Literature Review on Government-To Business (G2B) Reverse Auctions System

Megat S. Zulkifli
Putra Business School University Putra
43400 UPM, Selangor, Malaysia

Mohd Fuaad Said

Faculty of Economics &
Management
University Putra Malaysia
43400 UPM, Selangor, Malaysia

ABSTRACT
Government-to-Business (G2B) reverse auctions are receiving attention as an effective strategy for reducing the
price of purchased goods and services. The efforts to understand the G2B reverse auctions has been lacking despite
the online auctions being an avenue to create an efficient and transparent public sector. As governments around the
world are moving from paper-based to process-based information technology (IT) infrastructure, reverse auctions are
beginning to replace traditional paper-based manual procurement transactions. Effectively, the importance of the
reverse auctions to the public sector further is underscored by projections indicating that the economic potential
benefits include significant deficit reduction as percentage to GDP of 16%, and potential cost savings of 7% to GDP
for Malaysia (Settoon and Wyld, 2003). The aim of this study is then to fill this gap. In this paper, literature and
published research stream on G2B reverse auctions is reviewed including the eBidding, the Malaysian G2B reverse
auctions market. To date, explanations of why public sector procuring officials decide to adopt the reverse auctions
strategy are incomplete, as such future research is needed to explore the antecedents of the G2B reverse auctions
system.
Keywords: e-Government Systems, Government-to-Business Centric Perspective, Reverse Auctions

1. INTRODUCTION

The Government-to-Business (G2B) reverse auctions is an innovative procurement auctions for the public sector
(Carter et al., 2004). G2B reverse auctions is defined as an online and real-time auction between a buying party
and two or more suppliers hosted by a single buyer to outsource products and/or services, in which multiple
pre-qualified suppliers compete for the buyers bids (Emiliani, 2004). Government-to-Business (G2B) reverse
auctions is an inter-organizational information system (IOS) with which participating buyers (governments) and sellers
employ electronic markets for transactions. G2B reverse auctions involve three groups government procuring
agency, registered supplier, and service provider of the reverse auction services.

The majority of research on electronic auction markets are focused on developed countries, however lack of
resources (e.g. skilled people, proper ICT infrastructure) inhibit the development of reverse auctions in the developing
countries (Carter et al, 2004). Prior research in this area has been in the domain of private sector settings. There is
little empirical research exploring the appropriateness (or motivation) of reverse auctions use by the public sector
procuring officials (Jap, 2007), and similar trend shown in the case of Malaysia. Previous studies on auctions
deployment in Malaysia are qualitative in nature and focusing on factors that motivates suppliers to adopt auctions
rather from the government users perspectives. An empirical study on the factors influencing the adoption of
reverse auctions in Malaysia will enhance the boundary of knowledge in terms of broadening the understanding the
use of reverse auctions as sourcing strategy in Malaysia. This study in a developing country will increase the
understanding of how G2B reverse auctions and will assist the government to increase the reverse auctions adoption
by the government users. The effort to understand the behavior of government procuring officials in adopting the
reverse auctions has been lacking. The studies of G2B reverse auction have been relatively rare so there is still a lack
of a good understanding of how it work, especially from the government users perspective.

The paper will also focus on the Malaysian G2B reverse auctions namely the eBidding market. The study of G2B
reverse auctions have become significantly important for the procurement of goods and services in South East Asian
countries including Malaysia (Settoon and Wyld 2003). Firstly, the government shows commitment in trying to
promote the G2B by making it mandatory for all procurement of goods and services through the e-procurement.
Secondly, the adoption of eBidding in the G2B electronic markets is low (ePerolehan, 2012). Until April 2012, there
are a total of 419,688 transacting procurement units out involving 28 ministries and department that are located in
the Peninsular of Malaysia. However the number of transacting procurement units via eBidding is only 315
transactions out of 419,688 transactions procurement units. The balance amount was transacted using the manual
system (www.home.ePerolehan.gov.my, 2012). Thirdly, explanations for the phenomenon of why procuring officials
decide to employ eBidding are incomplete, as such the factors that influence reverse auction use are important for
government policymakers.

