e-Procurement in Indian Railways

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The Indian Railways (IR) is Asia’s largest and the world’s second largest rail network under a single management. It is a multi-gauge, multi-traction system covering over 60,000 route kilometres, with 300 railway yards and 700 repair shops, and covers most of the country’s vast geographical spread. Realising the important role that information plays in customer services and in railways operations, IR had embarked on its Computerisation programme, earlier than many other organisations in the country. Annual purchases by IR amount to about INR 150000 million with 0.2 million purchases settled in a year through tenders.

e-Procurement has been adopted by IR as a part of the modernisation process and to increase transparency in its dealings. Northern Railway (NR) has successfully started e-Procurement from May, 2005. It covers all types of tenders issued by engineering (works) and stores department of NR. All tender notices are published on NR’s website from where tender documents can be downloaded by the vendors directly. The offers are submitted electronically with digital signatures and the electronic tendering system has all required security features as in manual system. The tenderers can see the tabulation statement of all offers after opening of advertised tenders and also the status of their tenders. The security money is deposited electronically through a payment gateway. The information regarding purchase order is conveyed to the concerned vendors through e-Mail

 e-Procurement in Public Sector

The e-Procurement process is unique to government. While corporate purchasing has become supplier management and driven by business partnerships, government procurement remains dedicated to levelling the playing field between competitors by use of the sealed competitive bidding and awarding bids to the lowest bidder meeting specification. Government records are open and the prices are revealed in the public arena. Fortune 500 companies boast of maintaining a key supplier base of 10-15 first and secondary suppliers, which is miniscule to what a government has as registered vendors and many more that bid, but never make it to the vendor list. Therefore, government must forge its own model of e-Procurement and by doing so, encourage the competition so heartily sought. The deluge of requests via the Internet from companies seeking to compete will have to be managed. Government must create a model that pays for itself, thereby maximising the taxpayer contribution without damaging small and emerging businesses. The opportunity to conduct online transactions with government reduces red tape and simplifies regulatory processes and helps businesses to become more competitive. The delivery of integrated, single-source public services creates opportunities for businesses and government to partner together for establishing a web presence faster and cheaper. A vision of e-Procurement implies providing greater access to information as well as better, more equal services and procedures for public and businesses.

The case of Indian Railways

Procurement functions in Indian Railways form major part of the materials management activity and these functions are effectively discharged by adopting well established procedures, policy guidelines and practices. As a part of the overall reform process and to increase transparency in its dealings, IR decided to adopt and implement e-Procurement systems for deriving mutual benefits to the railways as well as the participating industry. In NR which has successfully started e-Procurement from May 2005, more than 3000 e-Tenders have been uploaded and 1500 tenders opened electronically and 800 e-Tenders have been decided through e-Procurement in. Around 3287 suppliers are registered with NR.

NR has been assigned as the nodal agency for implementation of e-Procurement project over eight Zonal Railways (WR, CR, NR, SECR, WCR, SR, NCR, SR and SCR) and five Production Units (RCF, ICF, DLW, DMW and RWF) and it is expected that it will take off by July 2008. The  existing application software (stores tendering module) developed by  HCL is running successfully at NR in Application Service Provider (ASP) mode, will be extended for use by other railways and production units on a centralised data centre by suitably customising the same through HCL. A single portal will be developed for tendering process for all railway units and there will be a single log-in registration for vendors. Tenders shall cover all types such as supply tender for procurement of goods, tenders for construction works and services and Fabrication (track). It is planned that enhanced features will be developed in the application software for global tendering and reverse auction for procurement of stores and auction for sale of scrap unserviceable stores.

Reverse auction, engineering stores tendering module and works tender module developed by HCL have not been rolled out in NR. The application software will also be upgraded suitably to include other utilities such as two packet tendering system, inspection call screen interface, inspection report, material dispatch information, fetching of receipt note data from Material Management Information System (MMIS)  server in purchase office to SPS, contract data transfer module from MMIS to Enterprise Procurement System (EPS), post contract amendment interface, search options, global tendering and auction/reverse auction. An integrated payment gateway for tender cost, earnest money, security deposit will be created and payment module will be linked with stores accounts module of MMIS for payment through electronic clearing scheme (ECS) or electronic fund transfer (EFT) against supplier’s bill.

