The Dark Side of GeM’s MSE Policy: How It’s Impacting Fair Competition
According to the General Terms & Conditions of the Government e-Marketplace (GeM) on page 22, clause (2) of “Bid to RA with H-1 elimination rule,” point (d) states:
“If L-1 is a non-MSE and H-1 is an eligible MSE, and H-1’s price is within 15% of the non-MSE L-1’s price, then after the Reverse Auction (RA) process, the buyer shall award the contract(s) in accordance with the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 and the Public Procurement (Preference to Make-in-India) Order, 2017, as amended from time to time.”
This means that if the second-lowest bidder (L2) is an MSE, even if they do not participate in the reverse auction, GeM may provide them an opportunity to match the lowest price (L1). This practice is often criticized as a misuse of the MSE clause, as it allows MSEs to win tenders without necessarily having the experience or turnover to fulfill the contract.