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Innovative idea saves nearly $400,000

by Capt. Jason McCree
386th Air Expeditionary Wing Public Affairs

4/14/2008 - SOUTHWEST ASIA (AFPN) -- Contracting officers recently leveraged the benefits of technology to save $395,000 for the Air Force at a Southwest Asia air base.

Airmen from the 386th Expeditionary Contracting Squadron used electronic reverse auctioning or e-RA to save the Air Force hundreds of thousands of dollars. 

Reverse auctioning is an online real-time bidding event between a buying organization and a group of suppliers. The buying organization, in this case the Air Force, posted its need for generators on a specially e-RA-designed Web site, and the suppliers bid the prices down to win the business. 

"When the 386th Expeditionary Civil Engineer Squadron had a requirement to purchase 29 backup generators here, we identified this as a candidate for e-RA," said Maj. Tim Hawkins, the 386th ECONS commander. "This was a great candidate for e-RA because the generators were specifiable, there was plenty of competition for the contract, and the estimated value of the procurement was significant -- these are all attributes necessary for a successful e-RA." 

"After contracting officers solicited proposals from several companies, the lowest bid received was about $2 million," Maj. Hawkins said. "Often, the government will award a competed contract based on initial pricing received -- not this time."

The contracting squadron worked with an e-RA service provider to conduct the online auction. The suppliers entered their bids for the generators during the e-RA, and after 278 bids during six hours, the price was bid down to $1.5 million dollars. This reduced the price enough to save the Air Force $395,000.

Capt. Lisa Gambrel, a 386th ECONS contracting officer, solicited the proposals from the competing companies and watched the online auction unfold from Southwest Asia, while Major Hawkins watched it in the U.S. while on leave.

"Since it was online, I could view it from the hotel I was staying in," said Major Hawkins, who researched e-RA in doctoral studies. "It was great watching the bidding process unfold."

"Conducting this process online gave each company the opportunity see what they were up against as they bid against their competition. It gave them a chance to sharpen their pencils," Captain Gambrel said. "They had to come ready to compete, but it was that competition that led to big savings for the Air Force." 

Major Hawkins said, they were the first to conduct an e-RA in the deployed environment, but it should be continued across the Air Force, at home and downrange, to save additional dollars.

"I hope we can further leverage e-RAs to get the biggest bang for our buck," he said. "Our taxpayers deserve it, and our Air Force needs the savings to fund modernization. Not all supplies and services are appropriate for e-RA sourcing, but by ignoring e-RAs, we are certainly leaving a lot of money on the table."