Bord na Móna is set to be the first public sector body in Ireland to implement an online reverse auction system that will allow the organisation to handle competitive tenders electronically. Esat BT has been contracted to provide the energy supplier with a web-based system for conducting bidding events such as procurement.
The present deal covers three auctions, the first of which is a tender for fuel supply, which was advertised in the EU journal last week. Reverse auctions operate on the principle that organisations looking to procure goods or services can have a number of suppliers make price-based bids within a fixed period of time.
Reverse auctions are said to reduce procurement costs. According to Colm Keavey, e-auctions specialist with Esat BT, international experience has shown that organisations can save between 10 and 15pc in costs through using electronic procurement systems.
In addition, this method is said to offer greater transparency for buyers and sellers. Potential suppliers input bids that they believe are sufficient to win the business. Each supplier has their own bottom-line price and can see other bid quotations in real time as they are submitted, although not the identity of other bidders. Sellers can then react to these bids based on actual prices rather than guesswork. There is also a provision for the bidding period to be extended, as this eliminates the possibility of a bidder delaying submission until the last moment before entering a price that undercuts all competitors.
In addition to providing the web-based system for Bord na Móna, Esat BT will also be training sellers to use the software. A number of private sector companies are already using e-auction services, but this is said to be the first such public sector implementation. However other public sector bodies have reportedly expressed “huge interest”, Keavey said.
By Gordon Smith