Mineola, NY – Nassau County Executive Laura Curran announced today that Nassau County will be paying almost $100,000 less to purchase asphalt this year. In 2018, the County paid about $1.11 million to purchase asphalt to meet its road maintenance needs. After passage of a new contract Monday by the Nassau County Legislature, however, the County will be paying $1.02 million, a savings of 8.2% that totals $91,723. These savings were achieved through the use of a reverse auction, administered by online auction house EASiBuy. Reverse auctions function exactly as they sound; instead of one seller and multiple buyers, reverse auctions achieve savings by bringing multiple sellers to a single buyer, in this case the County.
“We’re always looking for new and innovative ways to save money for our taxpayers,” said County Executive Curran. “Procurement can be a long process, so if we’re able to cut spending and maintain the same level of service — all while freeing up manhours for our employees to focus on other critical tasks — that’s real value for everyone”
Traditionally, municipalities like Nassau County procure goods by issuing a competitive sealed solicitation, receiving bids from potential vendors of that good, conducting a public opening, and reviewing those bids to determine which offers the best value for the County, identified as the lowest responsive, responsible bid meeting the specifications. Reverse auctions use the public opening process to prequalify bidders for a subsequent pricing event--the auction--during which the approved vendors compete online in real time to offer the lowest price. Participants are unaware of the firms they are competing against, but they see how the prices they are offering compare to their competitors', and are able to lower their prices if needed to obtain the winning bid. Bidding continues until a stated period of time passes without any bidding activity, thereby determining the low price(s). This process ensures that vendors are offering, and the County achieves, the best, most competitive prices. This real-time price competition is not available with traditional sealed bids, and therefore this opportunity to drive down prices is not leveraged for those solicitations.
In addition to providing the best available prices, the reverse auction vendor also provides extensive market research and vendor outreach services. The reverse auction vendor receives payment only for successful bids that achieve savings for the County, and therefore they invest their own time and resources to review specifications, survey the market, and identify as many potential participants as possible. These services are offered to the County at no cost.
While reverse auctions have been employed in the private sector, as well as occasionally by the federal government, this method is relatively new to municipal government. Nassau County will continue to identify opportunities to employ this best practice to obtain the highest quality goods and services at the lowest cost to the taxpayers.