Reverse auctions are way forward, says MoD

Getting to grips with online buying has helped the British Army to cut down its expenditure on vital military equipment - such as tissues.

The Ministry of Defence (MoD), in conjunction with the government's procurement arm, the Office of Government Commerce (OGC), have been looking at reducing costs through online reverse auctions.

The auctions work by inviting suppliers to bid for contracts online. Bidders then try to undercut each other's offers, while maintaining some margin.

MoD officials believe they can save up to 65 per cent on routine purchases made through reverse auctions. And, with three million packets of tissues issued to the armed forces each year, such savings have impressed officials.

"This is an excellent result and we intend to expand the exploitation of reverse auctions further as quickly as possible," said MoD official, John Chapman.

With the MoD spending £9bn a year through its logistics organisation, it could become one of the largest procurers to use reverse auctions.