Home' Trinidad and Tobago Guardian : November 15th 2015 Contents As recent as 2012, a major e-
auction event was conduct-
ed at a state enterprise for
the procurement of pipe and
fittings valued at US$47mil-
At the end of the event---which took one
hour and 30 minutes---a savings of 30 per
cent (US$15million) was realised. This is equiv-
alent to $100million.
This article is intended to provide an under-
standing of e-auction and share the power
of the process.
E-auction is a procurement tool using Web-
based software that allows suppliers to bid
online for the supply of goods or
services. Sometimes it s called "reverse auc-
tion" because bids are reduced and not
increase as in a traditional auction. It forms
part of the procurement process.
This tool consolidates the whole process
of negotiating with individual suppliers
through a single on-line (Internet) event. It
therefore provides a forum whereby suppliers
are bidding in real time, to provide a specified
product, against each other. This process can
generate significant savings and improve the
efficiency of the procurement process.
It ensures and maintains the key procure-
ment operating principles:
1. Transparency: information regarding the
procurement process would be in the public
2. Accountability: in current best practice,
officials of procuring agencies are clearly iden-
tifiable along with their responsibilities.
3. Value for money: procurement of goods
and services means the achieving of the best
combination of price and quality based on a
specific need in the shortest possible time.
e e e De ee C e
The diagram shows the procurement 360
degree cycle detailing the steps from 1, where
the procure needs are identified, to the end
at step 14 where the performance of the sup-
pliers on the contract can be evaluated. The
e-auction activity occurs in steps 5 and 6,
where tenders are invited and bids are received.
Once completed, the traditional process of
evaluating the bids continue (step 7).
E-procurement is simply using Web-based
applications to operate the transactional
aspects of the requisitioning, authorising,
ordering, receiving, contracting and payment
processes for the required services or products.
E-auction is a subset of this process.
The e-auction element is usually the first
to be introduced, as the significant savings
peaks the organisations interest and the other
elements of e-procurement can be progres-
sively introduced. This, too, provides savings
Many organisations are not aware of how
their money is spent, with which suppliers
and on what categories of spend (eg chemicals,
A general spend analysis rule of thumb is:
organisations spend 80 per cent of their money
on 10 per cent of their suppliers
/contractors and 10 per cent of their money
on 80 per cent of their suppliers/contractors.
Invariably, most of the procurement admin-
istrators spend most of their time on resolving
issues from the 80 per cent of suppliers/con-
tractors where only 10 per cent of the organ-
isation s money is spent. The opportunity for
major savings resides in the management of
the major 10 per cent of your organisation
The process identifies areas where the great-
est savings potential exist and results in real
market prices being obtained, thereby yielding
significant savings which is approximately 10
to 25 per cent.
In order to get the best benefit of the e-
auction process, clear and proper specifications
must be done ideally through a cross-func-
tional team for the best results. This tool
replaces individual negotiations which usually
transpire over long periods of time, by having
all supplies bid at the same time on the same
clear specification clearly communicated prior
to the e-auction.
A competitive market must also exist. This
ensures greater transparency. The process is
managed by a service provider whereby all
communication and bid data is logged and
available for scrutiny and audit. The availability
of this information could reduce corrupt activ-
ity. The reputation of the service provider can
be fatally jeopardised if there is any semblance
of collusion between the buyer, the supplier
and the service provider.
In order to maintain the creditably of the
process, the funds must be available and
secured in order to pay the supplier/contractor,
who has been awarded the contract on a
timely basis, consistent with the terms of the
In modern organisations, procurement is
considered strategic not transactional. This
means that the legal framework, board tenders
rules must be reviewed to accommodate e-
auction as a multi-bidding process and the
engaging of a service provider.
The relevant officers in the organisation
must be trained to assess where major spend
is occurring to identify the potential areas for
savings. For e-auction to be a success, I strong-
ly recommend a champion, a senior officer,
who has the lead and the authority to make
E-auction was introduced using a pilot
project approach in 2006 for the purchase of
pipe and fittings. Since then, approximately
100 events have taken place by various state
agencies and e-auction has been a part of the
procurement landscape in T&T since then.
The Ministry of Finance commissioned an
E-Auction Task Force in 2008, mandated to
spread the use of e-auction among state enter-
Twelve agencies got involved and over 300
suppliers/contractors were trained.
Under the E-Auction Task Force, a few bulk
purchase events were completed, clearing
identifying the benefits and savings. For exam-
ple, all of the state agencies use paper. A
simple analysis revealed they all pay different
rates for the same size of paper specification.
We invited them to join a bulk purchase for
paper where savings obtained were signifi-
If we want transparency, accountability and
value for money introduced into our procure-
ment processes along with significant saving,
e-auction towards e-procurement is the way.
Leslie Figaro is a procurement and e-
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt NOVEMBER 15 • 2015
e e e
Below are some of the items procured
using e-auction providing savings of over
Pipes and fittings
Chemicals (liquid aluminum sulfate)
Hard note book
Dump truck, backhoes & forklifts
Supply & install of meters/accessories
Construction of offices & workshops
Computers & printers
Bottle mounted chlorinators
Wire wall fencing & gate
High voltage switches
Equipment rental service
Gas fuse tanks
Maintenance & security services
Pumps & fittings
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