The launch of Government e-Marketplace (GeM) where all regular products and services will be bought by all government departments of both the Centre and states and PSUs’ from electronic auction platform of government is indeed a bold initiative by the government and should be appreciated by public.
It shows the willingness of the government to bring reforms in the procurement practices of government bodies.
It requires political will and resolve to start an e-procurement initiative. Procurement of regular supplies works like a well-oiled machinery inside the government as often nexus develops between officials and suppliers who supply on a regular basis.
A relationship develops between the two parties where the terms and conditions of exchange are all set and there is comfort in doing business with each other which includes the exchange of gifts and other favours. Because of the relationship, the awkwardness is no longer there in negotiations. In such a scenario it becomes difficult for new suppliers to get a foothold or entry in a government department. Under these circumstances we can only imagine the resistance this GeM would have faced from departments and officials.
On one hand pressure would be there from officials against e-procurement, on the other hand pressure would be there from citizen groups demanding greater transparency and efficiency in government functioning. We are proud that citizen groups prevailed.
With digital facilitating functioning of the government, the future looks better for transparency. More and more functions of the government should be made available on public platforms to remove asymmetry of information.
This will go a long way in reducing corruption. The GeM initiative also has a signaling value for the government. It signals the intent to make procurement clean and thus would help improve the government’s image.
Reduced corruption
There is heavy human interface between suppliers and government officials before, during and after the tendering process leading to influencing the procurement. With e-procurement, the tender documents, the Request for Proposal (RFP) would be hosted on the web. Information about status of tenders, the evaluation and award of contracts would be automatically made available to the bidders on the portal.
This reduces the need to visit government officials and liaison with them. The whole transaction becomes more impersonal thus reducing corruption.
E-procurement would prevent suppliers from forming cartels as there would be wide participation from many genuine suppliers who will get access to government departments across the country. It will give equal opportunity to all suppliers. It will hence create a level playing field for small suppliers.
The process will be more democratic. In fact, the participation may not be restricted to national suppliers rather it can open the boundaries for international suppliers. Hence it has the potential to become a global marketplace which will bring new technology and quality from global players to government departments in India.
The increased participation would push prices down and there would be fair price discovery. The possibility of manipulating the tendering system where specifications are designed to suit some suppliers will thus become a thing of the past.
Cost efficiency
It will save costs for the government as expensive newspaper advertisements may not be needed to inform the suppliers about the requirement.
It will also reduce the number of intermediaries as direct contact will be established between the supplier and buyer. The less number of intermediaries would mean margins can be passed on to the customer. There will hence be a better utilization of tax payers’ money.
This will also give greater control to senior government officials who can themselves log on to the system and check the progress of procurement. MIS reports can be generated which can provide greater insights into efficiency of procurement. History can be easily retrieved from e-procurement portal.
It would be good for maintaining records and learning from the past. Since all purchases will be accessible to people in the department, officials would be more careful about adopting fair procedures for procurement.
There would be greater convenience for both suppliers and government as it’s asynchronous and 24/7 and removes geographical boundaries.
The paper based tendering system has a lead time of four to six months and often gets delayed due to some formalities and hurdles. E-auction will reduce the lead time and hence the need to plan too much in advance.
For suppliers, it leads to demand aggregation and hence makes it viable to operate at lower margins. It will also bring consistency in procurement procedures across all departments.
Reverse auction will be an even more potent tool for bringing efficiency in procurement and driving prices down. Overtime, feedback about suppliers would get accumulated on the platform which will improve the quality of product and services.
The seller ratings would give confidence to buyers to buy from new suppliers which will increase the pool of suppliers and hence drive prices down. The platform may even facilitate placement of repeat orders.
It’s a wonderful move to include services too besides products under the ambit of GeM. Services require greater credibility and trust and seller ratings would facilitate that. It will hence bring greater transparency in purchase of services which are difficult to evaluate and compare.
All in all, GeM is heralding of a new era of clean procurement and transparency in government functioning. It is a step towards Digital India. Government is walking the talk and practicing Digital India in its own corridors.
(The author is Chairperson of Post Graduate Programme in Enterprise Management, IIM Bangalore)
