Article 54, Public Procurement Directive provides Member States with the explicit option of allowing contracting authorities to use reverse electronic auctions ('e-auctions').
Electronic auctions will be used in conjunction with the open and restricted procedures or, in circumstances where open and restricted procedures cannot be bought to a satisfactory conclusion and the negotiated route with a contract notice is therefore adopted.
Electronic reverse auctions offer a simple and efficient way for government to harness the opportunity offered by the internet to improve how they purchase products and services. They also increase competitive edge and will demonstrably deliver more value-for-money to the public purse.
The main benefit is a much more transparent process that removes constraints from suppliers eager to put forward their best bids for government business. As a result the transparency and increased market awareness means the supply market is highly competitive.
Electronic reverse auctions differ from traditional auctions in that suppliers bid against each other to offer the keenest bid for a particular contract. Public sector buyers monitor the various bids over the course of the auction until all bidders have reached their final offer.
Average savings for the public sector from the use of electronic reverse auctions are currently estimated at approximately 25% when viewed against traditional paper-based tender processes, with the potential for far higher savings dependent upon the type of goods or services being tendered for. Value-for-money features are not about price alone and are equally likely to be demonstrated in improved quality and service.
The process ensures total transparency for the buyer and suppliers taking part in the bidding and guarantees security and anonymity for both via secure Internet access.
Please note that:
* E Auctions are an appropriate tool in many competitive procurements;
* E Auctions are not about price alone;
* The contract needs to be of a value that will attract competition;
* E Auctions require a clear and concise statement of requirements;
* Initial price proposals are needed; and
* Commercial sensitivities must be respected.
