The Government e-Marketplace (GeM) is a transformative force in Indian government procurement, setting a new standard for efficiency and transparency. Since its launch by the Ministry of Commerce and Industry, Government of India in 2016, GeM has grown from facilitating transactions worth ₹7,800 crore to an impressive ₹4 lakh crore by 2023.It is expected that now procurement on Government e Marketplace has reached a huge landmark transactions it is expected that next year onwards the growth on this platform will be even more steeper, However, the platform is not without its challenges, primarily favouritism and collusion among vendors.
Understanding the Risks
Favouritism
When certain vendors are consistently favoured over others during the procurement process, competition suffers. This can lead to several negative consequences:
Reduced Competition: Discouraged participation from potential suppliers due to a perceived lack of fairness leads to limited choices for government buyers. This can also result in potentially inflated prices as competition is stifled.
Quality Concerns: When favouritism influences procurement decisions, quality standards may be compromised. The focus shifts from objectively evaluating products and services to maintaining relationships with preferred vendors, potentially leading to the selection of inferior goods or services.
Market Distortion: Over time, unchecked favouritism can distort the market dynamics within GeM. This can disadvantage honest businesses and hinder the overall efficiency and effectiveness of the platform.
Collusion:
Secret agreements or cooperation between vendors to manipulate the procurement process can lead to several harmful outcomes:
Bid Rigging: Colluding vendors may coordinate their bids to ensure that a predetermined vendor wins the contract. This undermines the competitive bidding process and harms other potential suppliers who may have offered better deals.
Price Fixing: Collusion can lead to artificially inflated prices. When vendors conspire to maintain high prices, the government ends up paying more than necessary for goods and services.
Quality Compromises: Colluding vendors may compromise quality to maximise profits. This can adversely impact the government’s ability to deliver quality services to citizens, potentially affecting public health, safety, or infrastructure development.
Combating the Threats: GeM’s Measures
GeM actively tackles these issues. Here’s a look at their current efforts.
Government Backing for Transparency and Efficiency:
Underlining GeM’s commitment to a robust platform, the Higher authorities from ministry of Commerce & Industry, recently emphasised the importance of increased transparency and affordability. Here’s how GeM’s efforts align with the Minister’s directives:
Transparency and Audits: The Government e-Marketplace (GeM) enhances transparency in government procurement by implementing comprehensive audit trials and regular independent audits. Audit trails document every transaction within GeM, ensuring actions are traceable and data manipulation is preventable. Regular audits, conducted by third-party entities like the Directorate of Standardization Testing and Quality Certification (STQC), assess the adherence to transparent processes and the fairness of technical and financial evaluations. To boost accountability, GeM is advised to make these audit reports publicly available. Additionally, robust internal controls and secure user verification processes are in place to safeguard the integrity of the e-procurement environment, aligning with the goals of the “Make in India” initiative and promoting a transparent, efficient, and competitive marketplace.
User-Friendly Interface: Recognizing the need for a user-friendly platform, GeM is going beyond simple system simplification. They’re adopting a user-centric design approach, catering to all stakeholders with varying technical expertise. This includes developing an intuitive interface with clear navigation, easy workflows, and contextual help guides to streamline onboarding and learning. Additionally, a user-friendly mobile app is planned to enhance accessibility, allowing vendors, especially resource-limited SMEs, to participate in bidding and manage accounts on the go. Finally, expanding language options beyond English will remove language barriers and empower a wider range of vendors, particularly those in rural or remote areas, to participate in the GeM marketplace. These user-centric design principles will not only level the playing field but also encourage a more diverse and competitive vendor pool, ultimately benefiting the government procurement process.
Reduced Transaction Charges: As recommended by the Ministry of Commerce, GeM has taken commendable steps to reduce transaction charges significantly and cap them at a certain level. To further encourage participation and competition, it’s important to mention GeM’s efforts to eliminate unnecessary fees or streamline the registration process. This can make it easier and more affordable for businesses, especially small and medium enterprises (SMEs), to participate in GeM.
Integration with Other Systems: GeM Portal emphasises their integration with other government systems (e.g., IREPS, IMMS) as a key measure to boost transparency and reduce collusion risks. This collaboration allows for cross-checking information and minimises manipulation in the procurement process. Plans for further integration with tax databases for vendor verification are underway, adding another layer of transparency.
AI Implementation: Echoing the Commerce Ministries call to leverage Artificial Intelligence (AI), GeM’s plan to utilise AI for buyer-seller matching is promising. AI algorithms can be designed to identify suspicious bidding patterns, such as bids that are unusually similar or come from vendors located in close proximity with no apparent business connection. Additionally, AI can analyse vendor relationships to identify patterns that suggest collusion, such as a sudden increase in business dealings between vendors before a major bidding event.
GeM’s Achievements and Recognition
Since its launch in August 2016, GeM has witnessed significant growth. As of 2023, the order value has grown over 90 times, exceeding ₹38,620 crore, with MSMEs contributing over 56% of the total order value. The platform boasts over 55,400 buyers, 30.66 million sellers, and facilitates trade in over 16,456 products and 206 service categories. Notably, GeM was recognized for its excellence in “Best Use of Digital Technology” at the CIPS Excellence in Procurement Awards 2021.
Conclusion
GeM’s potential to revolutionise government procurement in India is undeniable. By implementing the measures discussed above, maintaining a focus on transparency and fairness, and adhering to the directives outlined by Minister Piyush Goyal, GeM can solidify its position as a trusted and efficient platform. This will not only benefit the government by ensuring they receive the best value for their spending but also empower small and medium businesses to participate in the procurement process, fostering a more competitive and dynamic marketplace.
*The above information is from secondary sources. GeMTech PARAS is not responsible for its content.
