Division of Administration - Kristy Nichols, Commissioner - State of Louisiana
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News

FOR IMMEDIATE RELEASE
November 27, 2012
Contact: Michael DiResto, 225-342-7158

Division of Administration issues RFP for establishing 'reverse auctions' in state government procurement

BATON ROUGE - Commissioner of Administration Kristy Nichols announced today that the Office of State Purchasing has issued a Request for Proposals (RFP) to engage a private sector service provider to establish and conduct reverse auctions for goods and services procured by state government.

"A reverse auction is an innovative tool to lower costs when procuring specific materials, services or equipment needed by the state," said Commissioner Nichols. "A reverse auction is designed to save taxpayer dollars because, unlike ordinary auctions in which buyers compete and drive up prices, vendors participating in a reverse auction will compete in a real-time, online environment that drives prices down."

As a result of legislation proposed by the Jindal administration, Act 210 (Senate Bill 83 by Senator Donahue) of the 2011 legislative session authorized the use of reverse auctions in lieu of the standard procurement process for the purchase of materials, supplies, or equipment.

In a reverse auction, a buyer puts a contract out for bid through an online marketplace. Multiple sellers offer bids on the item, competing to offer the lowest price that meets all of the specifications of the bid. In the standard competitive sealed bid process the vendors only make one offer which they hope will be the successful low bid.

As a reverse auction progresses, vendors have the opportunity to make more than one offer as competitors’ prices are revealed. Bidding is performed in real-time via the Internet, and results in a dynamic, competitive process designed to lower prices as sellers compete to offer lower bids than their competitors.

According to the RFP, the third-party provider will not only host the auction and provide bidders with training to participate in the auction, but will also advise the Office of State Purchasing on which particular supplies and services are best suited to a reverse auction.

A copy of the RFP can be viewed at:
http://wwwprd1.doa.louisiana.gov/OSP/LaPAC/agency/pdf/5263000.pdf
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