This study contributes to the literature in the following ways: Firstly, this study will provide a deeper understanding
the critical factors of what leads to the government procuring officials behavior to adopt the reverse auctions
system, which has not been previously done. The paper also fills the gap in the literature arising from a lack of
research in the public sector G2B reverse auctions environment. It is hoped that the study will help build the
foundation for future studies in G2B reverse auctions adoption.

2. LITERATURE REVIEW
This paper is organized as follows. This literature review is taken from e-government research streams , publish
research on reverse auctions and G2B reverse auctions adoption literature. The reverse auctions mechanism is
introduced, global public sector reverse auctions, followed by a description of the Malaysian reverse auctions
context. Theoretical and practical implications are offered and then close with recommendations for future research.

The process of searching for related literature focused on articles from different scientific publishers on a timeframe
from 2000s until mid 2012.

2.1 Reverse Auctions System

A reverse auctions system is defined as an online and real-time auction between a buying party and two or more
suppliers (Carter et al., 2004). Reverse auction is an electronic competitive bidding between suppliers that drives
prices down or purchasing auctions from buyers. Reverse auctions is an innovative sourcing strategy in the area of
supply chain management (SCM) and as a strategic sourcing tool, it is employed to facilitate firms to enhance the
organizations competitive advantage (Emiliani et al., 2004).

The body of literature on reverse auctions is still in its infancy (Arnold, Kamer and Schnabel 2005; Carter et al.
2004; Wagner and Schwab 2004) and research specific to the factors that influence reverse auction use is sparse
(Joo and Kim 2004). However, The procurement and supply chain management research literature is rich with case
studies documenting how leading global firms have effectively used reverse auctions in their procurement activities
to increase competitiveness, cost efficiency and manage their supply chain (Wyld, 2011). Reverse auctions
provides an avenue for organizations to contribute to a position of competitive advantage by reducing the price and
the transaction costs associated with purchasing goods and services. Research on reverse auctions in recent years
has been focused on the antecedent factors of online auctions adoption in private sector and business
organizations at organizational level (Radhakrishnan and Davis, 2004).

2.2 Global G2B Reverse Auctions

The introduction of G2B reverse auctions into procurement is a relatively recent phenomenon. Reverse auctions are
increasingly being used in G2B electronic markets to procure goods and services for governments (Beall et al. 2003).
Online reverse auctions system is expected to be widely embraced by global governments due to its benefits and
from the popular success in the private sector (Wyld, 2012). There are many compelling reasons for governments to
adopt reverse auctions.

Reverse auction is an efficient and structured way to conduct online negotiations between public sector with their
suppliers. Reverse auctions have been reported to yield significant price reductions and time saving for governments
as well as to create opportunity for suppliers to penetrate new markets (Emiliani and Stec 2002; Smeltzer and Carr
2003). In fact, Beall et al., (2003) argue that reverse auctions are beginning to replace traditional paper-based or
email-based requests for proposals (RFP) and manual transactions due to its benefits. For the government, reverse
auctions offers many advantages including price reduction, increase in buyer productivity, reduction in cycle time,
access to many suppliers at the same time, creating a more competitive environment, standardization and
transparency in purchasing process. In terms of transparency, the government implemented eBidding to fight
corruption, reduce back room negotiations, and bring transparency to the government purchasing process. The
process is open since a reverse auction preserves bidder anonymity and provides suppliers with real time pricing
feedback (Jap, 2007).

Countries in which application of electronic reverse auctions to public procurement has been pioneered include in
particular Brazil, the United Kingdom, Singapore, Thailand, and the United States (Simeon, 2005). Previous studies
on online auctions are as shown in Table 1, Dolpanya et al., (2008); Radhakrishnan et al., (2005) ; Souza and

Pereira, (2009); Hackney et al., (2009) ; Neri, M.,P. et. al, (2012) ; Li D. et, al (2007) ; Winston T. H. et., al (2009).

