Network Rail blasted for Dutch auction

Network Rail has been blasted by its contractors for using a Dutch auction to drive down costs on some of its service contracts.
The online auction for seven welding contracts, which took place a week ago, was open to all contractors. It is the first reverse auction the rail operator has used for construction-related procurement.
However, the bidders, which included Jarvis, Grant Rail, First Engineering and Amec, are furious with the method. An hour of cut-throat bidding saw bids drop from £4.5m to £2m at the end of auction, according to sources.
"The use of these auctions is ludicrous," said one unsuccessful participant in the auction. "The rate at which bidders were trying to hammer down costs was ridiculous. I believe many of them are unsustainable. It will be interesting to see if the winners will be able to deliver what they say they can."
However, the rail operator told CJ it was "happy" to use reverse auctions to drive down costs and get efficiency savings. Previously welding contracts were near the £8m mark.
Network Rail admitted to CJ that it plans to use the procedure on other contracts.
It added that it will still demand high standards of performance and safety when interviewing the two or three contractors that are successful in auctions.
"Contractors are asked to attend interviews after bidding to prove they can deliver," said a Network Rail source.
"This is another way to reduce costs as it can't be denied that we are under tremendous pressure to reduce overheads," he added.