The experience of the reverse auctions in the government procurement of Brazil: opportunity and innovation

The paper presents an overview of the creation, trajectory and results of the adoption of this new procedure for bidding, enacted in 2000, depicting its impacts on cost reduction, improved efficiency and innovation in the... [ view full abstract ]

The paper presents an overview of the creation, trajectory and results of the adoption of this new procedure for bidding, enacted in 2000, depicting its impacts on cost reduction, improved efficiency and innovation in the management of public procurement in Brazil. It is a case study supported by qualitative interviews with public officials, compilation of quantitative data and documentary survey of research papers published on the subject. The paper describes the political context surrounding the creation of the reverse auction, explaining the circumstances that led to the catching of an opportunity to innovate in an area characterized by its organizational and institutional weakness. The fast dissemination of the reverse auctions in the Brazilian federal government and the results of its use in the last 15 years are analyzed. The evaluation of these results takes as a reference an analytical framework of expected benefits of the adoption of reverse auctions that distinguishes between the direct impacts that occur by the intensification of competition, the impact of procedural innovations that reduce transaction costs and the specific impact of the electronic reverse auctions, evidenced by the increased participation of suppliers, diversification of their socio-economic and geographic profile and increased purchases shared between public administration bodies. As a conclusion, the paper highlights the advances and limitations of the reverse auction experience and suggests issues for further research, in particular through comparative analysis across countries. Further, it discusses the possible lessons from the Brazilian case that are of interest to countries experiencing the modernization of their public procurement systems.