An empirical study was undertaken on suppliers participation in Thai electronic auction markets by Dolpanya et al.,
(2008). The study found that suppliers participation depends on organizational motivation, and their capabilities,
namely efficiency motive, legitimacy motive, and organizational capabilities to participate in Thai B2G e-auction
markets. A case study Radhakrishnan et al., (2005) in the United States on the effects of system related,
organizational readiness, external factors on the supplier willingness to adopt G2B reverse auctions in the Federal
Government. The authors argue that the factors affect willingness to adopt governmental reverse auctions are
system factor (difficulty), perceived external factors (price based competition intensity, customer power and
information intensity) and organizational readiness factors (financial readiness and technological readiness).

Case study by Souza and Pereira, (2009) on the ComprasNet portal Brazilian Governments public sales
electronic reverse auctions to examine the relationship between auctioneers, government agencies and negotiation
gain. Three factors are found to be influencing the successful use of online auctions : pre-selection of suitable
auctioneers; agencies with more than one auctioneer will present higher auction gains ; and failure of auctions is not
related to the agency or auctioneer but due to price and lack of competition. Another case study by Hackney et al.,
(2009) on reverse auctions impact on organizational efficiency to ensure procurement excellence in the UK. The
authors contend that reverse auctions can improve procurement processes, realise cost savings and reduce
delivery times. The research also note that reverse auctions can produce dis-benefits, including poor buyer and
supplier relationships and social implications.

A descriptive study by Neri M.P. et. al, (2005) on global eBay sites to identify patterns of attributes that contribute to
the success or behaviour of e-auctions in websites associated with a recognized web brand in web-based bidding

to strengthen Philippines e-Commerce 2000 Act. The study found out a direct connection between the rise of buyer
satisfaction and access, consumer protection and efficient payment and deliveries methods. A case study by Li D.
et, al (2007) to identify factors for the users brought by the reverse auction in the supply chain management in
Chinas Department of Commerce. The authors outline the conditions for a beneficial reverse auctions for the
purchasers are market environment with free competition and flexibility in market price; specifiability of the products,
good supply chain relations, internal organization structure ; and supervisory and contract management. Winston
T.H K,. Mariano R.S., and Tse Y.K,

(2007) conducted an econometric analysis on the vehicle quota system

(VQS) in Singapore to understand whether the change in auction format led to a change in bidding behaviour when
the switch from a sealed-bid format to an open bidding format for the quota license auctions. From the econometric
analysis, the authors argue that an open auction is beneficial for car buyers, in terms of cost savings, and with
greater transparency and less uncertainty, buyers are better off under the open auction system

Table 1. Previous Studies on Public Sector Online Auctions Adoption

No

Authors

1. Dolpanya et. al.,

(2008)

Variables
Empirical study on
suppliers participation in
Thai electronic auction
markets

2. Radhakrishnan et. Case study on the the

al, (2005)
effects of the three groups
of factors
(system related,
organizational readiness,
external) on the supplier
willingness to adopt G2B
reverse auctions.
3. Souza and
Pereira, (2009)

Case study on the Brazilian

electronic reverse auctions
to
examine the relationship

Country

User
Groups

Findings

Thailand

Supplier
users

Suppliers participation depends on

organizational motivation, and their
capabilities, namely efficiency motive,
legitimacy motive, and organizational
capabilities to participate in Thai B2G
e-auction markets.

United
States of
America

Supplier
users

Factors affect willingness to adopt

governmental reverse
auctions: a system factor,
perceived external and organizational
readiness factors.

Brazil

Auctioneers
Users

Three factors influencing successful

online auctions : pre-selection of
suitable auctioneers; agencies with
more auctioneers; and price

No

Authors

Variables

Country

User
Groups

Findings

Supplier
users

Product specifiability, organization

structure of purchasing, appropriate
market conditions, selection of
competent suppliers and flexible
commercial arrangements are
important in determining auctions
success.
E-auction characteristics that focus
on context, input, process, output and
outcomes are context factors ; input
factors ; process factors ; output
factors and outcome factors.
The study found out a direct
connection between the rise of buyer
satisfaction and access, consumer
protection and efficient payment and
deliveries methods.
The authors outline the conditions for
a beneficial reverse auctions for the
purchasers:
a. market environment with free
competition and flexibility in
market price;
b. specifiability of the products,
good supply chain relations and
feat internal organization
structure ;and
c. supervisory and contract
management

between auctioneers,
government agencies and
negotiation gain.
4. Hackney et. al.,
(2009)

5. Neri, M.,P. et. al,

(2012)

6.

