Railways Decides To Adopt Reverse Bidding Process For High Value Orders

Railways Decides To Adopt Reverse Bidding Process For High Value Orders

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Date of Post: 09, Sep, 2017

New Delhi : Indian Railways has decided to adopt a reverse bidding process for high value purchases. It is first of its kind initiative by the national transporter. This initiative is aimed at increasing the competition for supplying goods & services to Indian Railways and cutting spending substantially.

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REVERSE AUCTIONS

  • In this initiative, the suppliers offering goods and services at the lowest price win the bid.
  • “The Indian Railways is currently in process of developing a software that would hold a platform for reverse auctioning,” a senior government official said. “First we would hold it on a pilot basis and then on a large scale.”
  • This method would initially be used for high-value products include
    • High-end equipment
    • Parts for Locomotives, Coaches, Electrification of Railways etc.
  • The national carrier procures material worth Rs50,000 crore every year.

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CITIBANK’s REPORT

  • According to a recent report by Citibank on the performance of Indian Railways, railway capex increased 60% year-on-year in FY16 and 18% year-on-year in FY17.
  • Physical commissioning of projects has improved sharply. Average commissioning of broad-gauge lines increased 86% in FY16-17 over average commissioning in 2009-14. Electrification of rail lines increased 58% in FY16-17 from the average in 2009-14.
  • The report further said that Railways has reduced the average project approval duration to 6 months from an average of 24 months.

RAILWAYS ACHIEVED E-PROCUREMENT

  • Railways has also achieved 100% e-procurement.
  • “Introduction of e-procurement has helped to bring down corruption, but the ministry feels that still procurement rates are high,” a senior railway ministry official said.
  • “So once we switch to reverse auction the competition will increase further and prices would fall leading to decline in our expenditure,” he said.
  • At present several ministries including the power ministry and public sector undertakings are using the reverse auction to procure supplies at competitive prices, he added.

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