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Government considers direct reverse bid auctions

GOVERNMENT departments may use reverse bid auctions to cut out contractors and buy construction materials direct from suppliers under new guidelines being considered by the Office of Government Commerce.

Under an agreement of the latest draft of the European Procurement Directive, the British government has been handed responsibility for detailing when reverse bid or 'Dutch' auctions are appropriate for procurement of goods and services.

The Office of Government Commerce is drawing up guidelines for the technique, where suppliers electronically submit bids for a contract and can then reduce them to beat rivals with lower prices, to say how and when it can be used. An OGC spokesman said: 'It could be the case that, where precise specifications can be set for basic materials needed for a project, electronic reverse bid auctions may be appropriate.

'Under these circumstances the department may be able to get better value by going directly to the supplier rather than procuring through the contractor.'

But he added that nothing was set in stone and called on the industry to give its input before guidelines are established later in the year.

He said: 'There is no harm in questions being raised. It is possible that after consultation with industry we decide that reverse bid auctions are a nonrunner.'