The EGP application has been integrated with latest digital security features to demonstrate and ensure highest level of security, confidentiality and trust between the buyer and the seller. It permits vendors to search, view and download tenders directly from the Railways’ secured website and also participate and submit online offers in e-Tenders directly from the website in a fair, secured and transparent manner. All tender notices are published on Northern Railway’s website from where tender documents can be downloaded by the vendors directly. The offers are submitted electronically with digital signatures and the electronic tendering system has all required security features as in manual system. The tenderers can see the tabulation statement of all offers after opening of advertised tenders and also the status of their tenders. The security money is deposited electronically through a payment gateway. The information regarding purchase order and other purchase activities like renewal of registration and post contract correspondence etc. is conveyed to the concerned vendors through e-Mail.

The e- Procurement system is governed by digital security features as provided under Indian IT Act 2000.  No vendor can interact with the e-Procurement portal of Northern Railway unless they possess a legally valid digital certificate from a licensed certifying authority. For the convenience of the vendors, software developer for Northern Railway has tied up with  Safescrypt Limited for issue of digital certificates. Use of digital signatures for e-Transactions, public key infrastructure (PKI) for data encryption/decryption, time stamp by certifying agency, 128 bit SSL (secured socket layer) for secured data transmission has ensured enhanced level of trust for authentication – digital certificate of sender attached with each bid document, integrity and protection – by hash check using same one way hash function and senders public key, authorisation- only an authorised person from the railways decrypt and open e-tender box.

The home page provides direct links for instructions, manuals, general and standard tender conditions which form part of bid documents. There are separate links for creating and uploading advertised/open tenders and also limited tenders issued to only approved and registered vendors. Each e-Tender NIT (Notice Inviting Tender) will be digitally signed before uploading on the website. Vendors home page provide screens for search view and permit downloading of tender NIT, documents and special tender conditions  in PDF format free of cost. With each tender record, there shall be a corrigendum and notices box directly linked with tender document which shall auto create and store corrigendum to tender notices and upload with date and time stamp. Corrigendum shall also be digitally signed for proper authentication. Application will also declare and attach the public key digital identity of tender opening officials. This is necessary to permit data encryption and tender opening only by authorised railway persons.

The home page for vendors shall have online vendor login registration link for all new vendors. A user login ID is generated by the application after the user fills online loginregistration form.  Password protection is also provided for safe access and proper authentication of the user. A single login ID is permitted for one single vendor. There can be more than one ID for same vendor at different location address. Vendors can submit commercial and technical offers online directly using standard input screens in an online manner by validating themselves with their login ID and password.

Each vendor after downloading the e-Tender and after obtaining user-login registration ID can obtain digital certificates by using link to Certifying Authority (CA) homepage directly from vendors screen. A digital certificate is either directly stored into receivers computer browser or is given in the form of hardware token such as a pen drive to be inserted into USB port of receiver’s computer. This shall permit access to input screens used for submitting offers. One digital certificate is valid for a specified period and can be used for signing any number of tenders issued by railways during such validity period.

The application provides for pre-designed input forms where suppliers can fill commercial offers and submit the same in detail using pre-specified entry spaces.  Application shall auto generate the all inclusive rate before an offer is actually submitted online by suppliers. Commercial offer consists of four standard forms pre-designed separately for supply and works tenders. These are:

  • Rate form: Pre-designed standard form for submitting rates, taxes duties, freight, discounts, any other charges etc. and all inclusive unit rate
  • Performance sheet form: To fill up details of past supply to railways. This will be used for considering past performance, capacity of the vendor etc.
  • Special condition compliance sheet: To give compliance or otherwise to special condition attached with e-Tenders.
  • Deviation sheet: To give statement of deviation to tender conditions.

To provide improved transparency to vendors, the application auto creates total rates for each item with user friendly messages directing vendors to fill and submit commercial offers. Before bid can be submitted, total all inclusive unit rate will appear in numeric form and vendor can modify any rate or all before submitting bid.  Each bid document will be digitally signed and time stamped and notarised. HTML receipt message is sent to the vendor as acknowledgement to submission of online offer with date and time for keeping records. Vendors are not permitted to submit electronic bids after stipulated date and time of tender opening.

