Cities Find Success with Online Reverse Auction

Kentucky cities active in online bidding demonstrate savings

by / July 7, 2003
John McGill
Kentucky League of Cities

From Techlines

FRANKFORT, Ky. -- The Kentucky League of Cities (KLC) has come up with an online "reverse auction" system that not only is saving taxpayers money and helping cities meet their dwindling budget demands, but also serving as a model for other states.

Eighteen Kentucky cities have already utilized the online bidding service, which is offered by KLC in partnership with Ecuity, a Louisville-based technology firm. Most have realized significant savings on their purchases of goods and services, said Kirby Ramsey, KLC's Director of Urban Affairs.

Cities have long used a sealed-bid process to buy services and equipment or contract for construction projects, with suppliers submitting written bids and supporting information that city officials review at a specific time.

"We offer an alternative to that," said Ramsey. "We take our cities to the Internet, where they can take advantage of technology. This is the opposite of an auction, where you're trying to get the price to increase over a period of time. The reverse auction allows the price to decrease over a period of time."

There's a specific time limit on the auction and suppliers can continue to bid lower to land a contract until the clock hits zero-"like the last shot in a basketball game," said Ramsey

Eighteen auctions have been completed to date for everything from fire apparatus to computers. Estimated costs related to these auctions totaled close to $5 million with low bids resulting in an average savings of 15 percent.

For more information, visit the Kentucky League of Cities