WELCOME TO

A PRESENTATION ON

ONLINE REVERSE
AUCTION
1
 Online Reverse Auction

Reverse Auction is an online process through

which short-listed bidders get an opportunity
to reduce their quoted prices online in a
transparent and fair manner based on the
evaluation methodology stipulated in Tender
Document without disclosure of identity of
bidder(s) to other bidders or to officials of
GAIL.
2
 Online Reverse Auction

The entire process of RA is designed to bring

a complete transparency in process as under:

- Less time is spent in arriving at final prices

- Minimizes human involvement
- System offers greater insight into the
current market pricing
- Gives equal opportunity to all short listed
bidders to be most competitive.
3
 PROCEDURE
FOR
REVERSE AUCTION
IN
GAIL
4
 Online Reverse Auction

Implemented in GAIL: 01.09.2009

In GAIL, RA is being conducted in all the tenders valuing

more than Rs. 50 Crores except following:
a) Procurement on Limited Tender basis from Licensor
approved sources
b) When there are only limited sources
c) Procurement of high-tech special items/ services/
packages
5
 Process of Reverse Auction

- In a tender in which RA is to be conducted, it is

clearly mentioned that GAIL reserves the right to go
for Reverse Auction process or may finalize the
tender without Reverse Auction, if required. The
decision to conduct RA or not will be conveyed to
short-listed bidders prior to opening of price bid.

- On line Reverse Auction is conducted only in those

cases where e-tendering is followed and there are
two or more techno-commercially acceptable
bidders exist.
6
 Process of Reverse Auction

- Price bids of Techno-Commercially acceptable

bidders received thru e-tender are opened by GAIL
without presence of bidders and the evaluated
prices are communicated to respective bidders.

The date and time of Reverse Auction is intimated

in advance to the bidders.

The bidder after submission of initial bid, cannot

subsequently increase the bid. They can only
reduce their bid by the minimum permissible
decrement or its multiple.
7
 Process of Reverse Auction

- During Reverse Auction, a bidder can reduce his

prices repeatedly. The minimum percentage of
reduction in each step namely, the bid decrement
shall not be less than 0.1% of the last bid of the
respective bidder.

- The evaluated prices of the short listed bidders

based on their price bids submitted initially shall be
the ceiling price or the maximum permitted starting
bid in Reverse Auction for the respective bidders.

8
 Process of Reverse Auction

At any point of time a bidder can see only his rank

(eg. L1, L2 etc.) and current L1 price on his screen
as the case may be.

Reverse Auction is conducted in a closed room with

access by the dealing officers and Tender
Committee members or their authorized
representatives.

One or two dedicated land line phone connections

are provided for authorized
9 interaction with bidders.
 Process of Reverse Auction

- During the auction, identity of the bidders is not

visible/disclosed to Tender Committee members
and Dealing Officers.

- Irrespective of the L1 prices being lower or higher

than estimates, Reverse Auction is conducted once
communicated.

- The Reverse Auction is for a period of 30 minutes

with a provision for extension by 5 minutes in case
receipt of a bid in the last 3 minutes which results in
change of L1 position. 10
 Process of Reverse Auction

- In case of a tie during auction i.e two bidders

entering the same lowest price, the bidder who
enters the prices first in the system would be taken
as L-1 and the other bidder would see their ranking
as L-2.

- After completion of Online event of Reverse

Auction, bidders would require to re-submit break-
up of their final quoted prices to award the contract.
However, break-up of price of any item shall not be
above the original quoted prices.
11
 Process of Reverse Auction

- In case of failure in connectivity of any of the bidders, the

Reverse Auction time shall be extended once against
request of each bidder, if the request is received within
auction time. Such extensions shall each be of 10
minutes and no more than one request for such
extension from each bidder shall be entertained in an
auction. The extension of auction time shall be
communicated to all the bidders through system
broadcast message and also intimated telephonically to
the bidders who are disconnected from Reverse Auction
at that point of time
12
 Process of Reverse Auction

- In case any bidder who confirms to participate in the

Reverse Auction is required to participate by entering
their evaluated prices at least once in the Reverse
Auction system, failure would entail rejection of bid &
forfeiture of EMD. In case such bidder happens to be
evaluated L1 bidder, then, as per CVC guidelines, tender
would need to be re-invited in such a situation.

