Procurement by Government

Bid for government tenders and become a seller to the Government through the Government e-Marketplace (GeM) and other channels

View GeM Marketplace

 

 

What is Public Procurement?

 

 

 

Governments, just like private companies, have to buy goods and services for their operational needs.

 

Public procurement refers to the process by which governments and state-owned enterprises purchase goods and services from the private sector. As public procurement utilises a substantial portion of taxpayers' money, governments are expected to follow strict procedures to ensure that the process is fair, efficient, transparent and minimises wastage of public resources.

 

 

 

 

How Can Public Procurement Benefit My Startup?

 

 

 

In India, public procurement (government tenders) can also present useful pilot opportunities for startups that have not yet been able to gain traction in the private sector.

 

Conversely, opening government tenders up to startups improves the choices available to government bodies since startups are often more agile than corporate vendors and can provide cheaper, more innovative products and services.

 

 

 

 

What is GeM and what is GeM Startup Runway?

 

 

 

Government e Marketplace (GeM) is an online procurement platform for government ministries and departments, and the most widely used channel for public procurement in India.  MSMEs, DPIIT recognised startups and other private companies can register on GeM as sellers and sell their products and services directly to government entities.

 

GeM Startup Runway is a new initiative launched by GeM to allow startups to reach out to the universe of government buyers by offering innovative products that are unique in design, process and functionality.

 

 

 

 

 

 

Register On GeM

 

Startups can create a seller profile on GeM using:

  • DPIIT Recognition Number
  • Mobile number used for Recognition
  • PAN Number
  • Aadhar Number

 

GeM Startup Runway

DPIIT Recognized startups can view the GeM Startup Runway on their GeM dashboard, where they can spread awareness about their product by completing a form that describes their product as well as intended buyers and uses (Minitries/Departments).

How to Register on GeM

Benefits for DPIIT Recognised Startups on GeM
0

Requirement Exemptions

Startups are exempted from otherwise stringent selection criteria such as Prior Experience, Prior Turnover and Earnest Money Deposits

0

Pilot Projects

The chance to work on trial orders with the Government, making them more likely to take chances on a new product.

0

Feedback Mechanism

Buyers can rate your product or service on GeM. Given the large scope of public procurement, this can help you to finetune and adapt your product for scale.

0

Flexibility

No more restrictive categories on GeM, meaning that new & innovative products to be published on the platform.

 

What is CPPP and its benefits ?

 

 

 

Central Public Procurement Portal (CPPP) is Government of India’s portal that facilitates all the Central Departments, State Departments, PSUs & PSBs to publish their tender related queries, contract award details and corrigendum.

 

The primary objective of this portal is to provide a single point access to the information on procurements made across various Ministries / Departments and all the organizations under them. Startups can now register and become Preferred Bidders in all Public Orders and get exemptions on prior experience, prior turnover and earnest money deposit requirements on eprocure.gov.in. A free and fair environment provides the startups with a level playing ground amongst other competitors

 

 

 

 

 

Exemptions in the General Financial Rules (GFRs)

 

General Financial Rules (GFRs) are a compilation of rules and orders of the Government of India which are treated as executive insturctions to be followed by all government departments, organisations and other specifed bodies when dealing with public finances.

 

GFRs include a list of exemptions that may ease procurement of innovative products from Startups. Click here to download a list of relevant exemptions.

 

Policy Notifications for DPIIT-given Exemptions

 

DPIIT recognised startups are exempt from requirements of Prior Experience, Prior Turnover and Earnest Money Deposit on the GeM platform. The complete policy notifications for these exemptions can be found here:

 

 

 

Best Procurement Practices in Central & State Government

Below we have outlined some of the best practices for public procurement, outside of the GeM marketplace, at the Central and State government levels

1 Ministry of Railways

The Ministry of Railways has drafted a Policy on Unsolicited Non-Fare Revenue Proposals. The policy enables the department to award Earnings Contract to a bidder when an unsolicited proposal is received by a proponent. A special incentive of a Right of First Refusal is granted to the proponent to match the highest bid. This policy has been drafted and published with an aim to generate revenues for the Government by considering unsolicited offers proposed by outside agencies.

For more information please visit here.

 

2 Ministry of Defence

The Ministry of Defence has created the following models of procurement of innovative products:

  • The Defence Procurement Process 2016 has laid out a framework to promote defence-related startups under the Make-II procedure of DPP 2016. Under this framework, projects with an estimated cost of prototype development phase not exceeding $440K (INR 3 Cr) have been reserved for startups; no separate technical/financial criteria are defined on their participation.The development of these prototypes will not be funded by the Government. The startups can prepare and submit their proposals through an online form available here
  • The Support for Prototype and Research Kickstart (SPARK) framework by the Defence Innovation Organization – Innovations for Defence Excellence (under the aegis of the Ministry of Defence) in partnership with Atal Innovation Mission, is         aimed at supporting Startups/MSMEs/Innovators to create prototypes and/or commercialize products/solutions in National Defence and Security
  • The framework will call for proposals through challenges and other means to address specific technological needs of the Indian Defence Establishment. Applicants showing capability, intent, and promise to be able to produce functional prototypes or to productize existing technologies will be awarded grants of up to Rs. 1.5 crores, strictly on a milestone basis and starting, in the form of grant/equity/debt/other relevant structures. For More information, visit here

 

3 Ministry of Home Affairs

The National Security Guard, Ministry of Home Affairs has established a swiss model of procurement to purchase innovative products and services. Startups can create a proposal and submit it in a standard format to the department via email for consideration. The proposal shall be examined by both HQ NSG and user units and the startup shall be invited for presentations/demonstrations during monthly presentation of proposals which will be scheduled once in a month. The same will be witnessed by various user/stakeholders of NSG, if deemed necessary.

