Use of Reverse Auction for Counties

Reverse auctions allow suppliers to compete to obtain county business by using internet bidding. In a traditional auction, multiple buyers bid for a particular item, with the highest bidder receiving the item. In a reverse auction, the sellers lower the price of the goods with each bid placed. A county is authorized to use a reverse auction bidding procedure to obtain bids for the purchase of goods or services of any type.

Reverse auctions must be a real-time bidding process that takes place at a previously scheduled time and internet location and for a previously established duration, in which multiple suppliers, anonymous to each other, submit bids to provide the goods or services. County purchasing personnel can view each supplier’s identity as the suppliers place their bids.

Reverse auctions require a proprietary platform that provides a real-time, secure, web-based electronically sealed bidding process. Many providers are available for counties to use for reserve auction bidding.

Providers may or may not charge a fee to the county for this service, or the fee may be charged to the winning vendor.

• 19 O.S. § 1801(A)
• 19 O.S. § 1801(A)
• 19 O.S. § 1801(C)
   

Reverse Auction Procedures

The reverse auction procedure may be used as an alternative to any state law applicable to the purchase of goods or services. All bids submitted electronically through the reverse auction bidding process are subject to the same public disclosure laws that govern bids received pursuant to any other laws of this state governing procurement procedures for a county. Upon completion of the biddings, the county should make available a transcript of the bids as posted.

Reserve auction is also referred to as request for proposal or “Invitation to Bid Online.” Vendors must prequalify as potential bidders by responding to a request for proposal as advertised by the county.

Vendors initially respond to the request, which outlines the product information. Detailed instructions for response and online bidding should be outlined in the request for proposal. The following points should be considered:

• No pricing is included in the request for proposal;
• The date, time, and place of the internet bidding must be referenced;
• The date and time for responses to the request for proposal must be referenced;
• Vendors must receive an invitation to bid by the board of county commissioners by prequalifying;
• Vendors must pre-register prior to internet bidding.

Requests for proposals will be opened in a public meeting by the board of county commissioners. The board of county commissioners, along with the requisitioning officer, will evaluate the request for proposals. The board of county commissioners will approve the qualified vendors. Vendors will then be notified of their acceptance or rejection to participate in the online bidding.

As previously stated, reverse auction bidding procedures must meet the total disclosure laws of all public bidding. With the few minor adjustments, the bidding is very similar to the prescribed purchasing procedures as outlined under “Purchases When Bidding is Required” in this chapter.

The most significant difference between traditional sealed bids and a reverse auction is the bid closure. The law allows the county to extend the closing time by notifying the reverse auction bidders of the extended closing time by public announcement at the internet location at least fifteen (15) minutes prior to the original closing time.

Because a reverse auction is “real-time,” vendors are changing the bid as the auction progresses. The county could extend the bid deadline after each posted bid, which allows vendors “one last bid” or an “equal opportunity to bid.” The county may want to include a minimum increment that the bids can be changed in the specification (incremental changes should be substantial amounts, such as $25, $100, or other appropriate amounts) to avoid small changes that could extend the deadline for an unreasonable length of time.

Vendors are also required to register before the opening date and time of the online bidding. The registration requires the bidders to agree to the terms and conditions. A beginning bid may also be required with the registration. A recommended good practice is for counties to require vendors to participate in an online orientation of the bidding process. Specific instructions should be included in the request for proposal outlining the registration period deadlines and requirements.

The board of county commissioners retains the authority to award the bid. The county may accept electronic bids after the specified closing date and time if it is determined that a significant error or event occurred that affected the electronic receipt of any reverse auction bid.

All remedies available to the county and the suppliers through a bid process pursuant to any other law of this state are also available to the county reverse auction bidders in the reverse auction bidding process.

A purchase made through the reverse auction process requires the following procedures:

• 19 O.S. § 1801(B)(4)
• 19 O.S. § 1801(B)(1)
• 19 O.S. § 1801(B)(3)
• 19 O.S. § 1801(B)(5)(6)
• 19 O.S. § 1801(D)
   

The Requisitioning Officer

Prepare the specifications and the requisition portions of SA&I Form 1116, Requisition - Purchase Order - Claim

The Purchasing Agent

• Prepare the request for proposal or Invitation to Bid online;
• The request for proposal will not include any pricing and will reference the following items:
• Date, time, and internet location of bidding;
• Deadline for request for proposal
• The response from the vendors will indicate if they can meet the specifications of the item being bid;
• Mail the request for proposal to the vendors:
• Publish notification at least ten days prior to the request for proposal
   

The Board of County Commissioners

Open and evaluate the request for proposals and approve the qualified

The Purchasing Agent

Notify the vendors of their acceptance or rejection to participate in the online bidding and provide further instructions regarding the bidding.