March 28, 2012

N.Y. MTA e-procurement saves millions

New York Metropolitan Transportation Authority (MTA) officials said the agency saved $8 million on three recent contracts by making necessary purchases through a new form of real-time online reverse auctions.

Under the new procurement method, known as e-procurement, companies hoping to do business with the MTA log into a website that allows them to place bids in real time and simultaneously track whether they are currently the low bidder, or have been underbid.

For appropriate purchases, the MTA notifies pre-qualified vendors of the time of the online auction and invites their participation. In a regular auction, buyers set the price they’re willing to pay and the price rises. In these reverse auctions, suppliers submit progressively lower prices within the allotted time.

Last December, after its first successful use of e-procurement, the MTA approved a contract for necessary office supplies that reduced expenses by 17.5%, or $4 million over five years.

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