Review of Auction Format Options for 600 MHz Auction

AMENDMENT #1

This amendment is needed to add the Question and Answers (question 1 and 2) to this Request for Proposal.

All other terms and conditions remain the same.

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Trade Agreement: NAFTA and AIT

Tendering Procedures: All interested suppliers may submit a bid

Competitive Procurement Strategy: Highest combined rating of technical merit (80%) and price (20%)

Comprehensive Land Claim Agreement: No

Nature of Requirements:

ISED 186360

Stephanie Cleroux

Telephone No. – (343) 291-1358

Email: stephanie.cleroux2@canada.ca

Title:

Review of Proposed Auction Formats for Innovation, Science and Economic Development Canada’s 600 MHz Auction

Background:

The Framework for Spectrum Auctions in Canada describes the general approaches that ISED will use to auction spectrum licences. As indicated in the Spectrum Policy Framework for Canada, the Department has adopted a policy objective to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource.

For the upcoming 600 MHz spectrum auction, ISED has proposed to auction licences for 70 MHz of spectrum in 16 service areas covering Canada. The band plan for mobile broadband services will be 617 – 652 MHz / 663 – 698 MHz, with 7 blocks of 5+5 MHz.

To auction these licences, ISED is currently consulting on three options for the auction format: (1) the combinatorial clock auction (CCA), as used in the Canadian 700 MHz auction; (2) the CCA with a modified activity rule; and (3) the enhanced combinatorial clock auction (ECCA). All three are described in the Consultation on a Technical, Policy and Licensing Framework for spectrum in the 600 MHz Band (hereinafter referred to as the 600 MHz Consultation), which can found at the following link: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf11316.html.

In the 700 MHz and 2500 MHz auctions, the activity rule was based on a principle known as the weak axiom of revealed preference (WARP). This rule checks whether a bid that exceeds a bidder’s current eligibility satisfies revealed preference with respect to bids in eligibility-reducing rounds, starting with the last round in which the bidder had sufficient eligibility to bid on that package.

Recent advancements in auction theory have developed a method to strengthen this activity rule by redefining it based on a principle known as the generalized axiom of revealed preference (GARP). This activity rule differs in two ways. First, the GARP-based activity rule checks whether a bid that exceeds a bidder’s current eligibility satisfies revealed preference with respect to all clock rounds, starting with the last round in which the bidder had sufficient eligibility to bid on that package. Second, all relevant revealed preference constraints are checked simultaneously. The modification to the activity rule is anticipated to result in prices that are likely to be more consistent and to be better reflections of opportunity costs.

The third variation of the auction format (ECCA) also makes use of the modified activity rule (GARP), and then modifies the approach to pricing. In the ECCA, winners’ prices are based on an approximation of the highest valuations that opponents could have for licences, given their bidding histories and the modified activity rule. As a result, prices are expected to be more consistent and to be better reflections of opportunity costs.

Objective:

The Department is seeking an independent contractor to provide a review and assessment of the advice and recommendations provided by Power Auctions LLC regarding options for auction format and their associated rules for Canada’s upcoming 600 MHz spectrum auction.

Contract Period and Options: A single Contractor will be selected amongst the responsive bids received in response to the RFP. The Work is to be from contract award to December 31, 2017.

A complete listing of the mandatory and point rated evaluation criteria can be found at Annex C.

Security Requirements: There is no security requirement associated with this requirement.

Inquiries: All inquiries of a technical nature and all questions of a contractual nature are to be submitted in writing to the Contractual Authority: Stephanie Cleroux, telephone - (343) 1358, e-mail –stephanie.cleroux2@canada.ca . Inquiries are to be made in writing and should be received no less than three (3) calendar days prior to the closing date to allow sufficient time to respond. Inquiries are to be made in accordance with Part 2. Instruction to Bidders.

Firms intending to submit tenders on this project should obtain tender documents through the Government Electronic Tendering System (GETS). Amendments, when issued, will be available on GETS. Standard terms and conditions for this procurement are incorporated by reference, and form part of the tender and contract documents.

Delivery Date: Above-mentioned

The Crown retains the right to negotiate with suppliers on any procurement.

Documents may be submitted in either official language of Canada.