Part of content:
Reverse Auctions for Services: Frequently
Asked Questions
Source: Minnesota
Department of Administration (revised September 3, 2003)
What is a reverse auction?
A reverse auction is a
structured bid process that links web-based technology with traditional
bidding methods to obtain better pricing for the customer. Pre-qualified
vendors compete in a real-time online auction to determine the lowest
responsible bidder.
What purchases can be made through reverse
auctions under Minnesota law?
The commissioner of administration
has had authority since 2000 to use reverse auctions for goods.
The 2003 legislature expanded that authority to include several types
of professional/technical services, specifically, engineering design
and computer services.
How will the statutory change affect the state
contracting process?
Under the revised law,
agencies and the commissioner of administration may now consider the
use of reverse auctions when assessing the procurement tool most likely
to achieve the best value for engineering and computer service contracts. The new law does not
mandate the use of reverse auctions. It does give agencies
and the commissioner of administration a promising procurement tool
and increased flexibility.
Why engineering and computer services?
The department of administration
supported language to allow use of reverse auctions for services, without
differentiating specific types of eligible services. The legislature
was unwilling to go that far and selected several specific services
as a compromise. The selected categories are two of the largest
four expenditure areas for professional/technica