electronic auction

An electronic auction is a digital process used in public procurement that allows suppliers to compete in real time by adjusting prices or other quantifiable elements of their tenders. Think of it as a reverse auction — instead of prices going up, suppliers bid against each other by lowering their prices. The method is designed to help contracting authorities achieve the best possible value for money.

How does an electronic auction work?

An electronic auction is not a standalone procurement procedure, but a closing phase within a standard competition. The process begins with an open procedure or another procurement method, where the contracting authority first evaluates all submitted tenders against the award criteria. All qualified tenderers are then invited electronically to participate in the auction.

During the auction, suppliers can adjust prices and other quantifiable elements of their tenders. The auction can run over several successive rounds. After each round, suppliers can see their ranking in the competition, but not the identities of their competitors or what others have bid. Under EU rules, the auction cannot start sooner than two working days after invitations are sent out.

When can electronic auctions be used?

Under EU Directive 2014/24/EU (Article 35), electronic auctions may be used in combination with several procedures:

• Open and restricted procedures
• Competitive procedure with negotiation
• Reopening of competition under framework agreements
• Competition within dynamic purchasing systems

A key requirement is that the subject of the procurement can be precisely specified in the tender documents. The award criteria must be weighted using a mathematical formula that enables automatic ranking. The method cannot be used for services involving intellectual performance, such as architectural design, because such tenders cannot be ranked automatically.

Tools like Cobrief can help suppliers discover notices that use electronic auctions, so they can prepare for the process.

Electronic auctions give contracting authorities an effective tool for achieving better prices through open competition among suppliers. For suppliers, the process provides full transparency about their ranking and ensures that contracts are awarded based on objective, predefined criteria.