Dutch Auctions

A Dutch auction is a fast-moving auction event in which line items steadily increase in price until the first supplier agrees to sell some quantity of the item at the current price. Line items open and close consecutively and only one line is open for bidding at any given time. The bid clock indicates the time remaining for bidding on the current line item. The initial starting price is usually set lower than market price and the price is incremented at a predefined time interval, which is usually set in minutes.

In a Dutch auction, the purchaser provides the starting price, time increment, and price increment for each line item. Bidding begins at the starting price. If no supplier is willing to sell at the starting price after one time increment, the bidding price is increased by the price increment. This process repeats until a supplier places a bid. If no reserve price is set, the first supplier who places a bid wins the award and the line item closes. If a reserve price is set, the first supplier to place a bid below that reserve price wins the award.

If no supplier bids and the line item has an optional ceiling price, the line item closes when the price increment reaches the ceiling price. If no ceiling price is entered, and no supplier bids on the line item, the line item remains open for bidding until the purchaser closes it manually.