Lowest-cost-wins procurement tool is offered by internet portal headed by partnering advocate Sir John Egan
The simmering row over the use of internet auctions to let construction contracts has broken out again with the news that e-business company Asite is offering to host them, and that airports operator BAA is taking part in them.

The dispute is particularly fierce because construction suppliers argue that the auctions reintroduce the kind of lowest price tendering that Sir John Egan criticised in his Rethinking Construction report – and Egan is the present chairman of Asite and a former chairman of BAA.

One leading M&E contractor said: "Egan is supposed to be against lowest price tendering and in favour of partnering. By Asite using reverse auctions, which promote lowest price, it looks as if Egan himself has taken a huge step back."

Tom Dengenis, Asite's chief executive officer, denied that internet auctions were inconsistent with integrated supply chains.

In Dengenis' view, internet auctions are just a way to begin a commercial relationship. Once a supplier is chosen, it is possible for it to enter into a partnering relationship with the client.

He said: "A reverse auction is just a competitive process to get into a commercial relationship."

Dengenis confirmed that Asite was offering a reverse auction service to clients. He said: "We support our clients' agenda. We are not peddling reverse auctions – it is up to them if they want to use it."

Dengenis said that reverse auctions could be used to procure anything as long as three or more bidders were willing to compete to supply it.

We’re not peddling reverse auctions – it is up to our clients

Tom Dengenis, Asite

Asite is trying to persuade suppliers that internet auctions offer some advantages for them. Dengenis stresses that they are an entirely transparent process because each bidder can see its position relative to its rivals, unlike conventional tendering.

BAA said reverse auction bidding was one of the procurement "tools in its tool box" and the process had saved it money.

Martin Plimmer, BAA's supply chain director, said: "We used a reverse auction to procure temporary accommodation on a framework basis at Terminal 5. We undertook market research to establish those suppliers who would supply an appropriate service to us. We ended up with a supplier that was delighted to supply BAA."

He said that it generated savings of 10% for BAA and that the supplier selected would be subject to BAA's usual performance evaluations.