Rule 167 of The General Financial Rules 2017 Electronic Reverse Auction

Rule 167 of The General Financial Rules 2017 Electronic Reverse Auction

Visual Summary

Executive Summary

Rule 167 of The General Financial Rules, 2017, outlines the framework for Electronic Reverse Auction (ERA). This online real-time purchasing technique allows procuring entities to select the most favorable bids by enabling bidders to submit successively better offers over a scheduled period. The rule specifies that ERA can be adopted when a detailed description of the procurement is feasible, a competitive market of qualified bidders is anticipated, and the criteria for determining the successful bid are quantifiable in monetary terms. The procedure mandates soliciting bids through an invitation that includes comprehensive details regarding access, registration, opening, closing, and norms for conducting the auction.

In-Depth Analysis of the Rule

Introduction: Rule 167 introduces the concept of Electronic Reverse Auction (ERA) as a modern procurement method within the General Financial Rules, 2017. This rule aims to leverage technology to enhance efficiency and competitiveness in government purchasing by allowing dynamic bidding processes.

Breakdown of the Rule:

• Definition of Electronic Reverse Auction (Sub-rule i): ERA is defined as an online, real-time purchasing technique. Its primary purpose is for a procuring entity to select the most successful bid. This involves bidders presenting progressively more favorable bids within a set timeframe, with automatic evaluation of these bids. This mechanism drives prices down, benefiting the procuring entity.
• Conditions for Adopting ERA (Sub-rule ii): A procuring entity can opt for the ERA method under specific conditions:
  • Feasibility of Detailed Description (Sub-rule ii a): It must be possible for the procuring entity to formulate a clear and detailed description of the goods or services being procured. This ensures that all bidders understand the requirements.
  • Competitive Market (Sub-rule ii b): There must be an anticipated competitive market of bidders who are qualified to participate. This condition is crucial for ensuring that effective competition, which is the core benefit of a reverse auction, can be achieved.
  • Quantifiable Criteria (Sub-rule ii c): The criteria for determining the successful bid must be quantifiable and expressible in monetary terms. This allows for objective and automatic evaluation of bids.
• Procedure for Electronic Reverse Auction (Sub-rule iii): The rule outlines the procedural requirements for conducting an ERA:
  • Solicitation of Bids (Sub-rule iii a): Bids must be solicited through an invitation to the electronic reverse auction. This invitation needs to be published or communicated in a manner similar to other e-procurement provisions, ensuring transparency and wide reach.
  • Inclusion of Auction Details (Sub-rule iii b): The invitation must provide comprehensive details. This includes information related to accessing and registering for the auction, the scheduled opening and closing times, and the specific norms governing the conduct of the auction.

Practical Example: Imagine a government department needs to procure 1,000 new desktop computers with specific technical specifications. Instead of a traditional tender, they decide to use an Electronic Reverse Auction. They publish an invitation detailing the computer specifications, delivery timelines, and payment terms. Multiple qualified suppliers register and participate. Over a set period, suppliers submit bids, each trying to offer a lower price than their competitors. The system automatically ranks bids, and at the end of the auction, the lowest compliant bid is selected, ensuring cost efficiency for the government while meeting all technical requirements.

Related Provisions

Electronic Reverse Auctions are part of a broader framework for government procurement. Other relevant rules include:

• Rule 144 of The General Financial Rules, 2017 Fundamental principles of public buying: Outlines the core principles for all public procurement, emphasizing efficiency, economy, and transparency.
• Rule 149 of The General Financial Rules, 2017 Government e-Market place GeM: Mandates the use of the Government e-Marketplace for common use goods and services, another digital procurement platform.
• Rule 161 of The General Financial Rules, 2017 Advertised Tender Enquiry: Details the procedure for inviting tenders through advertisement, typically for higher value procurements.

Learning Aids

Mnemonics:

• E.R.A. – Efficient Reversed Acquisition: Helps remember the core purpose of Electronic Reverse Auction.
• C.M.Q. – Criteria, Market, Quantifiable: Reminds of the three key conditions for using ERA.

Process Flowchart:

Multiple Choice Questions (MCQs)

Frequently Asked Questions (FAQs)

Key Takeaways

• Rule 167 defines Electronic Reverse Auction (ERA) as an online, real-time purchasing technique where bidders submit progressively better offers.
• ERA is suitable when procurement can be clearly described, a competitive market exists, and evaluation criteria are quantifiable.
• The process involves soliciting bids through a detailed invitation that covers all auction logistics.
• It promotes efficiency and cost-effectiveness in government procurement by fostering dynamic competition.

Conclusion

Rule 167 of The General Financial Rules, 2017, provides a robust framework for implementing Electronic Reverse Auctions, enabling government entities to harness digital platforms for more efficient and transparent procurement. By setting clear conditions and procedural guidelines, the rule ensures that this dynamic bidding method contributes to achieving better value for public money while maintaining fairness and competition among suppliers.