The reverse auction for government reverse auction websites

I've talked about reverse auctions before, making the point that reverse auctions work better for some products than for others.

If you want to sell to the U.S. Government, you have probably heard of the "GSA Schedule." This is a database of products, maintained by the General Services Administration, that are available to government agencies at specific prices. The idea is that because of the U.S. Government's tremendous buying power, the business selling the product is willing to provide the product at a low price.

But what if the GSA could get certain products at a lower price than the GSA Schedule price?

Enter reverseauctions.gsa.gov.

ReverseAuctions.gsa.gov is an efficient and cost-effective platform for buying non-complex commodities and simple services. It’s designed to drive down the total cost of acquisitions and increase savings to customers and taxpayers.

Use ReverseAuctions.gsa.gov to facilitate your request and submission of quotes for simple commodities and services through GSA Multiple Award Schedules (MAS) and Blanket Purchase Agreements (BPAs).

On ReverseAuctions.gsa.gov, you can solicit non-complex commodities and simple services while the sellers successively bid prices down until the auction time ends. An award can be made to the apparent low bidder if it meets the solicitation’s terms and conditions and is technically acceptable.

Again, because of the U.S. Government's tremendous buying power, companies are willing to sell commodity products (not, say, automated fingerprint identification systems) in this reverse auction. The available commodity products include computers, phones, and office supplies.

However, it turns out that there is also a reverse auction in reverse auction websites. You see, reverseauctions.gsa.gov was not the first such site. As Steve Kelman noted back in July, there are others.

As many blog readers are aware, I sit on the Board of Advisors of FedBid, the commercial company that has introduced reverse auctions to many government agencies and is the leading reverse auction services provider in this market. I have been asked, not surprisingly, what my reaction is to GSA’s new site, which appears to have been developed to compete with FedBid and other commercial reverse auction providers.

Speaking on his own behalf, and not on behalf of FedBid, Kelman noted:

GSA unfortunately has a history of efforts to establish itself as the monopoly source of supply, including in the recent past trying to strangle inside-the-government competing GWAC contracts. This should be the last thing that agencies will want, since the danger would be to make them dependent on an inferior government supplier for reverse auction services. Hopefully, GSA will take this opportunity publicly to make it crystal-clear that reverse auction competition will occur on a level playing field.

However, reverse auction services are NOT occurring on a level playing field, since the GSA reverse auction website is "free to use by both government acquisition shops and vendors." FedBid presents itself as free; however, FedBid "adds an equal percentage transaction fee to all Sellers’ bids prior to the submission to the Buyer." The GSA site does not add transaction fees.

In essence, GSA's willingness to provide its services without charging any fees has reduced the cost for reverse auction websites down to $0.

Isn't that what reverse auctions are all about?