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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: October 31, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Regulation (FAR); Reverse Auctioning

SOURCE: Federal Register, October 31, 2000, Vol. 65, No. 211, page 65231

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Request for Comments

SYNOPSIS: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council are seeking comments on whether there is a need for guidance on the use of reverse auction techniques and, if so, how that guidance can be most effectively communicated.

DATES: Comments should be submitted on or before January 2, 2001.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405; e-mail: Auction@gsa.gov. Cite "reverse auction notice" in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Ralph DeStefano, Procurement Analyst, 202-501-1758.

SUPPLEMENTAL INFORMATION: Recently, several agencies have conducted on-line "reverse auctions" for various commodities where vendors competed by lowering their prices to obtain the contract. Because of the relative success of these few auctions, other agencies are considering the use of reverse auctions. While the Councils recognize that guidance on the conduct of reverse auctions may be beneficial, the Councils also recognize that there are several strongly-held opinions on the need for such guidance:

• There is insufficient agency experience with reverse auctions upon which to develop meaningful guidance at this time.
  
  
• Explicit coverage in the FAR is not needed because paragraph (d) of FAR 1.102, Statement of Guiding Principles for the Federal Acquisition System, permits any technique that is not expressly prohibited.
  
  
• Reverse auction policy should be included in the FAR.
  
  
• Other guidance is needed, such as best practices guides, agency instructions, or training.
  
  

Therefore, the Councils are seeking input that will help them determine the best way to address reverse auctions, particularly in the following areas:

1. Need for guidance. Is guidance needed at this time? Discuss potential advantages and disadvantages.
   
   
2. Form of guidance. If guidance is needed, in what form or forms should that guidance be provided: FAR change, best practice guides, agency instructions, training, other?
   
   
3. Topics for coverage. If guidance is developed, what topics should be addressed? Examples of topics might include the following --
   
   
   • The goal or goals of an on-line auction.
     
     
   • The "ground rules" of the auction.
     
     
   • Factors that must be considered in determining whether a requirement is suitable for use of reverse auction techniques.
     
     
   • Ways to tailor the technique to reflect various contracting strategies and source selection approaches (including best value cost-technical "tradeoffs").
     
     
   • Strategies for small business participation.
     
     
   • Handling of preferences.
     
     
   • Barriers to conducting auctions.
     
     
   • Expected results from the auction.
     
     
   • Potential advantages and disadvantages of reverse auction techniques for industry participants.
     
     
   • Potential advantages and disadvantages of reverse auction techniques for federal agencies.
     
     
4. Content of coverage. Respondents are invited to share their ideas regarding possible content on the areas identified in their response to item 3. Respondents are encouraged to provide lessons learned from their experiences with on-line reverse auction techniques.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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