| Update Reverse Auction
Techniques for Online Procurement of Commercial Items |
| Agency |
Office of Federal Procurement Policy (OFPP), Office of Management and
Budget |
| Submitter |
Fairness in Procurement Alliance |
| Nominated |
February 28, 2008 |
| Description |
In the federal government’s
procurement system, the live electronic reverse auction technique was
designed as a contracting tool to provide contracting officers with
flexibility to make contract awards in a timely manner. Bidders who use
the technique submit their bids through an online intermediary and are
informed of competitors’ prices but not their identity. Bidders offer
successively lower prices until no lower price is offered. The agency
must then decide whether it will make the award. Some current techniques
used by contracting officers may have the unintended result of
circumventing Federal Acquisition Regulation (FAR) Part 19, which
requires agencies to set aside certain dollar threshold contracts for
small businesses. The problem exists because no specific FAR regulation
instructs contracting officers in how to use the reverse auction tool. |
| Small entities affected |
All federal small business prime contractors are affected by this
process. |
| Regulatory burden |
Small business prime contractors are being subjected to acquisitions
processes that may vary from agency to agency. This variability may
impose unnecessary costs to compete on small business prime contractors.
|
| Proposed burden reduction |
The OFPP should review the reverse auction technique and consider
structuring a federal government-wide rule that continues to provide the
contracting officer with the flexibility embedded in reverse auctions
while not conflicting with the well established FAR Part 19, which lays
out small business competition requirements. |
| Small entity benefits |
A
well-defined regulation for reverse auctions will provide the small
business federal contractor the business template necessary to measure
the “cost to compete burdens and benefits” associated with contract
bidding. |
| Status |
On October 4, 2006 the Office of Federal Procurement Policy (OFPP) announced a review to determine the appropriate course of action for this acquisition tool. OFPP has completed surveys of vendors and users. The surveys were targeted for government buyers who have never done a procurement using a reverse auction, and government buyers with experience using reverse auctions. The outcome of this review should be a FAR reverse auction regulation establishing conditions of applicability. This regulatory framework will be supplemented by a detailed “best practice” guide for the acquisition community.
|
| Advocacy contact |
Major Clark, advocacy@sba.gov |
