Big savings for NHS PASA through internet auctions
- 24 June 2004
A report published today has shown that the NHS Purchasing And Supply Agency’s (PASA) pilot of eAuctions has been a resounding success, with savings of up to 80% in some areas – leading Health Minister Lord Warner to admit that the DH probably ought to have “engaged in them earlier."
An enthusiastic Lord Warner, speaking at the Government Computing Exhibition in Earls Court, said that eAuctions yielded “significant results; some quite startling. We will continue to use them."
The system as tested was quite dissimilar to eBay or other internet auction sites.
In the reverse, or Dutch auction, a set of requirements were demanded, and a pre-approved set of suppliers were invited onto a secure website to bid. Many different products were tested, from food to medical supplies. It took an average of six weeks to arrange each auction.
The suppliers then bid over a period of 1-5 hours for the lowest price they could supply the product in question. Many were reluctant to participate at first, but in the end the vast majority of them became involved.
PASA’s report shows that eAuctions can make enormous savings on particular kinds of provisions and supplies, although not everything. For instance, an average cost saving over baseline price of 80.6% was made in purchasing eye masks, whereas a reduction of only 0.9% in the price of frozen vegetables was achieved.
Some significant savings on IT hardware were also made: around 31.48%. According to PASA, eAuctions, worked best when a particular, unchangeable set of requirements were set.
Although some NHS buyers raised objections from “My products are too complex” to “If the price at auction is much lower, then people will think that I’ve been doing my job badly for the last few years", in most cases these concerns were allayed by the savings made.
For eAuctions to become a popular method of procurement, however, the report strongly recommends “proactive senior sponsorship” and the appointment of an eAuctions champion, as well as training and support. It also notes that “barriers seem to be cultural and a willingness to embrace change."
“The use of eAuctions is demonstrably an area where additional benefits and savings can be achieved," the report concludes. The full report can be downloaded from PASA’s website here.
