Reverse auctions benefit the Postal Service in three ways:
The most obvious benefit is the price savings that can be achieved by using the online reverse auction process. This ensures that the price paid is the best available in the market and that there are savings in comparison with current contracts. Price savings achieved through reverse auctions often exceed the estimated savings predicted before the commencement of the reverse auction.
Process savings come by way of the streamlined purchase process employed during the auction process. By reducing the cycle time and effort involved, the time-efficiency savings alone can be dramatic. The Postal Service has been using reverse auctions for several years and turns to it as a dynamic means of receiving prices for performing best value purchases.
Precision benefits involve the capabilities to electronically track information involved with the purchasing cycle. By having the electronic record of who bid, what the bid was, when the bid was placed, and where the bid was placed from, the Postal Service has a greater assurance of consistency and validity of the process. In addition, the auction framework provides an assurance that the playing field is level and that everyone has the same access to the same information throughout the process, which reduces the potential for challenges of the award.