Li D. et. al,
(2007)

Case study on how

UK
behavior in electronic
Reverse Auctions
(e-RAs) may impact on
organizational efficiency to
ensure procurement
excellence.
A descriptive and
Philippines
correlational analysis on
global eBay sites to identify
patterns of attributes that
contribute to the success
or behaviour of e-auctions
in websites associated with
a recognized web brand in
web-based bidding.
The case study to identify
factors for the users brought
by the reverse auction in the
supply chain management
in Chinas Department of
Commerce.

China

Suppliers
Users

Users

7. Koh W.T.H,. et. al, An econometric analysis on Singapore

(2007)
the vehicle quota system
(VQS) in Singapore.

Suppliers An open auction is beneficial for car

Users buyers, in terms of cost savings, and
with greater transparency and less
Uncertainty.

A review of the methods underlying these publications reveals that the majority of the research is conceptual,
descriptive in nature and is based on qualitative interviews and case studies. Furthermore, the small amount of
survey research is based on rather small sample sizes. Table 1 show the trends of public sector reverse auctions

which predominantly studied as descriptive, case studies and the level of analysis is on the suppliers as users at
organizational level. Factors affect the willingness to adopt governmental reverse auctions include factors system
factor, perceived external and organizational readiness factors. Product specifiability, organization structure of
purchasing, appropriate market conditions, selection of competent suppliers and flexible commercial arrangements
are important in determining auctions success. The trend also indicate that online reverse auctions are a very
recent and an emerging research area, however, there are many compelling reasons for governments to adopt
reverse auctions. G2B reverse auctions system is expected to be widely embraced by global governments due to
its benefits and from the popular success in the private sector (Wyld, 2012).
2.3

Online Auctions in Malaysia

There is little empirical research exploring the appropriateness (or motivation) of reverse auctions use by the public
sector procuring officials (Jap, 2007), and similar trend shown in the case of Malaysia. An empirical study on the
factors influencing the adoption of reverse auctions in Malaysia will enhance the boundary of knowledge in terms of
broadening the understanding the use of reverse auctions as sourcing strategy in Malaysia. Previous studies on
online auctions are as shown in Table 4, Jamaludin et al., (2011); Kamarulzaman and Rahman, (2009) ; Settoon
and Wyld, (2003) ; Mukhtar et al., (2009) ; Eu-Gene, (2010) ; Anthony, P (2009) ; Gan, K.S. et al, (2009) ; Abdullah,
R and Zahadi E. D.(2011) ; Akmaliah A. K, (2007); Abdulhadi, (2013) ; P. Antony, (2005).

A case study on the success factors and obstacles in e-auctions use in Malaysian agricultural sector has identified
the advantages and drawbacks of e-auction use in Malaysia (Kamarulzaman and Rahman, 2009). The authors
argue that e-auction use in the agricultural sector could reduce purchasing costs of materials and assists suppliers
in negotiating prices and improve competitive bidding. However, the inability of suppliers to understand detailed
understanding of costing structure and prices potentially harm supplier-buyer relationship and sowing distrust. The

authors also contend that specifiability and detailed description of the services are important in determining auction
success. A case study on top e-auctions sites in Malaysia, namely the lelong.com.my and eBay was undertaken by
Eu-Gene, (2010). The author proposed four critical success factors in determining successful adoption of e-auctions,
namely security, costs, market volume and website performance. An integrated e-marketplace framework in
Malaysian wood based products industry was proposed by Mukhtar et al., (2009). The authors propose a
development of an e-marketplace which allows online auctions and purchasing with the interface to employ
short-messaging-services in the e-negotiation transactions. A case study on online auctions found that some
electronic auctions are not Syariah-compliant (Jamalludin et al., 2011). The study proposed a Syariah-compliant
electronic auction conceptual framework and system architecture for e-auction to address the issues of
non-compliancy with the Syariah rules that potentially be the basis for a Syariah-compliant electronic auction model
for commercial use.

