Web Auctioneer Wins DOD Contract

 
 
By eweek  |  Posted 2001-06-25
 
 
 

Liquidation.com has its work cut out for it.

The private online auction company has won a seven-year contract with the Department of Defense to sell an estimated $23 billion worth of surplus goods — nearly all of the surplus that the military is able to sell to civilians.

The award marks the biggest contract yet for a private firm performing auctions for the federal government, pumping at least $10 million per year into the coffers of a subsidiary of Washington, D.C.-based Liquidation, according to company Chairman and CEO Bill Angrick. To accommodate the size of the contract, Angrick set up a subsidiary, Government Liquidation, and will hire at least 130 people to deal exclusively with DOD auctions.

"The Department of Defense is exiting the business" of selling its surplus goods by itself, Angrick said. "Were taking it on, and were going to make it more efficient."

The company will sell everything from computers to aircraft parts to industrial kitchen equipment. However, weaponry and related materiel wont be for sale.

The union with Government Liquidation should "increase proceeds, reduce costs and . . . achieve greater efficiencies based on their added customer base, adaptability to change and ability to use different sales techniques," said Suzanne Gusching, spokeswoman at the Defense Reutilization and Marketing Service, the arm of the DOD that until now sold surplus military property.

The DOD will keep 80 percent of the take from each sale — after storage, marketing, selling and other administrative costs are lopped off and funneled back to Government Liquidation, which will keeps the remaining 20 percent.

Currently, when the military sells surplus goods, it usually receives about 1.5 percent of the propertys original value. With the military expected to sell $23 billion worth of goods during the next seven years, that translates into about $345 million in sales, of which Government Liquidation would receive roughly $70 million.

But Angrick said that with his companys network of more than 100,000 surplus buyers, marketing savvy and technological superiority through its Web site — as well as the DODs list of 60,000 active surplus buyers — bidding wars are likely to haul in more money than the DOD has in the past.

Liquidation, which was started in November 1999, conducts online surplus property auctions for private industry and governments, including the states of Georgia, South Carolina and Wisconsin. Liquidation and SurplusBid were the two finalists for the contract.

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