Government Contracts Proposed FAR Rule Provides Reverse Auction Guidance
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Tuesday, January 5, 2021

Proposed FAR Rule Provides Reverse Auction Guidance

By Government Contracts Editorial Staff

The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation to provide guidance on the use of reverse auctions. Agencies use reverse auctions to obtain competitive pricing for an acquisition. During a reverse auction, multiple vendors compete by lowering the offered price for which the vendor is willing to sell a particular product or service. The offered prices, but not the offerors’ identity, may be revealed to all offerors during the auction, and offerors have the opportunity to submit lower priced offers during the auction. The rule proposes to add new FAR Subpart 17.8, Reverse Auctions, which would:

  • Provide governmentwide policy on using reverse auctions, conducting reverse auctions, and utilizing reverse auction service providers, including the evaluation of fees;
  • Require contracting officers to evaluate and document that the use of a reverse auction service provider is cost effective;
  • Require reverse auction services acquisitions to be competed among commercial reverse auction service providers, and for the resulting contract or agreement to be sufficiently documented and made available to COs for future reference and verification needs;
  • Clarify CO requirements for conducting a reverse auction or utilizing the services of a reverse auction service provider; and
  • Provide guidance for when only one offer is received in response to a reverse auction.

Provision and Clauses. The rule would add a definition for “reverse auction” at FAR 2.101. The rule also prescribes a new solicitation provision, FAR 52.217-XX, Reverse Auction, and two new clauses, FAR 52.217-YY, Reverse Auction-Orders or Calls, and FAR 52.217-ZZ, Reverse Auction Services. FAR 52.217-XX would be included in solicitations when the CO will utilize a reverse auction to obtain competitive pricing for an award. FAR 52.217-YY would be included in solicitations and indefinite-delivery, indefinite-quantity contracts and blanket purchase agreements when a reverse auction may be used to award an order under the contract or agreement. The clause provides BPA holders and contractors with a notification similar to the one in FAR 52.217-XX, but it applies to delivery orders, task orders, or calls to be made under the basic contract or BPA. Proposed FAR 52.217-ZZ is for solicitations and contracts for reverse auction services and specifies requirements for reverse auction service providers.

Other Changes. The rule also proposes to amend FAR 3.103-2, FAR 3.104-4, FAR 7.105, FAR 13.104, FAR 15.306, and FAR 17.000. DoD, GSA, and NASA issued the rule in response to Government Accountability Office reports GAO-14-108, Reverse Auctions: Guidance is Needed to Maximize Competition and Achieve Cost Savings, and GAO-18-446, Reverse Actions: Additional Guidance Could Help Increase Benefits and Reduce Fees. GAO-14-108 recommended that the Director of the Office of Management and Budget amend the FAR to address agency use of reverse auctions and issue governmentwide guidance to maximize competition and savings when using reverse auctions. Comments referencing FAR Case 2015-038 are due February 5, 2021. The text of the rule appears at ¶70,006.363.

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