For more information please visit here

1 Kerala

The Government of Kerala has established various Procurement Models via the Kerala Startup Mission (KSUM). KSUM facilitates procurement of innovative products and services from startups through the following ways:

 

  • Direct Procurement Model: The Government of Kerala has setup a process to procure products from startups from INR 5 Lakh to INR 20 Lakh through Direct Procurement Model where the startup can submit a proposal to the Government Department or KSUM that shall be considered for procurement if found suitable. The purchase of products beyond 100 Lakh shall be done through Limited Tendering process.
  • Requirement by Department: The KSUM hosts demand days for the Government Departments to float their procurement requirements. KSUM subsequently facilitates hosting limited tenders and RFPs inviting applications from startups to bid for the work order.
  • Innovation Zone Model: The Government of Kerala has setup innovation zones under various Government Departments to procure highly innovative products and for procurement requirements with latent demands. This model enables the Government to work closely with startups and customize their products for the perfect fit.

The detailed information and documents on these models can be accessed here.

 

2 Andhra Pradesh

The Government of Andhra Pradesh has created a Suo Moto model of procurement where they invite innovative startup applicants to create and submit a proposal to Government Departments. These proposals are evaluated by Andhra Pradesh Innovation Society and are then presented to various Government Departments for procurement.

 

The companies outside Andhra Pradesh can also apply under this scheme and are evaluated by the evaluation committee. If their product/solution is selected and they do not have a presence in A.P, they shall open a development centre in Andhra Pradesh. Assistance under this scheme will be provided only on opening of such development centre in A.P.

 

Products and solutions, valued upto INR 50 Cr collectively, will be selected annually, by the Competent Authority, for implementation within GoAP. The selected proposals get a work order from GoAP of upto INR 5 Cr. For more information please visit here.

3 Rajasthan

The Government of Rajasthan has created an online platform, Challenge for Change, to provide work orders to startups for upto INR 1 Cr. Various Government Departments of Rajasthan have provided problems statements in the domains of Safe Drinking Water, Wool Industry, Crop Cultivation, Detection of Quarry and Mine blasts etc. that can be solved by the innovative offerings of startups.

 

The startups can apply online to participate in the challenge and apply for the stated problem statements. For more information please visit here.

 

4 Odisha

Odisha State Government notified a Government order dated 13.3.2018 which has included following provisions for Startups in public procurement:

 

  • There would not be any minimum turnover requirement from Micro, Small Enterprises and Startups in public procurement process,
  • All State Departments and agencies will additionally relax condition of prior experience with respect to Startups in all public procurement subject to meeting of quality and technical specifications.

 

Further, State Government’s Finance Department has exempted all eligible Startups and local MSEs from submission of Earnest Money Deposit (EMD) while participating in tenders of Government Department and agencies. The performance security (if any) has been reduced to 25% of the prescribed amount for Startups. Related Government orders have also been uploaded on Startup Odisha Portal.
 

The above provisions are followed in-principle as State Government Departments have also included above clauses in their procurement tenders.

 

5 Gujarat

Government of Gujarat, vide Industries and Mines Department Resolution on 11.4.2018 removed the criteria of "prior experience", “turnover”, “tender fee” and “submission of EMD” for encouraging Startups to participate in public procurement. The instructions to all the State Department is as below:

 

  • Exemption is given for obtaining details of ‘turnover’ for things and products under Micro and Small units & Startups. Hence, the condition may not be kept by the purchase officer
  • Exemption is given for ‘prior experience’ in tender document for Micro and Small units & Startups. The tender will not include any such condition of prior experience

The State Government has further directed all the offices to scrupulously follow the above mentioned provisions. The State departments have also included above clauses in their respective tenders. Further details on notification is provide on Startup Portal of Gujarat.

 

6 Haryana

Government of Haryana has done away with key qualification criteria of ‘turnover’ and ‘experience’ for Startups participating in public procurement process. The notification ‘Concessions/ Benefits in Public Procurement to Startups/ First Generation Entrepreneurs in the State’ was released by the State Department of Industries & Commerce on 3rd January 2019. According to the notification, startups will be treated at par with the MSEs in public procurement process subject to meeting other technical specifications as part of qualifying requirements for the procurement.

 

Startups based in the state, having turnover of less than INR 25 crore, would be eligible to participate along with big companies. As per estimates, around 750 startups are likely to benefit with the relaxation in norms. As per estimates, around 750 startups are likely to benefit with the relaxation in norms.

 

Additionally, if their quoted prices are within band of L1 (lowest bidder) plus 15% or in plain terms if Startup quoted prices are higher by 15% as compared to the lowest bidder and Startup is ready to match with the lowest bidder, they will be eligible to bag the contract subject to fulfillment of other terms and conditions.

 

Besides this, the government has exempted the startups from payment of tendering fee and Earnest Money Deposit (EMD) subject to conditions as per eligibility.

1 Airport Authority of India

The Airport Authority of India has established a Startup Grand Challenge Model offering certain incentives to shortlisted ideas post a series of evaluations. The shortlisted ideas are then further invited to submit a proposal for procurement which is challenged and evaluated by a counterbidding mechanism.

 

A system of counter bidding may be deployed for procurement from startups for innovative products shortlisted through the challenge. The startups would need to submit an online proposal detailing out the uniqueness of their product, the value add for airport etc. Based on the RFP, AAI will call for bids from other parties for the procurement within a fixed timeline. Those bidders who will be able to match the technical part with lower financial bids will be called along with the startup (with original proposal) to go for second round of bidding. The bidder with the lowest bid, after the second round of bidding, will be selected. This process will be time bound and will be closed within a month of receiving the initial proposal.

 

For more details please click here.

Frequently Asked Questions

Find answers here to common questions about the public procurement process.