Reverse Auctions:

A reverse auction is a type of auction in which the roles of buyer and seller are reversed. In an ordinary or forward auction, buyers compete to obtain a good or service by offering increasingly higher prices. But in a reverse auction, the sellers compete to obtain business from the buyer and the participants place lower and lower bids, until the lowest bidder wins. A reverse auction is similar to a unique bid auction as the basic principle remains the same, however a unique bid auction follows the traditional auction format more closely as each bid is kept confidential and one clear winner will emerge at the completion of the auction. .
The reverse auction has been widely used by many organizations and is aimed at reducing costs and sourcing services or products at the lowest possible price from the participating suppliers. Some of the benefits are: A reverse auction provides buyers with the most competitively priced solution to their needs by pitching suppliers against each other to be the one offering the lowest-priced bid. It saves time in the procurement process and also streamlines the procurement process as well as reduces the need to send a different request for proposal to each potential supplier.
It equally has some disadvantages that makes it a bad method like creating problems when proper controls are not put in place. Competition for the lowest price can make some suppliers to cut corners to maximize benefit or even send them out of business when the project turns out to be a loss. Since this is based solely on price, quality and standard may be compromised and aggressive under-bidding practices can result in supplier winning a contract that cannot be completely executed at the agreed price.