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November 2016      

 

ACEC Opposes Reverse Auctions for Engineering Services

 
 

ACEC-Canada has endorsed an adopted a position paper from ACEC - British Columbia expressing significant concerns with the use of reverse auctions by some clients. A Reverse Auction is a method of construction procurement arranged by an Owner that involves a live online bidding competition which allows interested bidders to review the most recent accepted bid and submit a lower bid until either a desired price is obtained, or a fixed time limit expires.

Reverse Auctions are inappropriate for engineering and other professional services because it is frequently not possible for the Owner to provide sufficient detail about the services required to ensure that all firms are bidding on equal footing. This is because part of the undertaking may be an exploration for the most appropriate solution. “Engineering design” typically represents 1 to 2 percent of the overall lifecycle cost of a project, with construction accounting for approximately 6 to 18 percent of the cost. All the rest—80 to 93 percent of the lifetime asset cost—is accounted for by operations, annual and capital maintenance and decommissioning. Therefore reverse auctions will seldom provide benefits comparable to currently recognized selection procedures for design professionals. Reverse auctions are also opposed by the Canadian Construction Association and the Surety Association of Canada.

ACEC believes that Qualifications-Based Selection (QBS) provides the best life-cycle value to owners. The QBS process makes it easier to think about an engineering problem without focusing exclusively over bidding at the lowest dollar figure possible. It allows engineers to consider the most creative and ultimately effective (and often the lowest costing in the long run) solutions to problems. It favours the best and brightest minds in the engineering community, rather than simply those with the lowest initial bids. For more information on QBS, click here

ACEC does not give direction or provide guidance to members or any other design consultants invited to participate in such auctions. Each firm must decide whether to participate in reverse auctions, and each must do so entirely on its own.