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50-579: The UPDM initiative began in 2005, when the OMG issued a Request for Proposal . This request was based on the then current versions of DoDAF (1.0) and MODAF (1.1). While the specification submission development was underway, significant changes were made to the DoDAF and MODAF. Therefore, although a UPDM 1.0 beta 1 specification was adopted by the OMG in 2007, and UPDM 1.0 beta 2 was submitted by an OMG Finalization Task Force in 2008, UPDM 1.0 beta 2 has not been endorsed by

100-426: A request for quotation (RFQ) and a request for information (RFI), where a customer needs more information from vendors before submitting an RFP. An RFI is typically followed by an RFP or RFQ. When an RFP is made after negotiations with prospective contractors, the submitted tender is known as a BAFO (best and final offer). A request for proposal requires the bidder to produce an original business proposal based on

150-440: A bid for the item, it is allocated to the supplier and the item closes for bidding. In this auction, the buyer specifies a starting price, price change value, time interval between price changes, and the reserved price. The auction opens with the first item with a specified start price and increases by the price change value (amount or percentage) after a fixed interval. The start price keeps on increasing until any supplier places

200-451: A bid or the start price reaches the reserved price. After the bidding is closed for the item it moves to another item sequentially. Auction is closed when the bidding for all items is completed. Although the history of the Japanese reverse auction is unknown, they are widely used in the world of business-to-business procurement as a form of cost negotiation. A Japanese auction is where

250-611: A consolidation of the reverse auction service marketplace. In January 2004, Ariba announced its purchase of FreeMarkets for US$ 493 million. Fortune published an article in March 2000, describing the early days of internet-based reverse auctions. In the past few years mobile reverse auction have evolved. Unlike business-to-business (B2B) reverse auctions, mobile reverse auctions are business-to-consumer (B2C) and allow consumers to bid on products for pennies. The lowest unique bid wins. Very recently business-to-consumer auctions with

300-538: A final selection decision is based. Federal government requests for final proposal revisions must advise offerors that the final proposal revisions shall be in writing and that the Government intends to make award without obtaining further revisions. The term "request for proposals" is sometimes used in relation to government procurement in the United Kingdom , for example a request for proposals to raise and manage

350-415: A form of reverse auction, have been commonly used in government procurement and in the private sector in many countries for many decades. For consumer auctions, the term is often used to refer to sales processes that share some characteristics with auctions, but are not necessarily auctions in the traditional sense. One common example of reverse auctions is, in many countries, the procurement process in

400-495: A government-wide memorandum encouraging agencies to improve and increase competitive procurement and included specific examples of competition best practices, including reverse auctions. In 2010, The White House Office of Management and Budget cited "continued implementation of innovative procurement methods, such as the use of web-based electronic reverse auctions" as one of the contracting reforms helping agencies meet acquisition savings goals. A common form of procurement auction

450-512: A price-based format have been explored. A Demsetz auction is a system which awards an exclusive contract to the agent bidding the lowest price named after Harold Demsetz . This is sometimes referred to "competition for the field." It is in contrast to "competition in the field," which calls for two or more agents to be granted the contract and provide the good or service competitively. Martin Ricketts writes that "under competitive conditions,

500-563: A reverse auction could be used to price the assets. In 2004, the White House Office of Federal Procurement Policy (OFPP) issued a memorandum encouraging increased use of commercially available online procurement tools, including reverse auctions. In 2005, both the Government Accountability Office and Court of Federal Claims upheld the legality of federal agency use of online reverse auctions. In 2008, OFPP issued

550-478: A twist have started to evolve; they are more similar to the original business-to-business auctions than mobile reverse auctions in that they offer consumers the option of placing a specification before retailers or resellers and allowing them to publicly bid for their business. In congressional testimony on the 2008 proposed legislative package to use federal funds to buy toxic assets from troubled financial firms, Federal Reserve Chairman Ben Bernanke proposed that

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600-473: Is expected to be able to support other frameworks as well, such as the NATO Architecture Framework NAF which has an identical meta-model to MODAF. The OMG Technology Adoption Process includes issuing an RFP, responses to that RFP called submissions, resolution of differences between submissions, acceptance of the final submission, and the chartering of a Finalization Task Force that refines

650-435: Is generally known to affect prices Pre-existing relationships are known to be the key driver in the buyer’s selection and therefore bidding aggressiveness in the auction-- in terms of the number of bids submitted, the rate at which the bids are submitted, and the price concessions offered—are related to these relationships. Theoretically, the factors that determine under what circumstances a buyer would prefer this format over

