Procurement in a Nutshell – eAuctions
30th October, 2015
In this Procurement in a Nutshell we will be looking at the Crown Commercial Service (CCS) eAuction programme, the statutory grounding of the programme and the new guidance published by the CCS.
The guidance can be found here.
The CCS has published a new 7 step process on a typical eAuction project. eAuctions rules stem from Regulation 35 of the Public Contracts Regulations 2015 and form part of the changes implemented on electronic communications in regulated procurement procedures (discussed previously here).
Electronic auctions are a procurement tool that allows potential suppliers to bid in real time and compete with other potential suppliers to provide prices for goods or services under auction.
eAuctions can be based on price alone or other criteria such as quality, delivery or service levels can be taken into account. The process can be referred to as ‘reverse auctions’ as the potential suppliers typically reduce the price of the goods or services rather than increase them to win the contract.
eAuctions are an ideal procurement method for bulk purchases and can greatly reduce the purchase price for buyers via economies of scale.
- Regulation 35(3) – (5): eAuctions may be open, restricted, negotiated with competition and for individual awards under framework agreements. eAuctions cannot be used where the specification cannot be established with precision or the contracts involve ‘intellectual performance’.
- Regulation 35(6): eAuctions may be used for the revision of prices and include values of other criteria or specifications that can be automatically ranked.
- Regulation 35(7) – (8): Details of how the auction is to take place but must be included in procurement documents.
- Regulation 35(2): the eAuction must follow an initial assessment of tenders against the award criteria.
- Regulation 35(10)-(13): unsuitable or unacceptable tenders must not be taken into the eAuction, and this includes; (a) late tenders, (b) tenders that do not comply with the procurement documents or (c) tenders submitted by suppliers who do not meet the exclusion and selection requirements.
The 7 step process
- Establish customer requirement.
- Stakeholders agree eAuction strategy and requirements.
- Invitation to Quote and specification is developed and issues to suppliers.
- Suppliers submit response and opening bids.
- Evaluation of the responses and invitation for the qualifying suppliers to eAuction.
- The eAuction typically lasts between 1 and 3 hours but can last longer. After 30 minutes each bid extends the event and after 5 minutes of inactivity the eAuction is closed. The identity of tenderers will not be disclosed during the auctions.
- Contract with winning supplier.
Why is it important?
The eAuction programme offers a transparent, legally compliant process and increases savings potential for buyers. The clearly specified requirements for eAuctions encourage accurate comparisons for similar services so prices can be broadly comparative and consistent.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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