MCAA criticizes growing ‘reverse' auctions trend
The group recently released a statement criticizing the growing practice. The statement said the use of Internet reverse auctions for procurement of construction services can be "problematic for owners and contractors alike."
The statement notes that an across-the-board policy of low-bid, price-only selection criteria can lead to work disputes, unnecessary changes, long delays, overhead waste and lawsuits.
The MCAA says many of the innovations in contracting and project administration in the past 20 years have been in direct response to problems stemming from low-bid, price-only selection criteria.
Internet reverse auctions can be seen as a way to adapt new technology, but may end up reversing project-efficiency gains the industry has seen in recent years, the MCAA says.
Given recent experience with reverse auctions, some MCAA members say changes such as well-defined scope of work, use of "best value" pre-qualification criteria, clear auction procedures and adequate safeguards against other abuses would make the process fairer.
However, they add, "early experience suggests that the risks of mistakes, misjudgments and the added costs of Internet services may well in many cases outweigh the perceived costs savings realized through the use of reverse auctions."