700-485: Is in putting suppliers in two different position. While in Dutch reverse auctions suppliers opt-in at intended price point and thus end the auction immediately, in reverse Japanese auctions suppliers explicitly opt-out of a given market at their intended price point. The benefits of the Japanese reverse auction are based on the fact that the buying organization has greater transparency to the actual market itself. In this regard,

750-452: Is known as a scoring auction. In that auction form, the score that the buyer gives each bidder depends on well-defined attributes of the offer and the bidder. This scoring function is formulated and announced prior to the start of the auction. Many procurement auctions are "buyer determined" in that the buyer reserves the right to select the winner on any basis following the conclusion of the auction. The literature on buyer-determined auctions

800-521: Is likely to provide the best value in providing goods or services. The software includes relevant buyer and seller business data, including constraints. Reverse auctions are used to fill both large and small value contracts for both public sector and private commercial organizations. In addition to items traditionally thought of as commodities, reverse auctions are also used to source buyer-designed goods and services; and they have even been used to source reverse auction providers. The first time this occurred

850-420: Is often empirical in nature and is concerned with identifying the unannounced implicit scoring function the buyer uses. This is typically done through a discrete choice model, wherein the econometrician uses the observed attributes, including price, and maps them to the probability of being chosen as the winner. This allows the econometrician to identify the weight on each attribute. Conceptually and theoretically,

900-406: Is one buyer and many potential sellers. In an ordinary auction also known as a forward auction , buyers compete to obtain goods or services by offering increasingly higher prices. In contrast, in a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid each other. A reverse auction is similar to a unique bid auction because

950-509: Is specified as a UML profile abstract syntax (i.e. extensions of UML 2.1 metaclasses). MODAF differs from DoDAF however, so the MODAF Meta-Model is not suitable for use in DoDAF tools. Differences in vendor implementations have resulted in interoperability issues between tools and additional training requirements for users. Also, the current DoDAF UML implementation guidance is based on a previous version of UML (UML v1.x), and doesn't address

1000-518: The UK Government 's proposed Broadband Investment Fund was issued in June 2016. The collective term RFX is often used to embrace a request for proposal (RFP), or any of the terms listed below. Reverse auction A reverse auction (also known as buyer-determined auction or procurement auction ) is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there

1050-407: The procurement of a service or product from potential suppliers. It is usually part of a complex sales process, and made through a bidding process. Unlike invitations to tender , which award contracts based upon the price and quality of the tender, RFPs allow suppliers more flexibility in proposing an original service or product in alignment with a company's needs. Similar requests include

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1100-463: The OMG in March 2008. The UPDM FTF's March finalization report was not endorsed by DoD and MOD because it was tied to an obsolete version of the DoDAF (DoDAF 1.0) and did not adequately meet DODAF 1.5 or MODAF 1.2 requirements. The OMG Technology Adoption Process specifically prohibits the kind of scope creep that would have resulted in trying to extend the RFP requirements to address the then current versions of

1150-548: The UPDM Group engaged with the DoD and MOD to participate in the improvement process. The UPDM Group has begun preparation for UPDM 2.0 with a focus on US DoDAF 2.0, Canada DNDAF, and other features. OMG Unified Architecture Framework (UAF) is effectively replacing UPDM. [2] Request for Proposal A request for proposal ( RFP ) is a form of reverse auction that solicits a business proposal by an organisation interested in

1200-889: The US Department of Defense or the UK Ministry of Defence (MOD). The UPDM 1.0 specification, the result of additional work by many members of the original submission teams, is architecturally aligned with DoDAF 1.5 and MODAF 1.2. This version of the specification has been endorsed by both the US DoD and the UK MOD. [1] The UPDM 2.0 specification was released in January 2013, and UPDM 2.1 was released in August 2013. DoDAF v1.5 Volume II includes guidance for representing DoDAF architecture products using UML . MODAF also provides similar guidance, and its meta-model

1250-578: The United States, FreeMarkets, was founded in 1995 by former McKinsey & Company consultant and General Electric executive Glen Meakem after he failed to find internal backing for the idea of a reverse auction division at General Electric. Meakem hired McKinsey colleague Sam Kinney, who developed much of the intellectual property behind FreeMarkets. Headquartered in Pittsburgh , FreeMarkets built teams of "market makers" and "commodity managers" to manage

