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Last edited 24 Sep 2021

Electronic auctions under the Single Procurement Document (Scotland)

The Single Procurement Document (Scotland) - also referred to as SPD (Scotland) - is a document that contains questions used at the selection stage for post-Brexit procurement exercises in Scotland. It is used to identify suitably qualified and experienced bidders for public sector procurement in Scotland.

The Supplier Journey portion of the Scottish Government’s procurement guidance website offers an overview of the different types of procurement processes that are available under SPD (Scotland). One such type of process is an electronic auction or eAuction.

For general information about eAuctions outside of the SPD (Scotland), see E-auctions in tendering.

According to the STAR Procurement Glossary of Terms, an eAuction is: “A procurement process that is an online auction where suppliers use Internet-based software to bid against each other in real time against a published specification.”

The Scottish Government’s Procurement Journey further explains that the most common type of e-auction is a reverse auction. Reverse auctions occur when suppliers compete for business in an online event by submitting the lowest bid during a specific timeframe. Reverse auctions can either be open or closed/private and are forms of Dutch auctions (also known as open descending-bid auctions where an initial price is set and progressively lowered until a bidder is prepared to accept the amount offered).

For SPD (Scotland) procurement activities, eAuctions may occur towards the end of the procurement process after full evaluation of tenders has taken place. The procurement officer may conduct an eAuction based on price and/or values of features from the specification to identify the most economically advantageous tender. This make take place when:

The requirement is of sufficient size to attract competition. The purchase should be of sufficiently high value to generate reasonable savings required to cover the cost of running the auction.
The product or service can be easily and accurately compared and specified. The purchase must be capable of being precisely defined, as would be the case with items such as furniture, vehicles, fuel and so on.
There is a competitive market. There should be a sufficient number of potential bidders in order to have an adequate level of participation in the auction, and the current price margins should not already be very low.

An eAuction can be used in conjunction with:

An eAuction may not be used under certain circumstances, including:

In public services or public works contracts whose subject matter involves intellectual performance, such as the design of works (since this does not allow for automatic evaluation methods)
To prevent, restrict or distort competition.
For some services for which it is not suitable, such as complex service contracts.

The eAuction method requires precise specifications. Documents must at least include:

Details of the features/values that will be evaluated through the eAuction and how these will be expressed in figures or percentages.
Any limits on the values to be submitted.
A list of the information that will be provided and when it will be made available to bidders during the eAuction.
Information explaining the eAuction process.
The conditions under which the bidders will be able to bid and particularly the minimum differences that may be required when bidding.
Information detailing the electronic equipment to be used and the arrangements and technical specifications for connection.

Those who submit admissible tenders should be simultaneously invited to participate in the eAuction process. This invitation shall include:

Details regarding the time and date of the auction start, duration and any extension periods.
Method of evaluation (including any mathematical formulae used, starting prices, bid decrements etc.).
How the advertised weightings will be applied to the final evaluation.
Where applicable, how lotting will be applied.
How separate calculations will be used where variants are permitted.

The eAuction must be closed in one of these ways:

At a previously indicated date and time
When no more new prices or values are received that meet the buying organisation’s minimum differences – as long as they have already stated the time they will allow after the last submission before closing the auction
When the number of phases already indicated has been completed.

The closure method must be clearly stated in the invitation, along with any relevant timetables.

On completion of the eAuction, contract award may be made in line with the information provided in the contract notice. Post-tender negotiations should not be undertaken following an eAuction.