Government
e-Marketplace
Procurement
Made Smart
*Binoy
Kumar &**S. Radha Chauhan
Public procurement forms a very
important part of Government activity and reform in Public Procurement is one
of the top priorities of the present Government. Government e-Marketplace (GeM
- gem.gov.in)
is a very bold step of the Government with the aim to transform the way in
which procurement of goods and services is done by the Government Ministries
and Departments, Public Sector Undertakings and other apex autonomous bodies of
the Central Government.
Background
Government
e-Marketplace owes its genesis to the recommendations of two Groups of
Secretaries made to the Prime Minister in January 2016. They recommended setting
up of a dedicated e-market for different goods & services procured or sold
by Government/PSUs besides reforming DGS&D. Subsequently, the Finance Minister
in his Budget speech for FY 2016-17, announced setting up of a technology
driven platform to facilitate procurement of goods and services by various
Ministries and agencies of the Government.
DGS&D
with technical support of National eGovernance Division (Ministry of
Electronics and Information Technology) has developed GeM portal for
procurement of both Products & Services. The portal was launched on 9th
August 2016 by the Commerce & Industry Minister. Procurement on GeM has
been authorized by General Financial Rules by making necessary changes in
government rules. Presently more than 7400 products in about 150 product
categories and hiring of transport service are available on GeM POC portal. Transactions
for more than Rs
140 Crore have already been processed through GeM.
GeM
is a completely paperless, cashless and system driven e-market place that
enables procurement of common use goods and services with minimal human
interface.
GeM
brings in Transparency
GeM
eliminates human interface in vendor registration, order placement and payment
processing, to a great extent. Being an open platform, GeM offers no entry
barriers to bonafide suppliers who wish to do business with the Government. At
every step, SMS and e-Mail notifications are sent to both buyer, his/her head
of organization, paying authorities as well as sellers. Online, cashless and
time bound payment on GeM is facilitated through integration with PFMS and
State Bank Multi Option System (SBMOPS); web-services integration is being
extended to payment systems of Railways, Defence, major PSUs and State
Governments. Seamless processes and online time-bound payment, which is also
mandated by the Department of Expenditure, has given confidence to the vendors
and reduced their ‘administrative’ cost involved in pursuing officers for
timely payment.
GeM enhances Efficiency
Direct purchase on GeM can be done in a matter of
minutes and the entire process in online, end to end integrated and with online
tools for assessing price reasonability. For procurements of higher value, the
bidding/Reverse Auction (RA) facility on GeM is among the most transparent and
efficient, in comparison to e-procurement systems in vogue within the
Government sector. For creating a bid/RA, the buyer does not need to create
his/her own technical specifications as they have been standardized on GeM. The
bid/RA can be created in a matter of minutes and finalized within a minimum of
7 days. The bid/RA is notified via e-mail and SMS to all the eligible
suppliers; new suppliers are also notified once they get themselves registered
online on GeM and are determined as ‘eligible’ by the system. GeM bidding/RA
therefore ensures competition, fair play, speed & efficiency and leads to
proper price discovery. The reasonableness of the rates can also be confirmed
through online comparison with market price on leading e-Commerce portals.
Very soon, GeM will also start getting feeds from
various other public procurement portals which will ensure that the same item
has not been procured at a lesser rate by any other Government agency, from the
same or a different vendor. The reasonability of price would be further
strengthened by way of integration with Goods and Services Tax Network (GSTN)
and Indian Customs and Central Excise Electronic Commerce/Electronic Data
interchange Gateway (ICEGATE) that will enable the buyer to ascertain the price
of an item when it exited the factory gate or when it got imported into the
country. These would make GeM an extremely powerful tool in the hands of
Government organizations to plan and procure.
GeM
is Secure and safe:
GeM
is a completely secure platform and all the documents on GeM are e-Signed at
various stages by the buyers and sellers. The antecedents of the suppliers are
verified online and automatically through MCA21, Aadhar and PAN databases. In
addition, SEBI empaneled credit rating agencies are also being used for
conducting third-party assessment of suppliers. This would further strengthen
due diligence about the veracity of suppliers wanting to do business on GeM.
For high value bids/RA on GeM, an e-Bank Guarantee is also being introduced.
GeM
is a far better system than the existing one which relies more on financial
instruments (EMD in case of tenders for large procurements only) to guarantee
good conduct by the suppliers. In the existing system, there is zero check on
the antecedents of the suppliers for small value procurements (upto Rs 1 lakh)
whose cumulative value is huge across the Government organizations. GeM does a
100% online verification of all vendors irrespective of the value of
procurement.
Potential
to support Make in India
On
GeM, the filters for selecting goods which are Preferential Market Access (PMA)
compliant and those manufactured by Small Scale Industries(SSI), enables the
Government buyers to procure Make in India and SSI goods very easily. Easily
accessible MIS also enables the administrators and policy makers to easily and
effectively enforce the Government regulations on PMA and SSI sourcing. After
the launch of GeM it has been noticed that several leading computer
manufacturers have placed PMA compliant products on GeM.
Savings to the Government
The transparency, efficiency and ease of use of the
GeM portal has resulted in a substantial reduction in prices on GeM, in
comparison to the tender, Rate Contract and direct purchase rates. The average
prices on GeM are lower by atleast 15-20%, and in some cases even upto 56%. GeM
is also doing Demand Aggregation for items that are to be procured by various
Central/State Government Departments. Demand Aggregation is expected to further
drive the prices south, by way of standardization of specifications and economy
of scale. Demand aggregation for most of the common use goods and services is
estimated to result in annual savings to the tune of Rs 40,000 Crore per annum.
If pursued to its logical conclusion, GeM would
eventually emerge as the National Public Procurement Portal, keeping in tune
with the Global best practices; most of the OECD countries, like USA, South
Korea, UK, Singapore etc, have a single NPPP and as a result annual savings of
billions of dollars are made in public procurement, besides giving a fillip to
the domestic industry.
******
* Binoy
Kumar is a senior civil servant
and presently serving as Director
General (Supplies &
Disposals), M/o Commerce & Industry
, Goi.
*S. Radha Chauhan is a senior civil servant and currently
serving as President and CEO, National e-Governance Division.