Electronic reverse auctions (e-RAs) provide purchasers with an opportunity for greater savings, transparency and administrative benefits. This paper reviews the literature, identifying the factors relevant to public sector e-RA success, and then tests these factors through a statistical analysis of a large sample of e-RAs, with a view towards providing guidance to public sector purchasers looking to conduct e-RAs. Our research found no correlation between e-RA success and the number of bidders or auction volume, but did find correlation between e-RA success and (1) competition among suppliers, (2) purchase complexity, and (3) purchase specification. The number of bidders was found to be correlated with competition among suppliers, specification and complexity. Auction volume was found to be correlated with none of the factors. We discuss the possible explanations for our results and draw conclusions for public sector procurement managers to consider when deciding whether to conduct an e-RA for a particular purchase.
Moshe E. Shalev, LLM, MBA, and Stee Asbjornsen, BA, LLB, are the Contracts Officer, and an Associate Procurement Officer, respectively, United Nations Secretariat Procurement Division, New York.