Detroit Startup H2bid Connects Water Utilities, Vendors Through E-Bidding Service

8/4/11Follow @XconomyDET

Perhaps it’s no surprise that the Great Lakes State is home to the world’s largest online clearinghouse for water utility contract opportunities. H2bid.com, believed to be the only Internet business of its kind, connects water utilities with vendors through its cloud-based e-bidding services.

The Detroit startup was founded in 2006 by Glenn Oliver, a former member of the Detroit Board of Water Commissioners and executive in former Detroit mayor Dennis Archer’s administration. Oliver started the company because he believed the Internet had the potential to transform the old way of doing things, which was to take out a legal notice soliciting bids in a local newspaper or otherwise publicly post a Request For Proposals.

On H2bid, contractors compete to provide everything from desalination and distribution equipment to tanks and valves to water utilities from Indiana to India. Oliver says the site uses a reverse-auction process that is the opposite of Ebay: The contractors, or sellers, bid against each other, which has the effect of keeping prices down.

Until H2bid’s e-bidding services were introduced, Oliver said there was no centralized method for the global bidding process in the water industry. With hundreds of thousands of water utilities publishing bids daily, it was impossible for vendors to track open bid opportunities at all of the world’s utilities. This was especially true for small vendors that were typically limited to tracking bids with their local utility only.

“We created an Internet exchange that allows all water utilities to advertise online,” Oliver said. “We have made this a green, paperless process to eliminate information inefficiency. Offline, there is no way for vendors to keep track of which utilities are in need of services. But on H2bid, a vendor can search by keyword. “

Oliver said H2bid doesn’t only have the vendors’ interests in mind—it also helps water utilities save money by increasing the field of competition for bids.

“We estimate it brings costs down for water utilities by 10 percent or higher, all without having to lay off staff or cut pensions,” Oliver said.

H2bid doesn’t charge water utilities to post procurement requests, Oliver said. Vendors don’t pay to submit bids either, but if they win the contract they go after, they pay 1 percent of the value of the contract to H2Bid. The website charges … Next Page »

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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