By using online tools and resources to inform vendors about bid solicitations, public purchasers can increase the volume of bids received and encourage cost-cutting competition.

When announcing bids and issuing Requests for Proposals (RFPs), public purchasers generally strive to attract a large pool of vendors, which compete to win the agency’s business. By encouraging competition among vendors, purchasers can compare prices and select the best buy for goods or services.

The quarterly VARBusiness 500 research survey recently found almost 75 percent of respondents said that purchasing agents are shopping their bids to competitors, and about 60 percent said that comparison-shopping translates into lower value and decreased margins.

So what more can purchasers do to increase bid response rates? Do not underestimate the power of online tools, including your company’s Web site.

Kirk W. Buffington, C.P.M., MBA, Director of Procurement Services for the City of Fort Lauderdale, FL, uses Web sites to inform vendors about his agency’s bids, linking between his department’s site and a major national database, so as soon as the agency releases a bid on the database, it is automatically posted to the agency’s Web site.

One of the best ways to get better competition is to use a nationally based system, according to Buffington. “Most agencies are still relying on some type of homegrown database, where bid announcements are really only being sent to bidders who are registered with that agency,” he told GovPro last month. By using a national database such as RFP Depot or Onvia DemandStar, purchasers can distribute bid announcements to a database that is more than 50,000 vendors strong. As a result, says Buffington, “I’m getting adequate numbers of responses, and I’m getting them from new vendors that we’ve never done business with before. We are getting better pricing without getting inundated with responses that aren’t really applicable.”

Likewise, other entities are using various online media to spread the word about bidding opportunities, writes Michael Keating, Research Manager for Government Product News and Government PROcurement magazines. For instance, a recent National Association of State Procurement Officials (NASPO) survey covering 17 state purchasing departments shows that “13 of the 17 respondents use their own department Web site for presenting bid announcements to vendors,” GovPro notes.

Not only that, many state governments’ purchasing departments are relying on e-mail notifications to registered vendors. Because the Department of Administration in Arizona’s state government is required by statute to notify all of its registered suppliers for the particular commodity code being solicited for formal solicitations, the department conducts such notifications via e-mail from the e-procurement system SPIRIT.

In New Jersey, the Purchase Bureau in the Division of Purchase and Property serves as the state’s primary agency in the procurement of general goods and services (non-construction) for the state government. The Purchase Bureau offers e-mail delivery of RFPs for vendors who wish to be notified of solicitations that may be of interest to them. Vendors can enroll to receive e-mail notification of bids using e-Bid online.

Tim Riley, marketing director at GovernmentBids.com, suggests purchasers establish an e-procurement network or join an existing one, as this can “maximize your effectiveness and access a larger vendor pool.”

Indeed, e-procurement continues to serve as the leading vehicle for a procurement organization to place more spend under management, reduce costs and improve the speed of transactions, and best-in-class enterprises are reaping the most enviable advantages, according to Aberdeen Group’s recent “The e-Procurement Benchmark Report.”

As best-in-class organizations seek to extend their advantage, the wider array of solutions available in the market has greatly lowered the hurdles to invest in e-procurement initiatives, according to Aberdeen. Bids are managed via the Web to ensure the broadest possible participation from a diverse pool of vendors.

“Having a wealth of prospective bidders leads to more competition and lower prices,” Brett Wood, CPPB, Purchasing Administrator for Johnson County, KS, tells GovPro.

And by using online tools and other media sources to announce bidding opportunities, public purchasers can expand their reach to vendors, encourage competition, and find the best value for dollars.

For a list of online procurement bidding sources, visit GovPro.

Resources

To Boost Bid Response Rates, Purchasing Pros Get the Word Out
by Michael Keating
GovPro, Aug. 16, 2006

2006 VARBusiness 500
VARBusiness, June 2006

The E-Procurement Benchmark Report
Aberdeen Group, September 2006