Auction site hurts private business, lawmakers say

Uncle Sam's new online auction service is taking business away from the private sector, according to four members of Congress. In a May 8 letter to Thurman Davis, acting administrator of the General Services Administration, the lawmakers said that the government's foray into the online auction business violates the spirit of the 1998 Federal Activities and Inventory Reform (FAIR) Act, which aimed to keep government from competing with private business. "During the debate on the FAIR Act in both the Senate and House of Representatives, members expressed concern over the auction operations of federal agencies," said the letter, which was signed by Reps. Connie Morella, R-Md., Tom Davis, R-Va., Dan Burton, R-Ind., and Albert Wynn, D-Md. While GSA has auctioned seized items and surplus government property for years, the agency took its auction business online in January with the launch of GSAAuctions.gov. At the time, private online exchanges such as Bid4assets.com were already hawking government property over the Internet. To entice agencies to sell their property on its site, GSA charged lower commission costs than private competitors. As the middleman in the auction, GSA charges a commission and takes a percentage of the proceeds from each transaction on the site. Revenues from the sale of seized items are deposited in the U.S. Treasury, while proceeds from the auction of surplus property can be returned to the agency that offered up the property. GSA should have tapped private companies to run its auction system, according to the representatives. GSA's Federal Technology Service used private firms to create an online system for reverse auctions, where companies bid against each other for government business, the lawmakers noted. "We believe the FTS demonstrated the effectiveness of using the private sector to foster online auctioning and that GSA's move into this new commercial activity was misguided and runs counter to congressional intent," wrote the lawmakers. GSA had no immediate response to the letter, but pledged to work with members of Congress on such issues. "GSA will continue to work with congressional committees in the future as it always has in the past," said an agency spokesman.