Differences between a competitive bid process and an auction

Auctions tend to be dominated by cost: which law firm will offer the lowest billing rates or take on the work on offer for the lowest fees. Competitive bid processes scrutinize costs, of course, but also take into account more subjective determinants, such as each firm’s experience, staff, diversity, approach and technology.

Auctions are usually done quickly, in real time. If all the bidders are prepared to hold up their cards, the auction can be conducted relatively rapidly. Competitive bid processes, by contrast, typically unfold over several months.

Auctions can be done online and electronically. In most competitive bids, although law firms may submit their proposals electronically and may ask questions by email, the most significant decisions and steps are not done through the Internet. For instance, often a bidders’ conference takes place and in person presentations.

These three comparisons are latent in my previous posts on auctions (See my posts of Feb. 4, 2006 #4 on auctions and the references cited; Jan. 14, 2007 #3 on savings of 10-35%; Feb. 20, 2007 #1 and expressive bidding algorithms; March 12, 2006 on GE’s electronic auction; Oct. 6, 2006 on auctions going away; and April 16, 2007 on GE dropping the auction; Feb. 1, 2006 #4 on reverse bids and PNC.).

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