Reverse Auctions Raise New Specter Of Bid Shopping on Industry Projects
If a manufacturer needed to purchase 50,000 lb of cement at a good price, it might try using a "reverse" auction on the Internet. That bidding technique is catching on among owners, particularly large industrial firms and nationwide retailers, as they try to cut costs for bulk commodities. But construction services also are becoming an auction item, and contractor groups are worried that reverse auctions are just another form of bid shopping.
Reverse auctions are a new Internet trend for buying goods and services. The process pits anonymous bidders against one another in an effort to obtain the lowest price--the reverse of a typical auction in which prospective buyers bid upward. The process includes specific times for rebids and continues until bidding stops and an award is made.