Dutch Auction

A Dutch auction in procurement is a type of reverse auction where the buyer starts with a high price that is gradually decreased over time until one of the suppliers accepts the current price. The first supplier to agree to the offered price wins the contract.

Unlike traditional reverse auctions where suppliers compete by submitting lower and lower bids, a Dutch auction puts pressure on suppliers to make quick decisions, as waiting too long might mean losing the opportunity to a faster bidder. This format is especially useful when speed is important or when there is a clear market value for the item or service.

In procurement, Dutch auctions can help:

• Drive quick supplier decisions
• Avoid prolonged bidding wars
• Promote transparency and fairness

They are commonly used in industries with standardized products or where supplier competition is high and pricing is well-understood.