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Old 03-04-2010, 06:26 PM
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Question Post Reverse Auction Price Negotiations

We are creating a policy for our commodity managers related to conducting vendor negotiations after holding an online reverse auction. Is there an industry standard? Is the reverse auction the final price negotiation, or do you go back to select vendors (most noticably incumbents) and ask them to reduce their price further after the auction if they were not the low bidder?
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Old 03-05-2010, 05:50 PM
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You really need to decide what your strategy is before you hold the auction. The inherent concept of the auction is to get the lowest price or cost. If you are using the auction to drive down and incumbents cost and have no intention of changing suppliers, then that is a disengenuous and unethical use of the auction. All bidders should be pre-qualified and all have a fair chance at winning the auction; they are qualified and you are prepared to give them the award if they win the auction. If you reserve the right to discard the auction results and negotiate with any supplier then you should state that in the inquiry documents.
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