FAR 17.802—Policy.
Plain-English Summary
FAR 17.802 sets the policy for when and how reverse auctions may be used in federal acquisitions. It explains the market conditions that make reverse auctions appropriate, confirms that reverse auctions are only a pricing tool and do not replace the underlying acquisition procedures, and addresses who may provide reverse auction platforms and how those services may be paid for. The section also requires agencies to address reverse auction service-provider fee structures, data rights, and data disposition in the solicitation and contract, including treatment of Government data and Government-related data and compliance with National Archives and Records Administration disposition guidance. It imposes strict provider eligibility and conduct requirements, such as no promises of obtaining contracts, free registration for potential offerors, optional proprietary data protection agreements, protection of bid and source selection information, anonymous display of successive low prices, delivery of auction results and supporting documentation to the Government, no provider participation as an offeror, and no assertion of rights in auction-generated data. Finally, it reserves key source selection and responsibility decisions to the contracting officer alone, including excluding offerors, selecting the awardee(s), and determining responsibility. In practice, this section is meant to ensure reverse auctions are used only where they make sense, are conducted fairly and securely, and remain under proper Government control.
Key Rules
Use only when market supports it
Reverse auctions are appropriate only when market research shows a competitive marketplace, multiple offerors can meet the requirement, and the supplies or services are well defined enough to support iterative bidding. This means the technique is best suited to simpler, clearly specified buys rather than complex requirements.
Reverse auctions do not replace FAR procedures
A reverse auction is only a method for obtaining pricing. Contracting officers must still follow the applicable acquisition procedures under the relevant FAR part or subpart, such as simplified acquisition, schedule ordering, task/delivery order procedures, or sealed bidding/negotiation rules as appropriate.
Service platforms may be commercial or Government
The reverse auction platform may be provided by either a commercial entity or a Government entity. If a commercial provider is used, the agency must use competitive procedures unless an exception applies and must document the provider’s fee structure in the resulting contract or agreement.
Fee structure must be transparent
When acquiring reverse auction services, the agency must make the provider’s fee structure available to contracting officers for consideration in deciding whether to use that provider. The solicitation and contract must also identify how fees are handled, including indirect payment methods where the provider adds fees to the successful offer and collects its fee from the successful offeror.
Data rights and disposition must be addressed
The solicitation and contract must describe Government data and Government-related data and specify ownership, licensing, delivery, and disposition instructions. Disposition instructions must support transfer in commercially available or open, non-proprietary formats and comply with NARA guidance for permanent records.
Provider eligibility is tightly limited
Contracting officers may use only providers that do not claim they can obtain contracts for participants, allow free registration, permit optional proprietary data protection agreements that do not alter Government solicitation terms, and protect bid, proposal, and source selection information from unauthorized disclosure.
Auction transparency and confidentiality rules apply
Providers must let offerors see successive low prices without revealing identities, and at auction close must give the Government the successful offer, a separate breakdown of offeror price and provider fees, and all offeror submissions and documentation. Providers also may not participate as offerors in auctions they host, including through related entities that create actual or potential conflicts of interest.
Only the contracting officer makes key decisions
Only the contracting officer may exclude an offeror, determine the awardee(s), or decide whether an offeror is responsible. These core source selection and responsibility judgments cannot be delegated to the reverse auction provider.
Responsibilities
Contracting Officer
Determine whether market conditions justify use of a reverse auction; ensure the underlying acquisition follows the correct FAR procedures; select only compliant reverse auction service providers; include required data, fee, and disposition terms in the solicitation and contract; protect procurement integrity; decide whether to exclude offerors, make award decisions, and determine responsibility.
Agency
Conduct market research to support use of reverse auctions; when acquiring reverse auction services from a commercial provider, use competitive procedures unless an exception applies; ensure provider fee structures are documented and available for contracting officer review; ensure agency contracts and agreements address data rights and NARA-compliant disposition requirements.
Reverse Auction Service Provider
Provide the auction platform without claiming it can secure contracts for participants; allow free registration for potential offerors; permit optional proprietary data protection agreements that do not change Government solicitation terms; protect bid, proposal, source selection, and related information; show successive low prices without revealing identities; provide the Government with the successful offer, fee breakdown, and all offeror submissions at auction close; avoid participating as an offeror; and assert no rights in auction-generated data.
Offerors
Register and participate under the provider’s platform rules; may execute proprietary data protection agreements if desired, so long as those agreements do not alter Government solicitation or contract terms; submit pricing and other required information in response to the reverse auction; comply with any solicitation requirements and restrictions.
Government Records / Data Stakeholders
Ensure data ownership, licensing, delivery, and disposition instructions are properly specified and that data can be transitioned in usable, non-proprietary formats consistent with records retention and disposition requirements.
