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United Utilities limits use of reverse auctions


UNITED UTILITIES last week said it had dropped the use of reverse auctions for engineering services.

The move comes amid strong criticism of the practice from consultants.

Reverse auctions are extra bidding processes imposed on short listed tenderers which have already submitted a price.

They are pitted against each other over the internet and asked to re-price in time-limited auction sessions 'Essentially there are elements for which e-procurement is very good and there are those for which it is not so good, ' said United Utilities commercial director Mike O'Neill.

'It is used successfully on things like commodities but with less success in engineered services and process technology.' O'Neill told NCE that reverse auctions would not be used to let these services in the future but they would still play an important and increasing role in materials procurement.

Water industry suppliers have been protesting against reverse auctions since their introduction several years ago (NCE Water Supplement October 2002).

United tilities, nglian Water, Wessex Water and Thames were among the fi st water companies to use this method. United Utilities is believed to be the only water company to have used it for engineering services.

Water industry trade association British Water welcomed the United Utilities' statement.

'This move agrees with the strategy laid out in our Guide to Sustainable Procurement, launched at the end of 2002.

'Reverse auctions shouldn't be used for anything other than commodities. It is totally inappropriate for services, ' said British Water director Paul Mullord.

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