Railways Opt for Reverse Auction Bidding (Download PDF)

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Indian Railways to implement an electronic reverse auction process for high-value items from 1 April, a first-of-its-kind initiative for the national transporter. Indian Railways aim to save Rs. 10, 000 crore a year by increasing competition and reducing expenditure on procurement.

Image of Reverse Auction Bidding

Image of Reverse Auction Bidding

Image of Reverse Auction Bidding

  • Electronic reverse auction is expected to offer industry greater ease of doing business as it will eliminate human intervention and provide paperless transactions. The e-procurement system will also offer more competitive bids to the Railways, as also reduce corruption.

Auction is Applicable on Which Purchases?

Image of Auction is Applicable

Image of Auction is Applicable

Image of Auction is Applicable

The reverse auction will apply to purchases such as

  • Wagons, Locomotives and coach parts

  • Signalling and track equipment

  • Cement, among others.

  • It will also include works, services, and all production units – allowing vendors to submit multiple bids on a time scale and compete online by offering the lowest acceptable bids.

Key Facts

  • The Railways annually procure Rs. 50, 000 worth of goods that it needs for production and maintenance of rolling stock, operation of passenger and goods services, and other safety-related works.

  • In addition, Rs. 10, 000 crore worth of track supply materials are procured, while projects and works worth Rs. 60, 000 crore are taken up for the expansion or upgradation of rail infrastructure.

  • Initially, all supply tenders of over Rs. 10 crore and all services and works above Rs. 50 crore to be covered through the electronic reverse auction

  • Currently several ministries, including the Ministry of Power, and public sector undertakings are using the reverse auction process to procure supplies at competitive prices.

  • The software to run the reverse auction process is being developed by the Centre for Railway information systems (CRIS), the Indian Railways’ software arm.

  • Reverse auction software would be easy to operate by all without charging any fee – and with this, decision-making in the high-value purchase process would become digital and transparent

Reverse Auction Process

  • A reverse auction is a type of auction in which the roles of buyer and seller are reversed.

  • In reverse auction, the sellers compete to obtain business from the buyer and prices typically decrease as the sellers underbid each other.

  • A reverse auction is similar to a unique bid auction as the basic principle remains the same, a unique bid auction follows the traditional auction format more closely as each bid is kept confidential and one clear winner is defined after the auction finishes.

- Published/Last Modified on: July 20, 2018

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