The Government e-Marketplace (GeM) has floated a request for proposal (RFP) for a managed service provider (MSP) to manage the GeM portal. Economic Times reports that the country’s two largest ecommerce players Flipkart and Amazon are competing for this opportunity.
The GeM, launched last August, portal will be managing procurement for ministries and departs for items such as laptops, air conditioners, furniture and items of daily use like stationery at both the state and central level.
Launched with the idea of making procurement more efficient, GeM will also handle services such as taxis and florists.
ET reports that procurement by the central and state governments put together is estimated at Rs 5-7 lakh crore each year. And of this, 0.5% of the total transaction value could be given as commission to the company that manages the portal.
Earlier this year, the government made it mandatory for central and state agencies to route all their office purchases through the GeM portal. Since the scope for growth is now immense, the government wants private companies to build and manage it.
Sources have told ET that executives of both Flipkart and Amazon have already attended pre-bid meetings with the government. The submission deadline for the RFP is June 1.
The RFP allows IT and ecommerce companies to form a consortium and bid and so, Flipkart may tie up with Microsoft for technology.
The contract will be awarded for five years and is extendable by two years.
Apart from Flipkart and Amazon, IT majors like TCS, Accenture and Wipro are also in the race. Amazon too, has received an approval from its global headquarters to participate in the bid, reports ET.
“Flipkart is a logistics provider, they know the game. Amazon is also hovering,” a source told ET, adding that these companies will need technology partner since they can’t offer their own platforms to the government.
The size of the project could anywhere be between Rs 900-1,000 crore.
The total value of purchase made on GeM was Rs 454 crore from the time it launched till April 30 this year. It currently has over 21,000 products and 17 services. Services include security, transportation, pest control and laundry.
Once an MSP is appointed, all government agencies will have to pay the vendor within 10 days of availing the goods and services. The payment to the MSP will be made from the GeM special purpose vehicle in a month of the transaction. Vendors will have to pay a registration charge, which will be a source of revenue for the portal.