Practical Implications
Reverse auctions are best for straightforward buys with clear specs and enough competition to drive price down; they are a poor fit for complex requirements where technical tradeoffs matter more than price.
Contracting officers should not treat a reverse auction as a shortcut around FAR source selection rules. The underlying acquisition strategy still controls, and the auction only affects pricing.
Provider selection and fee structures can materially affect total cost and fairness. Indirect fee models can obscure the true price unless the solicitation and contract clearly separate offeror price from provider fees.
Procurement integrity is a major risk area. Providers must not disclose identities or protected information, and they cannot participate as bidders or use related entities to influence the auction.
Data rights and records issues are easy to overlook. Agencies should specify ownership, licensing, delivery format, and disposition up front so auction data can be retained, transferred, and archived properly.
Official Regulatory Text
(a) The use of reverse auctions may be appropriate when market research indicates that— (1) A competitive marketplace exists for the supplies and/or services being acquired; (2) Multiple offerors can satisfy the agency's requirement; and (3) The nature of the supplies and/or services being acquired ( e.g., clearly defined specifications, less complex requirements) encourages an iterative bidding process ( i.e., multiple offerors participate and at least one offeror submits more than one offer during the reverse auction). (b) The reverse auction process is used to obtain pricing for an acquisition. When using the reverse auction process, contracting officers are still required to follow the acquisition policies and procedures ( e.g., those prescribed in subpart 8.4 or 16.5, or part 13 or 15), as appropriate for the particular acquisition. (c) (1) A service platform for conducting reverse auctions may be provided by a commercial or Government entity. (2) While some reverse auction service providers are paid directly by the Government for reverse auction services, other providers may incorporate a fee structure that uses an indirect payment method. When using an indirect payment method, the reverse auction service provider adds a fee(s) to the price of the successful offer that is provided to the Government at the close of an auction. The Government then pays the successful offeror the total price of the offer, which includes the fee(s) added by the reverse auction service provider. The reverse auction service provider then collects its fee(s) from the successful offeror. (3) When acquiring reverse auction services from a commercial reverse auction service provider, agencies shall— (i) Use competitive procedures, unless an exception applies; (ii) Detail the provider's fee structure in the resultant contract or agreement for reverse auction services; and (iii) Make the details of the contract or agreement for reverse auction services, including the provider's fee structure, available to contracting officers for consideration when determining whether to use a reverse auction service provider, in accordance with 17.804 (a). (4) When acquiring reverse auction services, the contracting officer shall ensure the following information is provided in the solicitation and contract: (i) Descriptions of Government data and Government-related data. (ii) Data ownership, licensing, delivery, and disposition instructions specific to the relevant types of Government data and Government-related data ( e.g., DD Form 1423, Contract Data Requirements List; work statement task; line item). Disposition instructions shall provide for the transition of data in commercially available, or open and non-proprietary format and for permanent records, in accordance with disposition guidance issued by the National Archives and Records Administration. (d) Contracting officers shall only use the services of a reverse auction service provider that— (1) Does not assert or imply that it can or will obtain a Government contract for participants of a reverse auction; (2) Allows entities to register, at no cost, as potential offerors for reverse auctions conducted on behalf of the Government on the provider's reverse auction platform; (3) Allows each entity, as part of the registration process, the opportunity to execute a proprietary data protection agreement with the provider; provided that the terms in the agreement do not affect the terms and conditions of a Government solicitation or contract; (4) Protects from unauthorized use or disclosure and does not release outside of the Government— (i) All contractor bid or proposal information (see 3.104-1 ) and source selection information associated with providing reverse auction services to the Government; (ii) All information similarly generated to support the issuance of a task order or delivery order or order under a blanket purchase agreement; and (iii) Information identified by an offeror as restricted from duplication, use, or disclosure—in whole or in part—for any purpose other than to evaluate the reverse auction participant's price or proposal; (5) Allows offerors to see the successive lowest price(s) offered in the auction without revealing an offeror's identity; (6) At the close of each auction— (i) Provides the Government with the successful offer, along with information that separately identifies the offeror's price and the price for each provider fee or charge included in the total price; and (ii) Provides the Government with all information and documentation received from offerors in response to the reverse auction. (7) Does not participate as an offeror in any reverse auction which the provider is hosting on behalf of the Government. This prohibition includes participation in a reverse auction by any entity with which the provider has a relationship that raises an actual or potential conflict of interest; and (8) Asserts no rights or license in the data gathered or generated during a reverse auction. (e) Only a contracting officer shall— (1) Exclude an offeror from participating in an auction; (2) Determine the awardee(s) of any reverse auction; or (3) Determine that the offeror is a responsible prospective contractor (see 9.103 , 9.104-1 , and 9.405 (d)).