Reverse or forward ... auctions save dollars.(online auctions)

On Sept. 5, 2002, the Naval Inventory Control Point conducted the Navy's first two online forward auctions. These forward auctions were Web-based versions of what one typically thinks of as an auction--items are put up for sale.

These first two forward auctions were conducted in two phases, with each phase consisting of the sale by NAVICP of two stricken CH-53D helicopters and associated parts packages.

Three firms were registered to participate as bidders in the two auctions. The winning bidders are expected to refurbish the aircraft for commercial applications such as firefighting.

The two contracts resulting from the auctions are valued at nearly $5 million. The Naval Air Systems Command will receive the portion of the proceeds applicable to the aircraft and NAVICP will retain the remaining proceeds for the purchase of similar or like parts.

These forward auctions were part of NAVICP's innovative strategy to reduce U.S. Navy potential excess inventory, which consists of weapons system parts that the Navy might need to use later but will most likely replace with modified or state-of-the-art versions in the future. Internet-based forward auctions are NAVICP's revolutionary tool for turning this potential excess material into budgetary resources for future procurements; mining parts and weapons systems that might otherwise decay and become obsolete into funding for the next generation of weapons systems.

Auction of the aircraft also creates a commercial marketplace for future sales of NAVICP's potential excess material. In fact, both of the winning bidders will have the option to buy additional CH-53D helicopters and more parts within six months of contract award.

"The forward auction of the CH-53s and associated parts is part of the continued advancement of the science of Naval Logistics and furthers our commitment to e-Business initiatives," said RADM Michael E. Finley, then Commander, NAVICP. "This tool will be of great use to us in the future, just as reverse auctions are being used to drive down our costs," he added.