1300-512: The United States, the Federal Communications Commission created FCC auction 1001 as a reverse auction in order to get back much of the 600MHz band from television broadcasting . The remaining TV stations would then be repacked onto the lower UHF and even VHF TV channels . After the reverse auction in June 2016, a forward spectrum auction ( FCC auction 1002 ) will then be held, with mostly mobile phone carriers as

1350-567: The architecture frameworks. Therefore, the FTF report was not accepted by OMG and an alternative path for creating the specification was followed. The OMG Technology Adaption Process includes an alternative to the RFP-based process called the Request for Comment (RFC). In this process, a completed specification is delivered to the applicable OMG Technology Committee. OMG members are then given time to comment on

1400-446: 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 is defined after the auction finishes. For business auctions, the term refers to a specific type of auction process (also called e-auction , sourcing event , e-sourcing or eRA , eRFP , e-RFO , e-procurement , B2B Auction ). Open procurement processes, which are

1450-509: The bid prices should fall until they just enable firms to achieve a normal return on capital ." Disadvantages of a Demsetz auction include the fact that the entire risk associated with falling demand is borne by one agent and that the winner of the bid, once locked into the contract, may accumulate non-transferable know-how that can then be used to gain leverage for contract renewal. Demsetz auctions are often used to award contracts for public-private partnerships for highway construction . In

1500-744: The buyer's needs. Depending on the RFP document's specification, a bidder may be required to decide upon project expectations, timetable, product design, and vendors. Other requested information may include basic corporate information and history, technical capability, product information. In United States government procurement , Federal Acquisition Regulation 15.203 covers requests for proposals, stating Requests for proposals (RFPs) are used in negotiated acquisitions to communicate Government requirements to prospective contractors and to solicit proposals. The FAR allows for evaluation of proposals, further discussions with bidders and invitation for submission of written final proposal revisions (FPRs), upon which

1550-404: The buyers. While a traditional Dutch Auction starts at a high bid which will then decrease, a Reverse Dutch Auction works the opposite way as it starts at a low price and then gradually increases over time. It contains a list of items that buyers want to procure and the price rises after fixed intervals until a reserved price is reached. Before the reserved price is reached, if a supplier places

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1600-732: The current version (v2.x) or the SysML profile for systems engineering applications. Modeling tool vendors are challenged to support a variety of DoDAF and MODAF adaptations, that have been created to meet the unique needs of several nationalities. For example, a UML Profile abstract syntax (extending the UML 2.1 meta-model) has been defined for MODAF to support XMI -based file exchange between tools and repositories. But interoperability with DoDAF tools will be difficult because MODAF made significant changes to some DoDAF products and adds two new viewpoints. In addition to supporting DoDAF and MODAF requirements, UPDM

1650-453: The effect of this format on buyer-supplier relationships is of paramount importance. Instead of each bidder as submitting a price and the lowest price bidder winning the contract, here each bidder can be perceived as submitting a total "score" involving a price + nonprice attributes. The winner is the bidder who has the highest score. Unlike scoring auctions, there is no pre-announced or binding weight on each quality attribute that will determine

1700-469: The effectiveness of the sourcing process and facilitate access to new suppliers. This may in the future lead to a standardization of sourcing procedures, reduced order cycle, which can enable businesses to reduce prices and generally provide a higher level of service. E-procurement In the case of e-procurement, When real-time e-bidding is permitted, the price decreases as sellers compete to offer lower bids than their competitors whilst still meeting all of

1750-458: The format more closely mirrors that of a traditional reverse auction by providing greater visibility to each participant's lowest offer. But in contrast to a Dutch auction format, Japanese auctions do not put what one Dutch auction users describes as "maximum psychological pressure" on the supply base and especially on the incumbent suppliers . This can put the buyer in a better position regarding with potentially earning more than he should based on

1800-541: The host of the auction states an opening price and participants have to accept that price level or withdraw from the auction. Acceptance indicates that the participant is prepared to supply at the stated price. When all participants reply to a certain price, the software lowers the price level by a predetermined amount and again asks participants to accept or decline at the new price level. This kind of auction continues until there are no more participants bidding. The major difference between Japanese and Dutch reverse auctions

1850-405: The initial auction's completion. The buyer may award the contract to the seller who bid the lowest price. Or, a buyer may award contracts to suppliers who bid higher prices depending on the buyer's specific needs with regard to quality, lead-time, capacity, or other value-adding capabilities. The use of optimization software has become popular since 2002 to help buyers determine which supplier

