19 September 2002 | Robin Parker
The Ministry of Defence is leading a breakthrough in the public-sector use of online auctions this week by inviting suppliers to bid for a multi-million pound army equipment contract.
The ministry's procurement arm is hosting a reverse auction for surveying equipment and associated IT tools, including laptops, worth £1.8 million.
The contract will replace what the ministry calls "a historic mishmash" of systems - some of which date from the 1950s and many of which are obsolete - with one package of technically advanced equipment.
The Defence Procurement Agency (DPA) aims to capitalise on the ministry's first e-auction, held last month by the Non-Project Procurement Organisation (NPPO), the general defence supplies unit.
The NPPO cut the cost of a detergent and chemical cleaning products contract by 29 per cent, or £50,000, far exceeding the expected savings of at best 10 per cent, when about 10 first-time bidders competed in the auction.
It is now planning further events, to be co-ordinated by a specialist team.
The team will be asked to see if auctions can ultimately be used to bring down the prices of goods procured through the Defence Electronic Commercial Service.
The moves follow the Environment Agency's renewal of a £460,000 energy contract in what was believed to be the first public-sector e-auction, held last month as part of the Office of Government Commerce's e-procurement pilots.
John Chapman, assistant director of auctions at the NPPO, said auctions were the first step in improving the MoD's competitiveness before streamlining the entire defence supplier base.
"The way the MoD does competitions has not traditionally been as effective as it claims, with a lot of horrendously old and unclear data, and we want to sharpen this up," he said.
"We want to bring new blood into the competitions and to allow bidders to ask themselves more focused questions."
Neil Dando, auction project manager at the DPA, said the NPPO's success had given fresh impetus to use auctions for higher value purchases.
"The NPPO's savings caught the eye of quite a few defence executives and I wouldn't be surprised if the pace now picks up for auctions," he said.