Electronic Auction (e-Auction)

An electronic auction (e-auction) is a structured online bidding event that takes place after an initial evaluation of tenders, in which qualified bidders compete in real time by submitting successive improvements to their offers. It is a tool for sharpening competition on quantifiable elements, most commonly price, but potentially also on delivery time, quality scores, or other measurable dimensions.

What is an Electronic Auction?

Articles 35 and 53 of Directive 2014/24/EU govern the use of electronic auctions. An e-auction can be used in the following procurement contexts: following an initial full evaluation of tenders in an open procedure or restricted procedure; when re-opening competition under a framework agreement (a mini-competition); and when calling off contracts under a dynamic purchasing system.

An e-auction may not be used as a standalone procurement procedure. It is always the final stage of a broader process in which tenders have already been fully assessed against all evaluation criteria. Only the quantifiable elements of a tender that were already evaluated can be improved during the auction round.

The process works as follows. The contracting authority sends all admitted tenderers simultaneous electronic invitations to participate in the auction, including the relevant rankings, prices, and scores from the initial evaluation. Bidders can see their own position relative to others (without knowing competitor identities) and submit improved bids. The auction runs for a fixed time, and the final ranking at close determines the winner, subject to verification of the full tender.

Contracting authorities must inform all admitted tenderers of the number of auction rounds, the time interval between rounds, and the criteria by which ranking will be determined throughout. The auction cannot modify the qualitative elements of tenders already assessed.

Why it matters for bidders

Participation in an e-auction requires a different kind of preparation from standard tendering. You need to understand your cost floor clearly: what is the lowest price (or best offer on the auctioned elements) at which the contract is still commercially viable for you? Entering an e-auction without a clear bottom line leads to either under-bidding (unprofitable contract) or over-bidding (losing the auction unnecessarily).

Because rankings are visible in real time, e-auctions create psychological pressure to bid aggressively. Discipline and advance modelling of scenarios are more valuable than reactive bidding.

Example

A Polish regional government procures office consumables via an open procedure. After evaluating technical compliance and quality dimensions, it invites the five compliant tenderers to participate in a 90-minute e-auction on total annual price. Bidders can see their ranking updated in real time as each submits a new price. At the close of the auction, the lowest-priced compliant bidder is ranked first, and the contract is awarded subject to verification of their full submission.

Frequently Asked Questions

Can a contracting authority use an e-auction for all contracts?

No. E-auctions are not permitted for contracts involving intellectual services such as design, consulting, or advisory work, where the subject matter cannot be ranked using automatic evaluation methods. They are most appropriate for well-defined, commoditised supplies and services where price is the dominant competitive variable.

How much advance notice is given before an e-auction begins?

The directive requires that the invitation to participate in the auction is sent at least two working days before the start of the auction. Contracting authorities often give longer notice to allow adequate preparation.

Can a bidder withdraw from an e-auction once invited?

Nothing in the directive explicitly prohibits withdrawal, but doing so after submission of an initial tender may have consequences under the terms of the procurement. Bidders should check the specific terms set out in the invitation documents.

Is an e-auction the same as a reverse auction?

Yes. An e-auction in public procurement is typically a reverse auction, in which the price decreases as bidders compete (the opposite of a standard ascending auction). The "reverse" label is commonly used commercially but the directive simply calls it an electronic auction.