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Dutch Auctions - why take the risk?


We know that our members are keen to get the best possible value for money for their Institution and sometimes that means thinking outside of the box. Innovation and pushing the boundaries are essential to continuous improvement and delivering an effective procurement service to your Institution.

There is however a worrying practice that is taking place within a very small number of our member institutions, we have had reports from our suppliers that some members are running 'dutch auctions'. A dutch auction happens when a member takes one suppliers prices and asks a competitor to match or beat them. There are a number of problems and risks associated with this approach:

  • The buyer is giving a competitor commercially sensitive information
  • The suppliers will not feel that they have to offer their best price first time, they will assume that they will have another opportunity to bid
  • The reputation of the buyer and their Institution is damaged because they are demonstrating disregard for the rules that apply to our frameworks and for good procurement practice
  • They will be setting a precedent with suppliers and an expectation may be created that the Institution is open to doing 'deals' and not working within the relevant procedures or legislation
  • If a price looks to be too good to be true, it usually is. Although the 'price' is low, the 'cost' may not be. Have the suppliers been vetted and has due diligence been observed, do they have the necessary insurances in place for example?
  • Please think twice before sharing confidential framework information with a competitor, in the long term you are doing a disservice to your institution and exposing them to criticism and risk of action from aggrieved framework suppliers.

    We take this matter very seriously and we cannot allow membership to Institutions that demonstrate this unprofessional and high risk approach to our frameworks..

    If you would like to discuss this article please contact Julie-Ann Garton on [email protected]

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