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- Addressed

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- Partially Addressed

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- Not Addressed

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- Consolidated or Other

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- Pending

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- Closed-Partially Addressed

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- Closed-Not Addressed

Year Identified: 2014

Area Number: 19

Area Type: Cost Savings & Revenue Enhancement

Action:

The Director of the Office of Management and Budget (OMB) should take steps to amend the Federal Acquisition Regulation (FAR) to address agencies’ use of reverse auctions.

Progress:

As of January 2020, the FAR Council, which is chaired by the Administrator of the Office of Federal Procurement Policy (OFPP) within OMB, has taken initial steps to amend the FAR to address agencies' use of reverse auctions, as GAO recommended in December 2013. Reverse auctions differ from traditional auctions in that sellers compete against one another to provide the lowest price or best value offer to a buyer. As GAO reported in December 2013, confusion exists among agencies and vendors regarding the use of reverse auctions in acquisitions. OMB generally concurred with GAO's December 2013 recommendation.

In November 2019, FAR Council members issued a timetable for the proposed regulatory changes to address the use of reverse auctions in response to GAO's recommendations and 2015 guidance released by the Office of Federal Procurement Policy. The notice of proposed rulemaking was planned for December 2019. However, as of January 2020, the notice of proposed rulemaking had not been published. OMB officials explained that the proposed rule remained under OFPP review but they did not have a revised date when they planned to publish the notice. Taking steps to amend the FAR could help mitigate confusion among agencies and vendors about how to use reverse auctions and maximize potential benefits.

Action:

The Director of the Office of Management and Budget (OMB) should issue government-wide guidance advising agencies to collect and analyze data on the level of interactive bidding and, where applicable, fees paid, to determine the cost effectiveness of using reverse auctions, and disseminating best practices from agencies on their use of reverse auctions related to maximizing competition and savings.

Progress:

OMB has addressed GAO's December 2013 recommendation by issuing government-wide guidance to agencies about how to collect and analyze data regarding the interactive bidding and amount of fees paid for the use of reverse auctions. In June 2015, the Office of Federal Procurement Policy, within OMB, released a memorandum that outlined the benefits of reverse auctions and key considerations when using them. For example, the memorandum asks agencies to consider whether a requirement is suitable for purchase through a reverse auction, whether the selected reverse auction tool is capturing data from prior transactions, and if proper internal controls were being followed. The memorandum also discusses key considerations for agencies when using a third-party vendor, such as examination of fees, role of government contracting officials, and contract data ownership. By issuing government-wide guidance, OMB has taken steps to help agencies maximize opportunities to increase competition and achieve greater cost savings.