A study on the potential impacts of Government-to-Business (G2B) reverse auctions was undertaken in Malaysia
and four other regional countries (Settoon and Wyld, 2003). The authors contend that the e-sourcing strategies
could yield significant benefits for governmental budget in terms of immediate cost savings, time and temporal
efficiencies and deficit reduction. They concluded the governments could improve efficiency in state expenditure,
reduce subsidies and reliance on external financing by adopting the electronic reverse auctions. A review by
Anthony, P. (2009) on electronic auctions outline types of auctions benefits to consumers. The author also propose
bidding strategies for bidders and sellers to maximize participation in electronic bidding including employing
buy-it-now, sniping tactics and participate in multiple auctions. For sellers, the author suggest they employ shilling
tactic by participating in the bidding to push prices downward and by offering reasonable price consistent with
bidders requirements.

10

In an empirical study, Gan, K.S. et al, (2009) conducted an empirical evaluation of self-adaptive genetic algorithm
and deterministic dynamic adaptation algorithm for searching most effective online auction strategies. Genetic
algorithm is a search technique used in computing to search for best approximate solutions in large search space
for optimization and search problems, for example computation that use techniques by evolution biology such as
inheritance and mutation. Deterministic dynamic adaptation is a discipline which alters the value of strategy
parameter by some deterministic rule. The existing bidding strategy is evolved using a standard genetic algorithm
which applied a fixed crossover and mutation rates. The study investigate whether using deterministic dynamic
adaptation and self-adaptation can improve the bidding strategy by evolving better bidding strategies in an online
auction setting. From the comparative study showed that the strategies evolved from the dynamic decrease
mutation rate performed better than strategies evolved from dynamic adaptation schemes, in terms of success rate
and average payoff when bidding in the online auction marketplace.

In a case study on Abdullah, R and Zahadi E. D.(2011) proposed a framework of bidding system for online
registration number of new registered vehicle. The framework is designed to help users to obtain a number plate
through an open bidding process and bidding results notifications. The framework comprise of

invitation to bids

functions based on highest price and on-time bid placements. Another empirical study by Abdulhadi, (2013) on
eBay Malaysia to evaluate the customer satisfaction by focusing on the influence of the various factors of
satisfaction among the Malaysian EBay users. The study study proposed a model of framework for the research
study on online customer satisfaction. The factors investigated are merchandise, transaction, response time,
security/privacy, payment and delivery with response time found not significant in the study.

In a case study by Akmaliah A., K, (2007) on online marketplace service innovation framework based on
Lelong.com.my to investigate entrepreneurship and innovation factors in the development of new online based

11

business. The study provide a detailed account of Lelongs online marketplace service innovation from its infancy to
the successful online auction market in Malaysia. The study contented that service innovation is derived from
interactions among managerial-organisational, technology-infrastructural, and business environment and
sustainable success of the new service by focusing on the customer loyalty and satisfaction. An exploratory study
by P. Antony, (2005) on an English Auction (Robosar) to investigate sellers strategy for online auctions for
Malaysia and global marketplace. In online auctions, the reservation price of an item set by the seller determines
whether the item can be sold or not. This paper propose a design of a seller agent that recommends a reservation
price of a given item to be auctioned off by the seller. The author proposed an algorithm reservation price for a
successful bidding strategy comprise of successful; failed ; sell period; competitors ; profit functions. The algorithm
will be improved further by including other auction protocols such as sealed bid auction.

Table 2. Previous Studies on Online Auctions Adoption in Malaysia

No Authors

Variables

User
Groups

Findings

1. Settoon and Wyld

(2003)

Case study on potential

economic impact of government
reverses auctions adoption.

Supplier
users

Governments should continue adopting and

promoting reverse auctions use.

2. Mukhtar et al.,
(2008)

Case study on the potential use

of e-marketplace and auction in
Malaysian SMEs wood-based
products industry.

Supplier
users

Proposed an integrated e-marketplace

framework in Malaysian wood based
products industry.

