Railways To Opt For Reverse Bidding To Reduce Procurement Expenditure

Railways To Opt For Reverse Bidding To Reduce Procurement Expenditure

Aiming at increasing competition and reducing expenditure on procurement, the Indian Railways will adopt a reverse bidding process for high-value items like rolling stock parts, track equipment and cement among other purchases.

Reverse auction is an online bidding process that allows vendors to submit multiple bids on time scale and then compete online with each other by offering lowest acceptable bids.

Currently several ministries, including the power ministry, and public sector undertakings are using the reverse auction process to procure supplies at competitive prices. Though the railways has introduced the e-procurement system, which has helped to bring down corruption, officials say that procurement rates are still too high. The railways purchases about Rs 60,000-crore worth of materials, including track items and items for the production and maintenance of locomotives and coaches, in a year.

“We aim to reduce the procurement expenditure substantially through reverse bidding method,” said a senior railway ministry official.

The railways, therefore, is in the process of developing a software for the reverse bidding purpose. “First we will try the system as a pilot project involving limited items.Then it will extended to all type of high value purchases.” Read More…

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