From what I’ve been told, PETRONAS is starting to use reverse auctions to squeeze the best price out of Design Engineering Services contractors. I have heard that PCSB-SKO has used this technique at least thrice, and that’s without me actively investigating the matter.
The way it works is as follows: Approved service providers are told to login to an auction page at a given time. The scope of work/services being auctioned off is given a starting price, hopefully the price is higher than what the SPs think is a fair value.
When the auction starts, service providers will be allowed to input their price to execute the work, the only limitation is that it has to be lower than the incumbent price (duh). To prevent last minute sniping, I’ve been told that the auction only closes 60 minutes after the last entry.
Now, I believe Shell did this either in the UK or Australia, but there were complaints from the industry. When will the outcry come from our local players? Or is there no recourse for a intellectual discussion on the topic?
Wata - Malaysian Oil and Gas Engineer 
Also know as online bidding. And it’s not only done to Design Engineering Services people. Vendors also get hit on the head with this. Ask Sarawak Shell Berhad.
i believed it happen once, where someone put USD1 and then say “oops”.
I think it was one of the major design house.
It was originally FOC. To make the transaction legal they put RM 1.
ha3,so no entertainment anymore or late night calls for conttractors to drop prices and give portion to procurement staff if they manage to get the contract.
Abang Botak84: Of course there are opportunities. Notice that the other OPUs don’t have online actions? And whose to say that a ‘computer glitch’ won’t reject bids after a certain criteria has been met? I don’t know if the reverse auction system is being done automatically or humanly sorted out? I would like to see an independent audit, maybe by PWC, or I volunteer.