Reverse Auction For HVAC Services

Here is one that people have been playing for about 10 years now.  Running a Reverse Auction For their HVAC service work.   As I have seen so far it is a JOKE!!! 
For those of you that may not understand reverse Auctioning, it is where a company says I need 15 widgets and if you want to build these widgets for me you need to tell me how much you can build them for.  They then allow all bidders on the Internet based bid site and then the auction begins and the LOWEST bidder wins the right to build 15 widgets for the company. 
I participated in one of these such auctions-only one.  I spent several weeks visiting close to 100 locations for a company that wanted to consolidate their HVAC maintenance and service with one contractor.  I prepared my proposal-what I would like to get for the service and what my bottom line for the work would be.
It was, I believe, a Wednesday morning when they had the auction.  I input my first bid and watched over the next 45 minutes as each bidder subsequently lowered their bids for the work in question.  With in 20 minutes the pricing had reached my minimum for the work so I just continued to monitor the pricing-with in 30 minutes the work was below my direct costs for labor and materials-NO PROFIT OR OVERHEAD-by the end of the 45 minutes the LUCKY LOSER was priced at 25% below direct cost for the work.  I know this because I have several friends who worked for the lucky Loser so I know their overhead, labor costs, etc. 
Well in true fashion for most public bid projects they put the screws to the owner for the first year of the agreement.  They condemned as many pieces of equipment as possible and replaced them as extras under the agreement.  They made lots of money in the first year-they did little maintenance but made alot of money.  Then about half way thru year 2 they dumped the contract because they were losing money-leaving the owner holding the bag-little maintenance performed and that which was performed was by first or 2nd year level employees with little or no skill/experience-Poorly performed.
I have been asked to participate in this type of program on several other occasions and politely declined.  I have told each of them that when they want a program tailored to their needs so that they get a Premier Maintenance Program and I make the 10% profit I need to stay in business please call.  None of them have but as word on the street puts it they all have gotten far less than what was needed.

Everyone needs to make a profit to stay in business-but not at the expense of another.  I work hard to provide a quality service at an investment that permits the staff to do their job properly and completely and the owner can remain comfortable knowing we are true to our word. 

Reverse auctions are bad for both the provider and the owner.  Mr. Owner please wake up and smell the coffee-a contractor will not perform the level of service you expect if it means they are going to lose money!!!!  They are in the business of making money-once you realize this your level of service will go up along with the value of your investment in your Brick and Mortar!!!