{"id":626,"date":"2020-11-24T09:00:02","date_gmt":"2020-11-24T06:00:02","guid":{"rendered":"https:\/\/scale.co.ke\/blog\/?p=626"},"modified":"2021-11-01T14:57:20","modified_gmt":"2021-11-01T11:57:20","slug":"is-electronic-reverse-auction-a-transparent-and-fair-process","status":"publish","type":"post","link":"https:\/\/scale.co.ke\/blog\/is-electronic-reverse-auction-a-transparent-and-fair-process\/","title":{"rendered":"Is Electronic Reverse Auction a transparent and fair process?"},"content":{"rendered":"

Kenya’s PPDA Act defines the electronic reverse auction as an online real-time purchasing technique utilized by the procuring entity to select the successful submission.<\/em> It involves the presentation by tenderers, suppliers or contractors of successively lowered bids during a scheduled period of time and the automatic evaluation of bids.<\/p>\n

Basically, this is a type of auction in which the roles of buyer and seller are reversed. During an ordinary auction (also known as a forward auction), buyers compete to obtain a good or service by offering increasingly higher prices. For a reverse auction, a procurer puts out a call for services and then up to the vendors to offer the best deal at the lowest price. Due to their nature, reverse auctions happen exclusively online using electronic negotiations platforms where vendors can offer up detailed contracts for consideration.<\/p>\n

In Kenya, this process may only be undertaken by a public entity with a procurement portal and appropriately secure software with electronic procurement capabilities approved by PPRA. The procuring entity may invite all its registered suppliers in a specific category to compete for the supply of the goods, works or non-consultancy services.<\/p>\n

The prices of all bidders within a prescribed time are required to be visible to all bidders without, however, revealing the bidder\u2019s identities; the public entity is obliged, subject to the reserve price set for the procurement, to award the tender to the bidder with the lowest price at the bid submission deadline (usually completed within 5 hours).<\/p>\n

Here\u2019s what the Procurement Laws say about Electronic Reverse Auction<\/h4>\n

Using of Electronic Reverse Auction as a procurement method is governed by Sections 110 – 113 of the Public Procurement and Asset Disposal Act Revised Edition 2016<\/a> as outlined below:<\/p>\n

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110. The Authority may in exceptional circumstances approve a system of electronic reverse auction method of procurement for goods, works or non-consultancy services by a procuring entity.<\/p>\n

111. For an accounting officer of a procuring entity to be qualified to use the reverse auction method, it shall possess –<\/p>\n

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  1. \n
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    1. Procurement portal;<\/li>\n
    2. An appropriate secure software with electronic procurement capabilities and functionalities approved by the Authority;<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

      112. In the reverse auction method of procurement\u2014 Procedure for Reverse Auction. –<\/p>\n

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      1. \n
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        1. a procuring entity shall;\n
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          1. invite all registered suppliers in the specific category to compete;<\/li>\n
          2. advertise its requirements on its website including the period of time and goods specifications;<\/li>\n<\/ol>\n<\/li>\n
          3. the prices of bidders within the prescribed time shall be visible to other bidders without revealing the bidder\u2019s identity; and<\/li>\n
          4. a pre-qualified supplier shall not revise its bid upwards within the prescribed time<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

            113. Subject to the reserve price set by the procuring entity, the successful bid shall be the bid with lowest price at the bid submission deadline<\/p>\n<\/div>\n

            The Maximum Level of Expenditure for this procurement method<\/h4>\n

            Guided by the Second Schedule of the Public Procurement and Assets Disposal Regulations (2020), the threshold matrix is provided as follows:<\/p>\n