Reducing paperwork and maybe even saving money in the federalgovernment? How can this not be a good thing?

As part of a pilot program to launch the U.S. Department ofDefense into ecommerce through Internet auctions, B2BeMarketplace’s FreeMarkets Inc. has completed the first of 12natural gas auctions for the Defense Energy Support Center, theworldwide supplier of natural gas and other fuels for thegovernment.

In the first event, six suppliers competed for a $1.1 millioncontract to provide 273,285 Dth of natural gas purchased for DESC’sDirect Supply Natural Gas Program. According to FreeMarkets, theonline bidding process not only increased contract competition, butit also reduced DESC’s negotiating time — it had 20 bids in lessthan 30 minutes.

The winning contractor, Washington Gas Energy Services, wasawarded the contract 15 minutes after the auction closed. Theauction, said FreeMarkets, yielded DESC a cost avoidance of$452,000 below the utility’s sales gas tariff, and $0.047/unitbelow the delivered cost, based on the New York Mercantile ExchangeAugust futures market.

Jeffery Jones, DESC’s director, said the agency was looking”forward to the next auctions, which will allow potential suppliersto compete in live electronic auctions, see what their competitorsare bidding, and adjust their prices accordingly.” He said he waspleased with the speed that allowed the contract to be awardedwithin minutes of the auction closing, which, he said, increasedefficiency and saved the government money.

Headquartered in Pittsburgh, FreeMarkets has executed more than5,000 online auctions for more than $7.6 billion worth of goods andservices to date, enabling buying organizations to source productsfrom more than 130 supply verticals.

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