The Associated General Contractors encourages contractors to urge their Senators to ban federal agencies from procuring construction services through reverse auctions.
The Senate is currently considering amendments to its version of the National Defense Authorization Act. The House passed its NDAA bill in May, which included an AGC-supported provision that would help ban federal reverse auctions for construction services.
AGC wants to ensure that the Senate, like the House, hears the construction industry’s voice on reverse auctions. To do so, please take action and contact your Senators. It can help improve the construction contracting environment by prohibiting federal reverse auctions for construction once and for all.
Reverse auctions enable a buyer to evaluate proposals submitted from multiple sellers who compete against one another based on price. Most federal agencies have evaluated and rejected using reverse auctions for construction services, while a few agencies, such as the Departments of Veterans Affairs and the Interior, continue to experiment with reverse-auction procurement for construction services such as million-dollar building renovations, national park road construction, and material supply and delivery.
- Reverse auctions may work to procure commodities, not professional services for variable projects like construction
- Reverse auctions for construction services DO NOT guarantee competition, the lowest price or agency savings
- Reverse auctions for construction services encourage imprudent bidding
- Reverse auctions for construction services unnecessarily LIMIT competition
The U.S. Army Corps of Engineers—the largest federal constructor—has banned reverse auctions for construction. But the General Accounting Office found that agencies have awarded thousands of contracts through reverse auctions with one bidder.
The Common Sense Construction Contracting Act of 2013, H.R. 2751, would essentially prohibit federal agencies from procuring construction services through reverse auctions. Introduced by Rep. Richard Hanna (R-NY), the bill successfully moved out of the House Small Business Committee in March 2014 and was included as an amendment to the National Defense Authorization Act (NDAA) of FY 2015, which passed the House in May. The Senate is currently considering this legislation as a part of its NDAA process.