13
GAILS EXPERIENCE
IN
REVERSE AUCTION

14
 Online Reverse Auction

Sl. Description No. of RAs

No. conducted
1 Line Pipes for BNPL project 8
2 Line Pipes for DBPL project 16
3 Line Pipes for BNPL Spur line project 11
4 Line Pipes for VKPL Spur line project 12
5 Line Pipe for DBPL project (item 2.01) 2
6 Line Pipe for KKBMPL project 6
7 Structural Steel Works Offsite-I at Pata for 1
Petrochemical Complex-II project
8 Civil Structural & U/G Piping Works for GCU-II at Pata 1
for Petrochemical Complex-II project

15
 Online Reverse Auction

Sl. Description No. of RAs

No. conducted
10 Acquisition & Processing of 3D Seismic Data & High 1
Resolution 3D Seismic Data
11 Laying works for KKBMPL Project 7
12 Line Pipe for DBPL project Phase- II 2
13 Laying works for KKBMPL Project (Section-VI) 1
14 Transportation of Polymer from GAILs Petrochemical 10
Complex, Pata
15 Procurement of PP circular woven bags 2
16 Construction of Breakwater for RGPPL 1
17 Replacement of Existing Pipeline in Andhra Pradesh 1
TOTAL 83

16
 Highlights of RA

Awarded Reduction Variation (in

Quoted
Price after after RA %) awarded
Sl. L-1 Price
Description Reverse w.r.t price w.r.t.
No. (Rs. in
Auction (Rs. Quoted L-1 quoted L1
Crs.)
in Crs.) (Rs. in Crs) price
Line Pipe for BNPL
1 454.2 409.53 -44.67 -9.83%
Project
Line Pipe for DBPL
2 1852.22 1132.55 -719.67 -38.85%
Project
Line Pipe for VKPL
3 174.4 136.36 -38.04 -21.81%
Spur Project
Line Pipefor DBNPL
4 198.01 138.62 -59.39 -29.99%
Spur Project
Line Pipe for DBPL
5 465.66 394.98 -70.68 -15.18%
project (item 2.01)
Line Pipe for KKBMPL
6 1150.78 1018.2 -132.58 -11.52%
project
17
 Highlights of RA

Awarded Reduction Variation (in

Quoted
Price after after RA %) awarded
Sl. L-1 Price
Description Reverse w.r.t price w.r.t.
No. (Rs. in
Auction (Rs. Quoted L-1 quoted L1
Crs.)
in Crs.) (Rs. in Crs) price
Structural Steel Works
7 73.05 70.61 -2.44 -3.34%
Offsite-I
Civil Structural & U/G
8 84.5 84.21 -0.29 -0.34%
Piping Works
Civil Structural &U/G
9 Piping Works for 67.6 66.35 -1.25 -1.85%
LLDPE/HDPE
Acquisition &
10 Processing of 3D 60.37 49.99 -10.38 -17.19%
Seismic Data
Laying works for
11 680.16 534.52 -145.64 -21.41%
KKBMPL Project
18
 Highlights of RA
Reduction
Awarded Variation (in
Quoted after RA
Price after %) awarded
Sl. L-1 Price w.r.t
Description Reverse price w.r.t.
No. (Rs. in Quoted L-1
Auction (Rs. quoted L1
Crs.) (Rs. in
in Crs.) price
Crs)
Line Pipe for DBPL
12 48.75 45.31 -3.44 -7.06%
project Phase- II
Laying works for
13 KKBMPL Project 100.29 78 -22.29 -22.23%
(Section-VI)
Transportation of
14 233.3 225.23 -8.07 -3.46%
Polymer from Pata
Procurement of PP
15 101.29 101.29 0 0.00%
circular woven bags
Construction of
16 594.00 594.00 0 0.00%
Breakwater for RGPPL
Replacement of
17 Existing Pipeline in 134.99 134.99 0 0.00%
Andhra Pradesh
19
TOTAL 6473.57 5214.74 -1258.83 -19.45%
THANK YOU

20