12/8/2010 11:47:00 AM
Bidding war on Government mobile contracts
An online bidding war for Government mobile contracts between Vodafone, O2, BT and Everything Everywhere is seeing the cost of public sector contracts slashed by up to 40%.
Government departments are being encouraged to bundle their mobile contracts into large deals that are then auctioned online as part of the Government’s drive to cut public sector costs.
The combined auctions, known as aggregated eAuctions, have seen millions of pounds cut from the cost of mobile contracts. The auctions are run by Buying Solutions, the Cabinet Office’s procurement arm.
The eAuctions for mobile voice and data contracts are open to Vodafone, Everything Everywhere, O2 and BT as approved Government suppliers under the Mobile Solutions II framework contract.
Buying Solutions is ramping up the use of eAuctions for mobile contracts after a Government efficiency review of the Mobile Solutions II framework contract last month concluded that greater savings could be found.
As a result of the review, the Mobile Solutions II contract is being terminated next December, 12 months earlier than planned. In the meantime, any department wishing to drive a mobile contract through the framework is being urged by Buying Solutions to sign up for an aggregated eAuction in order to drive down costs.
A Buying Solutions spokesman said: ‘It is not possible to pre-determine savings at this stage. However, recent eAuctions for mobiles have delivered savings ranging from 20% to 40%.’
He added that another aggregated eAuction for mobile solutions will take place later this month.
Competition at eAuctions, also known as reverse auctions, is fierce, with suppliers offering progressively lower bids in order to win a contract. The auction is conducted online, and allows bidders to see the most competitive bid and then ‘re-bid’ in response. The bidding process usually lasts no more than an hour.
eAuctions deliver savings
Last month an aggregated eAuction involving four NHS Trusts in Kent saw savings of nearly £997,000, or 41.15%, against a pre-auction value of £2,421,916 over the life of the contract. The contract was awarded for three years with a one-year extension option.
The Food Standards Agency (FSA) and Meat Hygiene Service (MHS) cut just under £300,000 against a pre-auction value of £1m, equivalent to around 27%, which was achieved against already competitive framework agreement pricing.
Derby City Council’s eAuction for mobile services delivered savings of 40%.