Administration.

The Federal Technology Service, a division of the GSA, the governments main procurement arm, wants to set up pilot e-marketplaces that will run reverse auctions for a broad range of vertical sectors that sell to the government.

"Were looking to share the cost with suppliers for significant savings," said Manny DeVera, the FTS official leading the initiative.

The FTS hopes to start with exchanges that serve the Defense Finance and Accounting Service, as well as medical buyers such as the National Institutes of Health and the Department of Veterans Affairs. There are even plans to run a "law and order" e-market.

But many of these markets are already served by GSA Advantage, a 6-year-old e-marketplace with 9,000 vendors selling everything from armchairs to armored cars. Operated by the Federal Supply Service, another division of GSA, it handled $125 million in transactions last year.

GSA Advantage doesnt do reverse auctions and doesnt expect to, said Al Iagnemmo, who runs GSA Advantage.

"We beat [the vendors] up to get the best price for the government," Iagnemmo said. "Now you want to do reverse auctions as well?"

The Supply Service wants to be careful about the FTS initiative. It doesnt want to just give up vendor lists and catalog access if it means exposing its vendors to higher prices, Iagnemmo said.

That extends to transaction fees as well. The FSS charges a 1 percent transaction fee on GSA Advantage. The FTS expects to charge about 2 percent, DeVera said. Iagnemmo fears that the FTS exchanges will act as gateways to GSA Advantage, then add their fees to the FSS fee. That would upset suppliers, he said.

DeVera said that the FTS pilots would be independent and more efficient than GSA Advantage. "Were doing the back-room operations," both for government buyers and suppliers, he said. "They dont do the invoicing, the billing. Theyre not tied in directly."

But it may take cooperation to start the exchanges. DeVera plans to sign up vendors both by going to them directly and by getting help from the FSS to use government pricing and vendor data.

How far the FSS will go to work with the FTS is unclear. Iagnemmo said he doesnt mind if suppliers agree to the FTS model on their own, but the FTS has to move cautiously to protect GSA Advantage. "While we will cooperate, we wont blindly give them a list of vendors," Iagnemmo said.

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