Online auction contract deals on the increase

The use of online auctions to bid for catering contracts is on the rise. Like the popular internet site eBay, online auctions are used mainly for buying products rather than services.

But in recent months the number of catering contracts put out to tender online has risen.

Roy Miller, Aramark's managing director for Scotland, said: "It's becoming more and more prevalent, certainly with oil and manufacturing companies that use online auctions to get the lowest-priced products.

"They're now using the same method to buy services. Our dilemma is that we're trying to sell a tailor-made service which is difficult to articulate in an online bid."

Andrew Mortimer, Avenance sales and marketing director, said that about 5% of tenders were advertised in this way, but agreed it was on the increase.

Mortimer warned against contractors making unworkable bids. "Ultimately the contractor needs to know his bottom-line price in advance of the auction starting," he said. "Clients won't necessarily choose the lowest bidder if they don't have confidence the caterer can deliver."

Both Avenance and Aramark said they had won business online without submitting the lowest bid.