Nicknamed the “Thoroughbred City,” Lexington is betting on a different kind of horse race these days- one less exciting than the real thing but with far better financial odds.  It’s called a reverse auction, and municipalities can use it to purchase goods and services at a low rate.

In a traditional auction, sellers present their products and buyers outbid one another to win them.  In a reverse auction, buyers request products and sellers underbid one another to score the deal.  While traditional auctions tend to drive prices up for consumers, reverse auctions do, well, the reverse.

Already a routine user of “e-procurement,” the Lexington-Fayette Urban County Government (LFUCG) jumped on the reverse-auction bandwagon in 2008 after being approached by BidBridge, a group that hosts online sales events and works with 400 public-sector entities.  So far, LFUCG has purchased four street sweepers and digital photo processing equipment, for a budgeted savings of over $96,000.  LFUCG currently has a third transaction pending on treated rock salt and is considering an auction for water treatment chemicals.

As municipalities are cutting costs and budgets, we can expect to see more cities turning to this form of bargaining.