Opinion is, not surprisingly, divided. 

In one corner, we have the procurement manager, keen to exert control over money spent on consultants and frustrated by the variety of different rates, even from a single consulting firm.  In the other, we have the consultant, eager to demonstrate value and apoplectic at the idea that consulting can be treated as a mere commodity.

What the debate usually ignores is that the underlying problem is not one of price, but information.  An e-auction is one of the few ways in which a buyer of consulting services can benchmark the rates of firms that won’t publish them.  It should be about getting the rates of the various firms to converge around a reasonable market rate, rather than identifying the lowest cost supplier.

From a consulting firm’s point of view, is this really any different to the negotiation that goes on prior to a contract being signed?  You can argue that an e-auction simply gets them to the rate they would have agreed to anyway, but far more quickly.

Some suggestions about running a useful e-auction:

• Do your preparation up-front: decide what you think about the quality of a firm’s proposal before starting the auction.  Don’t use the auction as the sole, or even most important, basis on which to select a firm.
• Ensure you have enough alternative suppliers: you can’t run an effective auction with two firms.
• Make sure you have some new firms on the list.  There’s no point running an e-auction for the same firms you already work with.
• Don’t make it too complicated – asking firms to pitch for multiple levels of resources. Focus on one key rate which will drive all the rates a firm charges.
• Explain exactly what you’re doing – and why – to the consulting firms involved.  If you are genuinely trying to identify a market rate, tell them this.