E-Auctions are a relatively new way of buying equipment such as ICT hardware but they offer substantial cash savings to boroughs that join forces to bid together
An e-Auction is an online auction that enables organisations to pool their requirements and then requires suppliers to bid down the price.
The e-Auction concept itself is not new; the Office of Government Commerce (OGC) has been organising online auctions since 2005.
The e-Auction organised with the support of Capital Ambition in March this year though was the largest event of its kind to date and saw 16 London boroughs join forces with 31 other public sector bodies to secure savings of more than £10.5 million in buying new ICT hardware.
One of the participants was the London borough of Enfield.
Tim Kidd, infrastructure delivery manager at Enfield, says that the concept benefits everybody who gets involved.
"It really is a 'win-win' situation", he says. "Everybody that takes part plays with the same bat. One of the biggest issues for local government procurement has been that prices were so variable. If we get organisations working together, we all gain - it's simple economics."
Prior to the online bidding process, all participants meet up to thrash out a unified hardware and contractual specification. Mr Kidd says that organisations try to be flexible with respect to their original requirements and this makes the process easier. Upgrades and downgrades can be added to the base specification for those that require them so those who need, for example, a three-year warranty on their ICT purchase can specify that they want an upgrade if the mutually agreed specification states that the warranty should only be two years. The price would then be adjusted accordingly.
Suppliers are asked to submit a tender for the contract and these are rated by all the participating public sector organisations, creating a provisional ranking.
'Reverse' auctions
The e-Auctions are then run as 'reverse' auctions whereby suppliers are invited to bid decreasing prices for the contract offered in response to competitors' bids.
Using specialised software the online auction enables only the buyers to see the prices offered. After the auction has closed, the final contract will be chosen taking into account not just the price but the rating of the tender.
The benefits of getting involved in the e-Auctions for Enfield have been considerable. In 2007, these equated to savings of 50 per cent. This year, the council hoped to repeat the same remarkable savings but due to price rises across the market, overall savings were reduced – although they were still a very healthy 30 per cent.
Mr Kidd project manages a multi-agency contract board which was set up to help improve this year's e-Auction.
The board collects feedback from and, disseminates information to, participating organisations and acts as a contact point for suppliers wishing to raise issues.
It has been a great help in smoothing out any contractual hiccups, says Mr Kidd. "The board has helped us become more powerful as a collaborative organisation. It's given the councils and other bodies involved a stronger voice."
Extending the benefits beyond ICT
Mr Kidd is effusive about the prospects for e-Auctions – not just in ICT but other areas of procurement as well. "We see this as a platform to continually use eAuctions as a means of procuring ICT hardware."
He is hopeful that the tool can be used elsewhere in local government procurement too. "If a mutually agreed specification can be agreed, then the borders are limitless to where e-Auctions can be applied – from fleet cars to servers."
To find out more about e-Auctions and how to get involved, contact: Ken Cole
Additional information can be found on the project's webpage
