No, that's not eBay -- it's your Uncle Sam

The federal government is refining ways to make it easier to sell its surplus property to bargain-hunters on the Internet

November 06, 2005|By MELISSA HARRIS | MELISSA HARRIS,SUN REPORTER

Want to buy a helicopter? Or one of 288 diamonds seized from a crooked insurance tycoon? A rickety surgical table gathering dust at Fort Meade? Or even a strip club in Fells Point?

At one time or another, all of these items have had one thing in common: Uncle Sam sold them on the Internet, an up-to-date way for the government to unload seized or surplus property.

But finding the feds' many versions of eBay hasn't always been easy - a fact that officials are trying to change as they seek to cash in on America's love of a good bargain.

This fall, the federal government finished improvements to its Internet sales portal (firstgov.gov/shopping/shopping), which directs users to more than 100 Web sites hawking items to the public - from archived American folk music recordings to Lamborghinis once driven by drug lords.

From the main page, a user who clicks on "Souvenirs," then "Unusual Items," can choose from a list that includes "Nixon Watergate Records" at the National Archives and "Collectible Coins" from the U.S. Mint.

Select "supplies and equipment" from the main page, and the list includes several online auction sites dealing in military surplus.

Each federal agency's links direct users to different sites, some run by contractors on behalf of the government, others by the agency itself. Some offer an easy-to-use online shopping cart, others require the user to print and fax an order form. Still others require participation in an online auction.

There are luxury goods here, Mercedes automobiles and Rolex watches seized when their owners ran afoul of the law. And there's plenty of junk.

Larry Moehring, 61, a retired General Motors machinist in northern Kentucky, has bought as much as 750,000 pounds of scrap steel from the government in a single online auction. After processing the scrap, he sells it for a profit -he won't reveal how much - to companies as far away as China.

"Most of the time, I'm in an international bidding war, but there's good deals to be made," said Moehring, who uses govliqui dation.com, one of the online auctions linked to the firstgov shopping site. "I've made a deal on about everything I've bought."

Even with little promotion, the federal government has staked a claim to a piece of the online retail market.

The government grossed $3.6 billion online in 2000, the only year anyone has totaled agencies' online sales. Revenues that year exceeded Amazon.com's, and most of it, $3.3 billion, came from the "TreasuryDirect" site, which offers bonds, bills and notes online, according to a one-time study by Federal Computer Week and the Pew Internet and American Life Project.

Industry giant eBay is unfazed.

"This is the first I've heard of it," company spokesman Hani Durzy said of the government's shopping portal. "We look at competition as anywhere that a consumer can spend one dollar online, off-line or in a store. It doesn't matter. But to put it in perspective, in the first nine months of the year, people traded $32 billion worth of goods on eBay. That volume is close to $1,400 every second of every day."

Durzy also noted that, rather then expend the labor and cost required to start an auction site, the state of Oregon and several cities sell their valuable surplus on eBay.

The feds have long sold property through live auctions, news of which would be published in local papers, for example. But slowly, they've been turning to the Internet.

The federal government launched firstgov in 2001, a sole starting point for auctions and retail sales.

"These auctions are the best-kept secrets," said Britney Sheehan of Gaithersburg-based EG&G Technical Services, a government contractor that held a simultaneous live and online auction in December for the 288 seized diamonds.

The event netted $9 million in restitution for victims of Connecticut financier Martin Frankel, who was convicted of stealing from insurance companies in five states. The most expensive purchase - $297,500 for a nearly 16-carat diamond the size of a nickel - came from an online bidder.

"In our case, the money is often going to victims, and the government has to strike the right balance between making them whole and funding an ad budget," Sheehan said.

In Maryland, perhaps the most memorable offering was the online auction of Ritz Cabaret, a Fells Point strip club seized in 2002 after its owner was convicted of hiring illegal immigrants and laundering drug money. The club sold for more than $1 million later that year. Silver Spring-based Bid4Assets ran the online auction.

"We work with multiple government agencies to sell stuff that basically was owned by crooks," said Anu Karnik Kelly, a spokeswoman for Bid4Assets. "They did not follow the law. Their items were taken. And with these online auctions, we're able to reach competitive buyers everywhere, rather than a limited city or state audience."

While Bid4Assets handles the U.S. Marshals Service's luxury goods, govliquidation.com handles the Defense Department's surplus. A lot of it is less than glamorous.

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