HOW IT WORKS Ordering on all CHESS contracts is decentralized, meaning CHESS does not initiate or develop delivery orders. Instead, these functions are carried out by the requiring activities or their local contracting office, who submit requests and place orders directly with vendors based on their own unique needs. CHESS acts as a mediator and provides guidance to the contracting office, the vendors and the customers as needed.
Say a customer needs to order 100 printers for the office. Te CHESS IT e-mart serves as the marketplace for the customer and vendor to meet. Te customer submits a request for quote (RFQ) or request for proposal (RFP) to CHESS vendors through the RFx Tool on the IT e-mart. CHESS vendors then respond to the RFQ or RFP with a bid: the price at which they are willing to sell 100 printers.
Tis is where a reverse auction becomes a valuable tool for obtaining the best prices on commodities. In a conventional auction, a seller places an item for sale and buyers place higher and higher bids until the close of the auction, at which time the item goes to the highest bidder. A reverse auction does the opposite. Te buyer submits an RFQ for an item required, and the sellers place bids for the price at which they are willing to sell that item. Rather than submitting only one bid in a regular RFQ, offerors have the opportunity to lower their prices based on new bids from the other vendors in a competitive, dynamic bidding process until the auction closes. Te reverse auction process offers the ability to conduct robust, real-time price com- petitions. Rounds of bidding typically start out slowly, but as the bid deadline draws closer, bidding activity increases. Tis type of bidding leads to continuous price reduction and strengthens competition.
Before the January 2016 launch of CHESS’s reverse auction capability, there were only two platforms for Army users to conduct
reverse auctions: one operated by a commercial
vendor, FedBid Inc., and one by the U.S. General Services Administration. Teir platforms are designed to help contract- ing officers and agencies identify the proper contract vehicles for their requirements and receive the best value possible for their procurement needs. Tese platforms support a wide vari- ety of supplies and services for the federal government—not just IT requirements.
IMPLEMENTATION With reverse auction spending goals established for Army users and the continuing popularity of reverse auction as a
procurement method continuing, CHESS vendors already were competing for IT requirements, but on third-party platforms that assessed a fee. Seeing a need for more direct Army oversight of IT reverse auctions previously conducted through a third party, and to further cut procurement costs, CHESS stepped into the reverse auction field. CHESS’s reverse auction capability focuses on IT hardware and software and complements existing platforms. Te CHESS reverse auction capability makes pos- sible real-time price competitions for IT hardware and software, without any CHESS fees, and is hosted on the same website as the IT contracts themselves.
CHESS saw an opportunity for cost savings in the increasing number of RFQs flowing through the IT e-mart. Te RFQ tool hosted on CHESS, designed with the decentralized order- ing on CHESS’s contracts in mind, allows customers to submit RFQs to vendors on specific contracts and view the requirement description, vendor responses and any questions in one place. Te selection menus and options route a customer to the appro- priate contract and require that the information typically needed for a legitimate quote be filled out. For example, a customer who needs to order printers would select the Printers from the Product Category drop-down menu. Te RFQ tool would then direct the customer to the Army Desktop and Mobile Computing-2 contract, which covers commodity purchases of COTS hard- ware such as printers, and select all vendors from the contract.
Te CHESS technical team developed the reverse auction plat- form using the existing framework of the CHESS RFQ tool familiar to Army customers, providing customers with the same user-friendly experience as submitting an RFQ. Trough the reverse auction process, users can solicit quotes from vendors to compete with alternating lower-priced bids from the CHESS contracts. Products available include commodity IT hardware such as laptops, desktops, monitors and printers and a wide variety of software, such as multimedia and design tools, that are guaranteed to have a certificate of networthiness granting approval to run on the Army network.
VALUE ADDED Te ability to provide an efficient, cost-effective, IT-focused alter- native to Army customers sets the CHESS reverse auction apart from other reverse auction platforms. Because there’s no fee for using CHESS’s reverse auction capability, Army customers who have used it have achieved significant savings. From its deploy- ment in January 2016 through September 2016, the CHESS reverse auction capability processed 153 auctions resulting in cost avoidance estimated at more than $2.5 million (calculated
ASC.ARMY.MIL 63
ACQUISITION
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