Reverse Auction in Public Procurement Law 2026

Definition: A reverse auction (also: inverse auction or electronic auction in public procurement) is an electronic procedure in which several bidders submit competing offers in real time and progressively lower their prices until the lowest price or the most economically advantageous tender is determined.

Last updated: January 2026 · Legal basis: Directive 2014/24/EU Art. 35; BVergG 2018 §§ 145 et seq.; GWB/VgV § 27

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What is a Reverse Auction?

The reverse auction inverts the classical auction logic: it is not the buyer that bids higher but the sellers (bidders) that bid lower – the cheapest bidder wins. In public procurement law it is codified as an electronic auction and serves to intensify competition after an initial evaluation of tenders through a transparent procedure.

The reverse auction is not a stand-alone procurement procedure but a tender evaluation method that follows an open, restricted, or negotiated procedure. It may be applied only to services whose specifications can be described with sufficient precision.

Procedure

The course of a reverse auction in procurement law follows a legally regulated pattern.

1. Initial tender: all bidders first submit a complete tender; the initial tenders are reviewed and evaluated
2. Invitation to the auction: the contracting authority invites all qualified bidders electronically to take part and informs them of their current ranking
3. Auction phase: within a set deadline, the bidders may successively improve their prices (and, where appropriate, other measurable parameters); the current rankings are displayed in real time
4. Closing: the auction ends on expiry of the fixed deadline; the most economically advantageous tender at that point is awarded the contract

Legal Requirements

The use of a reverse auction is subject to strict conditions in order to ensure transparency and equal treatment.

• The subject matter must be described with sufficient precision (no use for innovative or intellectually demanding services)
• Only measurable, that is, quantifiable features may be included in the auction
• Bidders must be informed in advance of the auction rules, the evaluation formula, and minimum bid increments
• At least two bidders must be admitted to the auction
• Intellectually demanding services (e.g. planning and consultancy services) are excluded from the reverse auction

Related Terms

• Electronic Auction
• Open Procedure
• Award Criteria

FAQ

May only price be compared in a reverse auction? No. The auction may also cover other measurable elements (e.g. delivery time, quality parameters), provided that these have been incorporated into a uniform evaluation formula and communicated to bidders in advance.

Can the reverse auction also be used for complex services? No. For intellectually demanding services such as planning, consultancy, or architectural services, the reverse auction is impermissible since their quality cannot be captured solely through quantifiable parameters.

What happens if no bidder improves its offer? The initial tender then remains decisive. The contracting authority is not required to impose a minimum improvement as a condition for the award.

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Last updated: January 2026 All information provided without guarantee. For legally binding advice, please consult a law firm specialising in public procurement law.