Reverse Auction (e-Auction)

In a reverse auction (also called an e-auction or electronic auction), multiple pre-qualified suppliers submit initial bids and then compete dynamically by submitting lower prices — or improved scores on other quantifiable criteria — within a defined live bidding period. Unlike a sealed-bid tender, participants can see their ranking (though not competitors' actual prices) and rebid until the auction closes.

Reverse auctions are used for commodity-type purchases where quality is standardized and price is the main differentiator: office supplies, fuel, standard IT hardware, commoditized services. EU procurement rules permit e-auctions only where specifications can be quantified precisely enough to support automated ranking. They cannot be used for complex contracts where quality elements cannot be expressed numerically.

For vendors, reverse auctions create intense price pressure. The dynamics often push prices below initial sealed-bid levels because the competitive real-time environment induces further cuts. Vendors must set a hard floor — the minimum price at which they can deliver profitably — before entering. Bidding strategies vary: some companies bid aggressively early to discourage competitors; others hold back and cut late. Knowing competitor cost structures helps calibrate strategy. Reverse auctions are also used within framework call-offs and DPS procedures for routine purchases.