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CLIENT CASE STUDY

United Kingdom government: Electronic auctions

By leveraging its eSourcing services, Accenture worked with the United Kingdom Government to implement electronic reverse auction (eAuction) initiatives.

Overview

By leveraging its eSourcing services, Accenture is working with the Government of the United Kingdom, its agencies and companies to implement electronic reverse auction (eAuction) initiatives that will reduce the cost of doing business by measurably driving down procurement costs across public sector organizations.

Client Profiles
Royal Mail Group Plc, a public limited company wholly owned by the Government of the United Kingdom, has annual sales exceeding £8 billion and more than 200,000 employees. Through its brands, Royal Mail, PostOffice™ and Parcelforce Worldwide, it provides consumers and businesses with letter delivery and express mail services that reach 239 countries and territories or 99.6 percent of the global population.

The Driver and Vehicle Licensing Agency (DVLA) is an agency of the Government of the United Kingdom that helps to improve road safety and law enforcement, collects vehicle registration fees and issues and renews driving licenses.

Business Challenge
Every year the companies, agencies and departments of the UK Government issue thousands of requests for proposals (RFPs) to companies wishing to secure government contracts. This process is mostly paper-based with mail, faxes and traditional couriers being used to deliver important documents required to negotiate contracts. 

Because this traditional paper-based RFP process makes it difficult for organizations to leverage their buying power among their supplier base—and requires significant administrative effort—Accenture's Government group began an eAuctions Program in June 2002 to educate UK public sector organizations about how they could use electronic reverse auctions, or eAuctions, to achieve savings and deliver value for money to the taxpayer.

Solution

The Police IT Organisation (PITO), an agency of the Government of the United Kingdom, chose Accenture to manage and run the first eAuction as part of a proof-of-concept project on behalf of the Office of Government Commerce (OGC). The Office of Government Commerce selected Accenture because of Accenture's thought leadership in eCommerce, our experience on wide-ranging projects that leverage technology to improve government efficiency, and our commitment to solutions that combine ease of implementation with rapid return on investment.

Recently, two additional public service organizations, Royal Mail Group Plc and DVLA, have successfully used Accenture's Standard Auction Service to reduce administration and procurement costs for goods and services while enabling multiple bidders to compete for business in open, transparent and fair eAuctions.

Accenture delivered the following to client organizations Royal Mail Group Plc and DVLA:

  • Our Standard Auction Service, a secure, managed, hosted and recorded eAuction that enabled open, transparent and fair competitive bidding among multiple, pre-qualified suppliers via the Web.

  • Seamless access to Auction Services, an Accenture Supply Chain Management organization that conducts the eAuctions. Accenture has conducted 1,500 eAuction events for client organizations worldwide and has provided our more comprehensive Full Strategic Sourcing Service and our Speed Sourcing Service to many others.

  • Recommendations and training to aid understanding of the appropriate conditions for using eAuctions.

  • Proof-of-concept auctions for DVLA, including one that, based on historical price, provided savings of 23.7 percent on a single lot of security watermark paper.

  • A series of proof-of-concept auctions for Royal Mail for goods and services that included air freight and print services. Based on historical price, air freight savings averaged 8.4 percent, while print services savings—including services for campaign printing, promotional printing and other high-volume printing jobs—averaged 42.7 percent.

  • A flexible, cost-effective fee structure for managing and conducting eAuctions.

Results

Accenture provides a range of electronic Sourcing, or eSourcing, services through Auction Services:

  • Full Strategic Sourcing Service

  • Speed Sourcing Service

  • Standard Auction Service

Accenture collaborated with the public sector organizations, Royal Mail and DVLA, to provide eAuction services. The Standard Auction Service includes the eAuction strategy, bidder training, technical support, eAuction hosting and post-event reporting—all the tools, services and expertise a public sector organization requires to enable multiple bidders to compete for business and to assist with saving money. 

Accenture's convenient Standard Auction Service enabled Royal Mail Group Plc and DVLA to respond rapidly to procurement needs, delivering significant savings and reducing the time required to initiate and complete the procurement process.

By leveraging Accenture's Standard Auction Service, these public sector organizations were able to conduct pioneering, cost-effective eAuctions. To simplify how eAuctions were conducted, Accenture worked closely with the Government of the United Kingdom, assessing needs and training bidders, while providing a secure, easy-to-use, fully hosted and fully staffed service.

A key endorsement of Accenture's Standard Auction Service came from Mike Killin, assistant director of the Office of Government Commerce. According to Killin, "eAuctions have a real role to play in delivering government contracts that offer the best value for money." Indeed, the significant savings achieved in the United Kingdom offer public service organizations worldwide a powerful example of how eAuctions can be implemented as a service, improving organizational efficiency, while offering the potential to substantially increase public sector savings.