The Navy became the first government agency to use the reverse auction techniques in awarding a federal contract.  Using the secured Internet-based technology, reverse auctions allow suppliers to compete for contracts online by adjusting their prices as they see other offers.  Three contractors competed for the Naval Supply Systems Command reverse auction to supply recovery sequencers used in ejection seats valued at $2.38 million.  In contrast to often time-consuming standard award procedures, the Navy praised the contract for taking just under an hour and claimed the procedures resulted in a 28.9 percent lower price than if standard procurement practices were used.  A Senate subcommittee, obviously interested in its potential, has called for more pilot tests of such reverse auction techniques.

Not surprisingly, the first such procurement generated a protest from one of the unsuccessful bidders who asserted it lost its internet connection before the bidding was complete.  Interestingly, the protest did not challenge the legality of the new technique and the protest was subsequently dropped.  The protest raised the first concern that a contractor may intentionally terminate its connection to obtain additional time to formulate its bidding strategy even though the entity hosting the auction uses procedures intended to verify when a bidder looses its connection.

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