What is Reverse auction?
A reverse auction is an online bidding event where qualified sellers lower their prices in real time, and the lowest price at the close wins.
What is a reverse auction?
In a normal auction, buyers push prices up. In a reverse auction, sellers compete to bring the price down. Government buyers use it to get a better price after confirming that bidders meet the technical requirements.
Reverse auctions are common on GeM, and are also used by PSUs and other buyers on their e-procurement portals.
How it usually works
Bidders usually see their own rank or the current lowest price, but not who the other bidders are. Rules differ by portal and tender.
- Bidders submit technical bids and initial prices in the normal way
- Technically qualified bidders are invited to the auction
- A start price is set, often based on the lowest initial price
- During a fixed time window, bidders submit lower prices, each by at least a minimum decrement
- The window may extend automatically if a bid comes in near the end
- At the close, the lowest price is ranked L1
Tips for bidders
Work out your lowest acceptable price before the auction starts, and stick to it. Check your login, internet connection and any signing setup well before the start time.
Remember that your final auction price is binding, on the same tax and delivery terms as your original bid.
Common questions
Common questions about Reverse auction in government tenders.
It depends on the bid. Buyers can choose a bid with reverse auction, and GeM rules may require it in some cases. The bid document says whether one will be held.
No. If you do not bid in the auction, your initial price usually stands as your offer.
Usually the bidder with the lowest price at the close, subject to purchase preferences and the buyer’s final approval.
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