Legislative bill promotes online 'reverse' auctions

To the winner go the spoils.

For Nebraska purchasing contracts, that winner would be the lowest – yes, lowest – bidder at online auction. The spoils would be state purchasing agreements if Sen. Bill Avery's LB168 becomes law.

The bill would allow Nebraska to buy items ranging from trash can liners to road gravel through Internet reverse auction, where sellers spar against each other to supply the lowest price.

During these auctions, firms can see competitors' offers, which drives down prices as bidders submit lower quotes to win the contracts.

Such purchases are made through a sealed bids process under current law.

Reverse auctions, described as a backward form of eBay sales, are used in at least 13 other states, said Laura Peterson, legal counsel for Nebraska's Department of Administrative Services.

Pennsylvania, the first to use the process, reportedly saved $2.5 million on rock salt for roads and $4 million on office furniture.

In a short 51-minute reverse auction, the U.S. Navy pocketed more than $2 million in savings on aircraft seats, according to a fedmarket.com article.

Peterson said Nebraska has not done any pilot auctions, nor could she speculate how much money would be saved with the process.

But she said other states have had good luck with it, and "theoretically, there are savings to be had" in Nebraska.

According to the legislative fiscal note, there would be "minimal cost" to conduct reverse auctions, and the minor expenses "could be absorbed within currently budgeted resources."

As lawmakers at the Capitol weigh the method's pros and cons, purchasers at the University of Nebraska-Lincoln and the city of Lincoln are doing business as usual.

Gary Kraft, UNL's director of purchasing, said his department had considered the practice, but little has been done with the idea.

The University of Nebraska Board of Regents, which oversees university purchasing, already allows reverse auctions. A change in the state law would not affect the university.

Lincoln purchasing agent Vince Mejer, who also represents Lancaster County and the Public Building Commission, has yet to adopt the method, but "if the state gets it, I want it," he said.

Several cities around the country do so, Mejer said.

But despite his faith in the technology's potential, Mejer won't abandon the old-fashioned way.

"Generally, I just like people who give me their best price the first time," he said. "I don't want to be haggling over it."

The Legislature's Government, Military and Veterans Affairs Committee voted 7-0 on Jan. 28 to advance the bill to the legislative floor.

It is awaiting debate before the full Legislature.

teresalostroh@dailynebraskan.com