Local Jurisdictions To Save Millions After Reverse Auction

Jun 6, 2007

Local jurisdictions will save millions of dollars in natural gas supply over the next three years, thanks to the region's first natural gas reverse auction held today at the Metropolitan Washington Council of Governments (COG).

The auction, which was coordinated by the Government of the District of Columbia’s Office of Contracting and Procurement (OCP) in conjunction with COG's Cooperative Purchasing Program, will help reduce costs for local jurisdictions and their taxpayers through volume buying.

In a bid for the largest cooperative purchase of natural gas on the Mid Atlantic Region, multiple natural gas suppliers participated in an online reverse auction to contract with 24 local jurisdictions and entities for 36 months of service. An online reverse auction is a real-time bidding process in which each bidder is given a generic identifier and can see competitors’ bids but not their names as they continue lowering bid prices until best market price is achieved.

Natural gas suppliers bid on four separate "lots," or groupings of COG members based on location.

“With today’s reverse auction, we saved residents in the District of Columbia, Maryland, and Virginia millions of dollars,” said Oscar S. Rodriguez, OCP’s interim Chief Procurement Officer. “This collaboration highlights the improvements we have made as a region in our planning efforts and echoes the fact that when local jurisdictions work together, everyone benefits.”

Bids began at a price ceiling set for each lot and continued until the lowest offer was reached. The final bids will save participating jurisdictions and agencies over the next three years an estimated $10million from current rates. The lot ceiling prices are lower than the current rates paid by the jurisdictions.

"What you are witnessing is a testament to the power of what local governments can do when they come together," said Mark A. Nuzzo, Chief Operating Officer of Co-exprise Technology, the company that performed the reverse auction. "The bidders participating in this event are the same suppliers that contacted COG's members in March and said they didn't think that they could lower the current rates."

In addition to conducting the auction, Co-exprise used its sourcing technology to validate the capability of the supplier and assure total transparency of the process.

The participating COG entities included the District of Columbia, the University of the District of Columbia, Montgomery County, Prince George's County, City of Alexandria, Alexandria Sanitation Authority, Fairfax County, Fairfax County Water Authority, City of Falls Church, the Town of Leesburg, Loudoun County, Prince William County, Prince William County Service Authority, the Upper Occoquan Sewage Authority, and the Washington Convention Center. Also participating were the school systems for Alexandria, Arlington County, Charles County, Fairfax County, Loudoun County, Prince William County, and the City of Manassas.

 

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