17.804 Procedures
Source: FAR 17.804 on acquisition.gov
FAR 17.804 mandates thorough market research, documentation, and strict procedural safeguards to ensure reverse auctions are fair, cost-effective, and transparent.
Overview
FAR 17.804 outlines the required procedures for contracting officers when considering and conducting reverse auctions, including the use of reverse auction service providers. The section details steps for market research, evaluation of service provider fees, documentation requirements, and specific protocols during the auction process to ensure transparency, fairness, and cost-effectiveness. It also addresses actions to take if only one offeror participates in the auction.
Key Rules
- Market Research and Cost Effectiveness
- Contracting officers must research available reverse auction service providers, evaluate their fee structures, and document that using such a provider is cost effective.
- Auction Conduct
- Officers must not disclose offeror identities (except the awardee post-award), allow offerors to revise prices downward until auction close, and permit offer withdrawal before auction close.
- Service Provider Use
- Officers must provide direct contact information in solicitations, verify provider fees in successful offers, and retain all documentation from the provider in the contract file.
- Single Offeror Participation
- If only one offeror participates, the auction may be canceled (with documentation) or the offer accepted if the price is fair and reasonable.
Responsibilities
- Contracting Officers: Conduct market research, evaluate and document provider selection, ensure proper auction conduct, verify fees, maintain documentation, and determine fair pricing.
- Contractors: Comply with auction rules, revise or withdraw offers as permitted, and ensure transparency in pricing.
- Agencies: Oversee compliance and maintain records for audit and review.
Practical Implications
- This section ensures reverse auctions are conducted transparently and cost-effectively, protecting the integrity of the procurement process. It impacts daily contracting by requiring thorough documentation, careful provider selection, and strict adherence to auction protocols. Common pitfalls include inadequate documentation, improper disclosure of offeror identities, and failure to verify provider fees.
(a) When considering the use of a reverse auction service provider, the contracting officer shall—
(1) Conduct market research for available sources of reverse auction services ( e.g., existing agency contracts or agreements, commercial service providers, or Government service providers);
(2) Evaluate the fee structure for each reverse auction service provider; and
(3) Document the contract file that the use of a reverse auction service provider is cost effective.
(b) When conducting a reverse auction, the contracting officer shall—
(1) Not disclose the identity of the offeror(s) except for the awardee's identity subsequent to an award resulting from the auction (see 3.104-4(a) and (e)(1));
(2) Allow offerors the opportunity to continually revise their prices downward during the reverse auction until the close of the auction; and
(3) Allow an offeror to withdraw an offer from further consideration prior to the close of an auction.
(c) When using the services of a reverse auction service provider, contracting officers shall—
(1) Include contact information, including contracting officer name and email address, in the synopsis and solicitation that will allow offerors to contact the contracting officer directly with any questions;
(2) Upon receipt of a successful offer, verify that any provider fees or charges included in the price are in accordance with the provider's fee structure, as evaluated in accordance with paragraph (a)(2) of this section; and
(3) Include in the contract file any information and/or documentation received by the reverse auction service provider from offerors responding to the reverse auction.
(d) If only one offeror participates in an auction, the contracting officer may—
(1) Cancel the auction and document the contract file with evidence of the participation of only one offeror; or
(2) Accept the offer, only if the price is determined to be fair and reasonable (see 13.106-3(a)(2) and 15.404-1).