“While most applications of e-commerce have demonstrated or hold great promise for productivity and service improvement for owners and the industry at large, the same cannot be said for Internet reverse auctions,” according to a statement approved by the MCCA board Feb. 28.
MCAA considers the practice to be nothing more than an electronic form of bid-shopping - disclosing the bid price of a competitor to all others to easily get an even lower bid.
Such a low-bid, price-only policy will lead to overall inefficiencies caused by related work disputes, unnecessary change, delays and wasted overhead spent on “defensive contract administration, claims, disputes and lawsuits.”
In fact, MCAA says that many innovations in the past 20 years, ranging from value-based selection criteria, performance evaluations, project partnering and design-build services, have been a direct response to bid-shopping.
“Overall, these developments have represented a better investment in overall project quality and life-cycle cost effectiveness,” the statement says. “Unfortunately, Internet reverse auctions can be seen as a way to adapt new technology to return to many of the problems of the past and give back the project efficiency gains that have resulted from innovative, value-added contracting procedures.”
Reading between the lines of the statement, the MCAA hopes that reverse auctions may be another Internet fad that will fade away. “Early experience suggests that the risks of mistakes, misjudgments and the added costs of Internet services may well, in many cases, outweigh the perceived costs savings realized through the use of reverse auctions,” the report says.