Overview
This section establishes the policy for utilizing reverse auctions as a tool to obtain pricing, provided there is a competitive marketplace and clearly defined requirements. It mandates that reverse auctions must comply with standard acquisition regulations while outlining strict transparency and data protection requirements for third-party service providers.
Key Rules
- Appropriateness: Reverse auctions should be used when market research indicates a competitive market exists, multiple offerors are available, and the requirements are simple enough to support iterative bidding.
- Regulatory Consistency: The use of reverse auctions does not bypass existing FAR requirements; Contracting Officers (COs) must still follow procedures in FAR parts 8.4, 13, 15, or 16.5.
- Provider Fee Transparency: Agencies may use direct or indirect payment methods (where the fee is added to the winning bid), but the fee structure must be detailed in the contract and made available to COs for evaluation.
- Data Rights and Protection: Service providers must protect contractor bid/proposal information, allow for proprietary data protection agreements, and cannot assert any rights or licenses in the data generated during the auction.
- Provider Conduct: Providers are prohibited from charging offerors a registration fee, cannot imply they can influence a contract award, and are strictly forbidden from participating as an offeror in any auction they host.
- Inherently Governmental Functions: Only the CO has the authority to exclude an offeror, determine the responsibility of a contractor, or make the final award decision.
Practical Implications
- Total Cost Awareness: Because indirect fees are added to the successful offer's price, COs must account for these costs when determining the best value for the government.
- Integrity Controls: The rules prevent "pay-to-play" scenarios by ensuring registration is free for vendors and mitigate conflicts of interest by barring service providers from bidding on their own platforms.