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Govt to scrap public procurement wing

LiveMint logoLiveMint 23-06-2017 Asit Ranjan Mishra

New Delhi: After abolishing the Foreign Investment Promotion Board (FIPB), which was responsible for clearance of foreign direct investment proposals, the government is all set to scrap its public procurement wing called Directorate General of Supplies and Disposals (DGS&D).

The work will now be handled by the government e-market, or GeM, platform which will be run by a private party under a government-appointed CEO.

“The same cabinet decision that approved GeM also said that DGS&D should be closed down. So the cabinet has already taken a decision and we don’t have to go to the cabinet again,” a commerce ministry official said, speaking on condition of anonymity.

The online platform was launched on 6 August 2016 after finance minister Arun Jaitley in his 2016-17 budget speech announced setting up of a technology-driven platform to facilitate procurement of goods and services by various ministries and agencies of the government.

The GeM platform has become all the more important after the government cleared a decision mandating giving preference to locally made goods and services in government procurements, in line with the US’s “Buy American” policy.

DGS&D currently has four regional offices, 12 purchase directorates and 20 quality assurance sub-centres. In total, it has 1,235 officers including 61 supply wing and 107 inspection wing officers. In 1860, the British government set up the India Stores Department in London under a concept of centralized buying to meet procurement needs of the government of India, which later turned into DGS&D.

GeM acts as a public procurement platform between suppliers and buyers, by providing them a common, unified and transparent government-to-business portal for supply and procurement of goods and services registered with GeM.

The commerce ministry official quoted earlier said the process of selecting a managed service provider (MSP) for the GeM platform has already begun and tenders will be open within a few days. A number of IT companies including leading e-commerce firms are learnt to have expressed willingness to run the online platform.

“GeM will be run on a revenue-sharing model without any government support except for the initial two years. The MSP will keep a portion of fees collected from vendors registered on the GeM platform. This will ensure the MSP is a stakeholder in development of GeM and will be interested to get more and more sellers to the platform,” said the official.

However, the government will not shed its control over GeM and will always have the right to appoint the CEO to whom the delivery head of MSP will report. The government has already appointed Radha Chauhan as CEO of GeM, with a one-year tenure initially.

Though a few state governments are voluntarily using the GeM platform for buying goods and services, the commerce ministry wants to formalize the process for all of them and has sent a draft agreement to all state governments. “We are asking state governments to amend their general financial rules to mandate buying from GeM platform like we have done. If the state government gets an item cheaper outside GeM, then it has to be recorded like we do at the centre,” said the official.

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