17.802 Policy
Source: FAR 17.802 on acquisition.gov
Reverse auctions in federal procurement are permitted only under competitive, well-defined conditions and require strict adherence to acquisition procedures, data protection, and transparency in provider fees.
Overview
FAR 17.802 establishes the policy for using reverse auctions in federal acquisitions. It outlines when reverse auctions are appropriate, the requirements for using reverse auction service providers, and the responsibilities of contracting officers and agencies. The section emphasizes that reverse auctions are suitable when there is a competitive marketplace, multiple capable offerors, and clearly defined requirements that support iterative bidding. It also details the use of commercial or government platforms, fee structures, data handling, and the protection of proprietary and source selection information. Contracting officers must ensure compliance with all applicable acquisition procedures and are solely responsible for key decisions such as excluding offerors, determining awardees, and assessing responsibility.
Key Rules
- Appropriate Use of Reverse Auctions
- Reverse auctions should only be used when competition exists, multiple offerors can meet requirements, and the acquisition is suitable for iterative bidding.
- Adherence to Acquisition Procedures
- Contracting officers must follow all relevant FAR acquisition procedures, regardless of the use of reverse auctions.
- Reverse Auction Service Providers
- Providers must meet strict requirements regarding fee transparency, data protection, offeror registration, and conflict of interest.
- Data and Fee Disclosure
- Solicitations and contracts must specify data ownership, licensing, delivery, and fee structures.
- Contracting Officer Authority
- Only contracting officers can exclude offerors, determine awardees, or assess responsibility.
Responsibilities
- Contracting Officers: Ensure reverse auctions are used appropriately, follow all acquisition procedures, select compliant service providers, and maintain authority over key decisions.
- Contractors: Register with reverse auction platforms, protect proprietary data, and comply with auction and solicitation requirements.
- Agencies: Use competitive procedures for acquiring auction services, disclose fee structures, and ensure data protection and transparency.
Practical Implications
- This section ensures reverse auctions are used only when beneficial and competitive, protecting the integrity of the procurement process. It places strict requirements on service providers and maintains contracting officer authority, reducing risks of conflicts of interest, data misuse, and improper awards. Contractors must be aware of registration, data, and fee requirements to participate effectively.
(a) The use of reverse auctions may be appropriate when market research indicates that—
(1) A competitive marketplace exists for the supplies and/or services being acquired;
(2) Multiple offerors can satisfy the agency's requirement; and
(3) The nature of the supplies and/or services being acquired ( e.g., clearly defined specifications, less complex requirements) encourages an iterative bidding process ( i.e., multiple offerors participate and at least one offeror submits more than one offer during the reverse auction).
(b) The reverse auction process is used to obtain pricing for an acquisition. When using the reverse auction process, contracting officers are still required to follow the acquisition policies and procedures ( e.g., those prescribed in subpart 8.4 or 16.5, or part 13 or 15), as appropriate for the particular acquisition.
(c)
(1) A service platform for conducting reverse auctions may be provided by a commercial or Government entity.
(2) While some reverse auction service providers are paid directly by the Government for reverse auction services, other providers may incorporate a fee structure that uses an indirect payment method. When using an indirect payment method, the reverse auction service provider adds a fee(s) to the price of the successful offer that is provided to the Government at the close of an auction. The Government then pays the successful offeror the total price of the offer, which includes the fee(s) added by the reverse auction service provider. The reverse auction service provider then collects its fee(s) from the successful offeror.
(3) When acquiring reverse auction services from a commercial reverse auction service provider, agencies shall—
(i) Use competitive procedures, unless an exception applies;
(ii) Detail the provider's fee structure in the resultant contract or agreement for reverse auction services; and
(iii) Make the details of the contract or agreement for reverse auction services, including the provider's fee structure, available to contracting officers for consideration when determining whether to use a reverse auction service provider, in accordance with 17.804(a).
(4) When acquiring reverse auction services, the contracting officer shall ensure the following information is provided in the solicitation and contract:
(i) Descriptions of Government data and Government-related data.
(ii) Data ownership, licensing, delivery, and disposition instructions specific to the relevant types of Government data and Government-related data ( e.g., DD Form 1423, Contract Data Requirements List; work statement task; line item). Disposition instructions shall provide for the transition of data in commercially available, or open and non-proprietary format and for permanent records, in accordance with disposition guidance issued by the National Archives and Records Administration.
(d) Contracting officers shall only use the services of a reverse auction service provider that—
(1) Does not assert or imply that it can or will obtain a Government contract for participants of a reverse auction;
(2) Allows entities to register, at no cost, as potential offerors for reverse auctions conducted on behalf of the Government on the provider's reverse auction platform;
(3) Allows each entity, as part of the registration process, the opportunity to execute a proprietary data protection agreement with the provider; provided that the terms in the agreement do not affect the terms and conditions of a Government solicitation or contract;
(4) Protects from unauthorized use or disclosure and does not release outside of the Government—
(i) All contractor bid or proposal information (see 3.104-1) and source selection information associated with providing reverse auction services to the Government;
(ii) All information similarly generated to support the issuance of a task order or delivery order or order under a blanket purchase agreement; and
(iii) Information identified by an offeror as restricted from duplication, use, or disclosure—in whole or in part—for any purpose other than to evaluate the reverse auction participant's price or proposal;
(5) Allows offerors to see the successive lowest price(s) offered in the auction without revealing an offeror's identity;
(6) At the close of each auction—
(i) Provides the Government with the successful offer, along with information that separately identifies the offeror's price and the price for each provider fee or charge included in the total price; and
(ii) Provides the Government with all information and documentation received from offerors in response to the reverse auction.
(7) Does not participate as an offeror in any reverse auction which the provider is hosting on behalf of the Government. This prohibition includes participation in a reverse auction by any entity with which the provider has a relationship that raises an actual or potential conflict of interest; and
(8) Asserts no rights or license in the data gathered or generated during a reverse auction.
(e) Only a contracting officer shall—
(1) Exclude an offeror from participating in an auction;
(2) Determine the awardee(s) of any reverse auction; or
(3) Determine that the offeror is a responsible prospective contractor (see 9.103, 9.104-1, and 9.405(d)).