3. Siew Eu-Gene (2010)

Case study on the critical

success factors of e-auctions
sites: security, costs, market
volume
and
website
performance.

Users

All four factors are found to be influencing

the successful use of online auctions in
Malaysia

4. Kamarulzaman and
Rahman (2009)

Case study on the critical

success factors and obstacles in
e-auctions use in Malaysian
agricultural sector : product
specifiability, costs and pricing
structure.

Supplier
users

Costs, product specifiability and description

of the services are important in determining
auctions success.

12

No Authors

Variables

User
Groups

Findings

An overview of electronic
auctions, definition, type of
auctions available and online
auctions benefits to consumers.

Supplier
Users

Strategies for buyers to win bids include

buy-it-now, participate in multiple auctions
and sniping (participate in late bidding).
For sellers, they could employ shilling
tactic (participating in the bidding to push
prices downward) and offering reasonable
price consistent with bidders requirements.

6. Gan, K.S. et al, (2009) An empirical evaluation of

self-adaptive genetic algorithm
and deterministic dynamic
adaptation algorithm for
searching most effective online
auction strategies.

Suppliers
Users

7. Zahadi E.D. and

Abdullah R., (2011)

Proposed a framework of an
intelligent bidding system for
online registration number of
new registered vehicle.

Users

Comparative study on experimental

evaluation showed that the
strategies evolved from the dynamic
decrease mutation rate performed better than
strategies evolved from dynamic adaptation
schemes in terms of success rate and
average payoff when bidding in the online
auction marketplace.
.
The framework key components are
a. Invitation to Bids (Item to bid,
classification, open bid, and notifications);
b. Winning bids criteria based on bidders
highest price and on-time bid placements

The empirical study is to

evaluate the customer
satisfaction of EBay Malaysia by
focusing on the influence of the
various factors of satisfaction
among the Malaysian EBay
users using the variables which
were ignored in the past by prior
researchers from their
perspective of online shopping
experience.

Users

5. Anthony, P (2009)

8.

Abdulhadi A, (2013)

9. Akmaliah A., K, (2007) Case study to propose an online

marketplace service innovation
framework based on
Lelong.com.my to investigate
entrepreneurship and innovation
factors in the development of
new online based business.

13

The online satisfaction study proposed a

model of framework for the research study
on online customer satisfaction. The factors
investigated are merchandise, transaction,
response time, security/privacy, payment
and delivery with response time found not
significant in the study

Suppliers Detailed account of Lelongs online

marketplace service innovation may serve as
the baseline reference for new venture into
e-commerce markets. The service innovation
emerged from interactions among
managerial-organisational,
technology-infrastructural, and business
environment and sustainable success of the
new service by focusing on the customer
loyalty and satisfaction.

No Authors
10. P. Anthony, (2005)

Variables

User
Groups

Case study on an English Auction

(Robosar) to design sophisticated
and efficient bidding strategies for
agents participating in online
auctions.

Sellers
Users

Findings
The author proposed an algorithm
reservation price for a successful bidding
strategy comprise of successful; failed ; sell
period; competitors ; profit functions.

Table 2 show the trends of Malaysian online auctions which predominantly studied as case studies and in the
marketplace and at SME firm-level of analysis. A study on the local wood based industry highlighted the importance
of auctions framework for the nations industrial competitiveness. The studies on eBay, Lelong.com and Robosar
were mainly focussing on B2C (business-to-customer) customer satisfaction in online shopping and sellers offering
price, cost, and product specifiability to ensure successful bidding. A review of the literature reflect similar trends of
global G2B reverse auctions that these publications reveals the majority of the research is conceptual and based on
qualitative interviews and case studies.

