Reverse Auctions – bidding for your safety?

Following on from the extensive research of reverse and e-auctions within the NHS, The British Safety Industry Federation (BSIF) fully supports the British Healthcare Industries Association's (BHIA) view, that reverse auctions and eauctions can adversely affect safety in the same way as these procurement activities also affect the health of patients in hospitals.

In a standard auction, buyers compete to obtain a 'basket' of goods or a service and the price typically increases over time. In a reverse auction or an e-auction, sellers compete to obtain business and prices of the 'basket' of goods or service typically decreases over a period of time. Reverse auctions and e-auctions are undergoing a revival within most industries due to the current economical climate as many businesses are using them to save money and create the potential to purchase products cheaper than normal.

The use of reverse and e-auctions in the NHS is now common place, however, the cost benefits gained through them are substantially overstated and the cost and disruption of introducing new suppliers severely understated.

Despite rigorous attempts from the healthcare industry to police reverse auctions, substitutes of cheaper alternative products are common place particularly with a new supplier who bases prices upon alternatives in a need to drive up the profit margin. In fact, it has been expressed that the professional use of seal-bid tenders (submitted in response to an 'invitation-to-bid' (ITB) produce better results and avoid all of the pitfalls of a reverse auction and secure the correct product at the best price.

The same dangers and pitfalls apply to reverse auctions held within the health and safety market.

Although the idea of a reverse auction or e-auction is appealing, with the potential to drive down costs and save organisation's money, it also promotes the supply of incorrect Personal Protective Equipment (PPE) leading to very serious consequences, not just for the user, but for employers and their management staff.

The BSIF's RSS scheme has been introduced to protect the market from counterfeit and nonconforming PPE and reverse auctions and e-auctions only encourage the influx of fake and counterfeit PPE as in many cases, unless the specification of the product is implicitly stated, the products received are the wrong type of PPE equipment or not fit for purpose.

Additionally, since each and every product change should require a reassessment of the risk, plus an assessment of the compatibility with other PPE the follow on costs can be very high and that isn't always inclusive in the final bid. This is especially so when changing Respiratory Protective Equipment (RPE) as a complete fit test program should be undertaken.

While the BSIF understands the perceived 'up front' gain of reverse auctions and eauctions, current and past experiences from the healthcare industry indicate the potential outcomes which are both unexpected and unsatisfactory. Like the healthcare industry, ensuring the right product is supplied on-time and at the most advantageous price has to be the key focus for any bid process. NHS Procurement has not always achieved this with reverse auctions.

Will you?