The City of Chesapeake saved nearly $100,000 this year contracting for motor pool vehicle tires using an e-commerce competitive bidding service, according to the developers of that service.
Officials of Chesapeake-a city of 150,000 neighboring Norfolk and Virginia Beach in Virginia's southeastern corner-approached Orbis Online Inc. of San Antonio, Texas, about the ``reverse auction'' technique Orbis offers to municipalities and businesses that solicit bids from potential suppliers.
``One of our folks had done some speaking engagements in nearby areas, which is probably how they heard about us,'' said Orbis CEO James Strader.
According to Orbis, the reverse auction is a live online event in which interested companies bid on contracts. Each company's bids are visible to other participants, allowing for ``dynamic pricing'' that reduces significantly the cost of products and services for the contracting firm or government entity, Orbis said.
The 30-minute online bidding event Orbis scheduled for the City of Chesapeake earlier this year turned into a 65-minute bidding fest. There were seven five-minute extensions under Orbis' rules, which state any bid in the last five minutes triggers a five-minute extension for other bidders to respond.
Under traditional sealed bids last year, the City of Chesapeake paid $325,000 for its tires. This year, using the transparent auctioning techniques offered by Orbis, the city saved $99,541-a 28.5-percent savings from 2001, according to the company.
Contract awards under the Orbis system aren't necessarily based on the lowest bid, but also take the goods and services offered into consideration, Mr. Strader said.
``Most government agencies and businesses don't buy exclusively on price,'' he said. ``They want the ability to get product quality and efficiency, and they don't want to be gouged.''
The Orbis reverse auction process is designed for all goods and services, not just tires, Mr. Strader stressed. He did not know offhand how many companies and agencies have used Orbis for tire procurement, but said the City of San Diego soon plans to hold an online bidding event for a tire contract.
``Some major tire manufacturers are looking at our system right now,'' he said. ``Also, one of our previous board members was chairman of a division of Pirelli.''
Officials of the City of Chesapeake were unavailable for comment.
Orbis' Web site is www. OrbisOnline.com. The company offers demonstrations of the reverse auction process at www.wsdemo.com.