2.4

Malaysias eBidding

The Malaysian G2B reverse auctions system, the eBidding is a module under the ePerolehan. It is an innovative
online procurement service with the promise of increase in procuring efficiency and transparency and save time and
cost for both procuring managers and suppliers (Unit ePerolehan, 2009). The eBidding is an online reverse auctions,
which a situation with one buyer (government) and a group of pre-selected sellers bids online for the supply of goods,
services or products to the agencies. Introduced in 2006 under the Ministry of Finance (MoF) to realize the vision
towards providing innovation and efficiency in public sector procurements (PekelilingPerbendaharaan, 2009). To
date, all Ministries have deployed the eBidding for procuring supplies, products and services. Each of ministries can
procure the goods, services through eBidding provided by government registered suppliers. eBidding is suited for
procuring agencies which are sourcing for goods and services with costs of RM50,000 and above and without the
need for complex technical evaluations. With eBidding, public sector procuring officials will have the option, either to
14

source via tender evaluation process service or choose eBidding, which provide the benefits of shorter procurement
process, time-saving and lower prices.

eBidding provides an end-to-end solution for auction transactions comprising three distinct communities, namely the
supplier community, the buyer community, and the procurement service provider (Pekeliling Perbendaharaan, 2009).
The supplier community consists of suppliers who have registered with the MOF to provide supplies and services to
the government. There are about 120,000 registered suppliers supplying goods under four categories, that is,
Central Contract, Direct Purchase, Quotation and Tender purchase (http://home.eperolehan.com.my/v2/index,
2012). These suppliers bear the responsibility to coordinate with the procurement service provider and register onto
the new system with the Government Procurement Management Division, within Ministry of Finance. All suppliers
are required to provide and update the necessary information regarding the items that they supply online. The
Government of Malaysia is the buyer community. The Government is a major purchaser of goods and services from
the suppliers spending a total of RM206.2 billion in 2010 alone, (http://www.treasury.gov.my/bajet2011). The cost of
processing and managing this process is extremely high with increasing expectation from the supplier side for the
government to be more efficient. It is the responsibility of the buyer to have the necessary information in place to be
able to accept and respond to the suppliers bids electronically in the process of procurement
(http://home.eperolehan.com.my/v2/index, 2012). The ePerolehan Unit and Commerce Dot Com Sdn Bhd (CDCSB)
are the service providers responsible for system monitoring, implementation and maintenance, data center
operation, user training, technology transfer and policy and procedure implementation. The modules of the system
are supplier registration, central contract, direct purchase, quotation system, tender system and eBidding
(http://home.eperolehan.com.my/v2/index, 2012).

15

The eBidding procurement process is geared towards procuring services and supplies with pre-determined scope
and clear specifications with participating bidders not less than five suppliers which will be screened by
pre-qualification panel (Pekeliling Perbendaharaan, 2009). The eBidding process comprises of four key steps from
pre-qualification, online bidding in 14 days, selection and appointment of supplier and contract administration. As
illustrated in Figure 1, the public sector sourcing officials in the procuring agencies will advertise the bidding
specifications in an online and printed media. This is followed by processing and evaluating received applications by
pre-qualification committee; conducting online bidding process via eBidding ; and appointing the lowest bidder as
the winner by issuing appointment letter. Following this, contract management is executed with delivery of services
and payment to the appointed supplier.
Figure 1. eBidding Auction Process Flow Adapted From ePerolehan Malaysia,(2009)

Source : (Pekeliling Perbendaharaan, 2009)

16

3. Conclusion
In this paper, a review on online reverse auctions, global G2B reverse auctions, Malaysias auctions marketplace
and Malaysian G2B reverse auctions market. A review of the literature reflect the trends of global and local G2B
reverse auctions that the majority of the research is descriptive, conceptual and based on qualitative interviews and
case studies. This review contributes to a better understanding of the factors affecting auction use in the market
place, however a more realistic views on the online auctions in Malaysia could be expanded by undertaking a study
on Malaysian G2B reverse auctions. The review find the adoption of eBidding in the G2B electronic markets is low
(ePerolehan, 2012), and explanations of why public sector procuring officials decide to adopt the reverse auctions
strategy are incomplete. As such future research is needed to explore the antecedents of the G2B reverse auctions
system in Malaysias G2B auctions market. Future steps include proposing a framework of factors influencing users
adoption of the G2b system to develop survey instruments, followed by pretest of the instruments, the main survey,
and follow-up interviews (if necessary) to explore unexplained results.

17

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