1900-530: The market. The suppliers should firstly determine the lowest price for which they are willing to sell their products. To do this effectively they must be able to compute their true marginal cost and identify extra-auctions costs and benefits. However, that does not mean that the best strategy is to bid the lowest price. In the analysis of extra-auction costs and benefits, they should examine areas where winning or losing can generate unexpected benefits or avoided costs. Some examples include: Based on this analysis,

1950-516: The process of running the online tender process and set up market operations to manage auctions on a global basis. The company's growth was aided greatly by the hype of the dot-com boom era. FreeMarkets customers included BP , United Technologies , Visteon , Heinz , Phelps Dodge , ExxonMobil , and Royal Dutch Shell , to name a few. Dozens of competing start-up reverse auction service providers and established companies such as General Motors (an early FreeMarkets customer) and SAP , rushed to join

2000-472: The provisioning of public goods , common-pool resources , and non-market ecosystem services , for example. Another common application of reverse auctions is for e-procurement , a purchasing strategy used for strategic sourcing and other supply management activities. E-procurement arrangements enable suppliers to compete online in real time and is changing the way firms and their consortia select and behave with their suppliers worldwide. It can help improve

2050-472: The public sector. Governments often purchase goods or services through an open procurement process by issuing a public tender. Public procurement arrangements for large projects or service programs are often quite complex, frequently involving dozens of individual procurement activities. Reverse auctions can also be used to reveal private opportunity cost information, which can be useful in the design of incentive programs to correct market failures and promote

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2100-407: The reverse auction marketspace. Although FreeMarkets survived the winding down of the dot-com boom, by the early-2000s, it was apparent that its business model was really like an old-economy consulting firm with some sophisticated proprietary software. Online reverse auctions started to become mainstream and the prices that FreeMarkets had commanded for its services dropped significantly. This led to

2150-454: The specification. Following the comment period, a vote to accept the specification is conducted. If accepted, the delivered specification then enters the same finalization process as an RFP-based submission. Immediately following the rejection of the original UPDM FTF Report, a group identified as the UPDM Group was formed. The result of their efforts was an RFC submission in September 2008 that

2200-454: The specifications of the original contract. Bidding performed in real-time via the Internet results in a dynamic, competitive process. This helps achieve rapid downward price pressure that is not normally attainable using traditional static paper-based bidding processes. Many reverse auction software companies or service providers report an average price reduction of 18–20 percent following

2250-556: The submission into a specification. Competing proposals were submitted to the OMG to satisfy the UPDM RFP., resulting in a Unified Proposal in March 2007. The Unified Proposal included support for SysML as well as UML. In 2007, the OMG organized a Finalization Task Force (FTF) to finalize the Unified Proposal (a.k.a. UPDM 1.0 beta 1) so that it could be made into a publicly available specification. The UPDM FTF submitted UPDM 1.0 beta 2 to

2300-475: The supplier should choose his goals for the auction. The obvious goal is to win the auction at a profitable price. However, that is not always the best goal. Because of the examples of reasons mentioned above the supplier might choose as a goal for example: After this preparation, the supplier should try to achieve his goal within the specific auction protocols and characteristics of the auction interface. The important characteristics that differ between auctions are

2350-460: The winner in a formal fashion. Rather, bidders operate in an uncertain environment in which only the buyer knows its own considerations. Given the uncertainty regarding other bidders’ nonprice qualities, it may be that bidders learn about the competition by observing other bidders’ bids. One can therefore expect systematic differences in their response patterns to competitive bids. Likewise, the provision of information on other bidders in such auctions

2400-578: Was accepted by the Domain Technology Committee in December 2008, at which time a new UPDM FTF was chartered. DoDAF and MODAF are under configuration control, with new versions being released as the user requirement evolves, and therefore the UPDM will evolve to enable accurate modeling of the changes. One intended improvement is a move to align the meta-models of the two frameworks. As of September 2008,

2450-436: Was in August 2001, when America West Airlines (which later became US Airways ) used FreeMarkets software and awarded the contract to MaterialNet. One form of reverse auction is static auction (RFQ or tender). Static auction is alternative to dynamic auction and regular negotiation process in commerce especially on B2B electronic marketplace. In 2003, researchers claimed an average of five percent of total corporate spending

2500-481: Was sourced using reverse auctions. They have been found to be more appropriate and suitable in industries and sectors like advertising, auto components, bulk chemicals, consumer durables, computers and peripherals, contract manufacturing, courier services, FMCG , healthcare, hospitality, insurance, leasing, logistics, maritime shipping, MRO , retail, software licensing, textiles, tourism, transport and warehousing. The pioneer of online e-procurement reverse auctions in

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