Data Security Features Adopted in Opening of e-Tender Box

  • Time locking of digital tender box Notarised time stamping of tender box opening
  • Verification of digital signatures with  public key of each vendor and hash checking for bid integrity and protection
  • Decryption of  bid documents with digital permission only
  • Opening permitted to only two authorised
    tender opening officials using their private keys
  • Creation of digital archive for storing  original encrypted messages
  • Access to digital archive only  with digital permission

To ensure confidentiality of rates and security, the commercial page, containing the rate values as quoted and submitted under commercial rate page will be transmitted and stored in secured time locked data base in fully secured encrypted form using PKI before transmission on Internet channels and shall remain encrypted till tender opening date / time using highest levels of data security standards as provided and tested and also approved by the CA. It will be digitally signed using the valid digital certificate as selected by the vendor for verification of identity of the vendor (as provided under law) who submits his electronic bid using the railways EPS application. All such offers submitted online will be stored directly into the time locked electronic tender box, which can be opened only after the stipulated date and time as stipulated for tender opening by two authorised railway officials who are provided valid digital permissions through digital certificates issued by CA in their names and as verified by the railways.

Application provides submission of tender cost and earnest money either manually as per existing procedure or through payment gateway facility using credit card. The vendor can use the link submit payment details and choose mode of payment as payment gateway to pay tender cost and EMD by filling details of his electronic instrument. In case of manual submission of tender cost and earnest money, vendors submit details of such payment in the required electronic page before filling up commercial rate page and manual instruments towards such payments shall be submitted to electronic purchase (EP) section of railways for maintaining records in register. The EP Section will hand over these instruments to the concerned purchase section for further action. In case of submission of tender cost and earnest money through payment gateway, the vendors shall be permitted to make online payment through credit card/debit card using payment gateway facility and shall give details of such payments in the required electronic page. The EP section shall submit the details received from ASP provider regarding details of payment received against the particular tender to the concerned purchase section for further action.

e-Tender box will be date and time locked. Tender box can be opened only with private keys of minimum two tender opening officials whose public keys have been pre-declared and pre-attached with uploading of e-Tender document. This shall be done internally by application without involving vendor. Tender box opening will permit opening only after specified time lock permission. Each offer as received in the e-Tender box will be first verified for digital signature of the sender and shall attach details of senders with the offer. Application will auto decrypt each offer using digital certificate of opening official.

Facilities Provided to the Vender Under e-Procurement

  • Free online login registration ID for online participation in e-Tenders.
  • Free e-Tender search and download of tender documents and tender corrigendum.
  • Direct participation and online submission of electronic offers in an e-Tender.
  • Direct submission of offers in standard commercial rate page in fully secured manner.
  • Direct viewing of tender opening and view of tender tabulation from website on or after tender opening date.
  • Direct access to view purchase orders details from website and contract/purchase order links from vender home page.
  • Direct submission of requests for amendments by contractors using website links from contract page.
  • Direct receipt of intimations and also post-contract amendments, requests for delivery and other amendments of contract through emails as notified by the contractors.

Application shows total number of bids received in each tender box before verification and also show number of actually opened bids. The bid document (rate page with other three forms) is freezed and online tabulation statement in PDF is prepared. Each commercial bid is stored in archive retaining the original encryption and hash functions and digital signature. The tender box database is updated automatically. Vendors are provided online access to their bid and tabulation sheet in PDF. This can be accessed only by a vendor whose valid bid has been received in tender box after its opening. Entire bid submission process is maintained in fully secured, confidential and at the same time transparent manner to the vendors.
Digital data archive is created for storing entire bidding process in originally encrypted form even after completing decryption process and for maintaining the highest level of digital security and confidentiality. Comparative statements are also generated at the time of tender opening, when all the electronic offers are verified and acknowledged. The application also demonstrates the progress of tender opening with date and time of opening. Verification process demonstrates the identification of the bidder and can also be saved along with offer details. Vendors can open any tender page and see the detailed status of the tender box by using the tender opening link as available on the tender page. Vendors who are awarded contract/ purchase orders in an e-Tender can submit online requests for issue of amendments in a purchase order by going to NR, EPS website under heading view notices against any tender.

The Railway Board has approved certain guidelines for e-Procurement system which are as follows:

a) Late and delayed offers after due date/time shall not be permitted.

b) Submission of manual offers along with electronic offers shall not be permitted.

c) The electronic tender box shall be opened at nominated date and time by two pre-authorised officials, one each from store and associated finance units.

d) The offers of firms so received shall be opened and acknowledged by the tender opening officials. The tender opening officials shall put their signatures on the tabulation statement as generated by e-Procurement application for records in tender cases.

e) If there are no special conditions/PVC etc. given by any tenderer on commercial rate page, the same system generated tabulation statement shall be sent to account department’s for vetting which they will return back to stores department within one working day as vetted.

f) In case any updated manual tabulation statement is required to be repaired for taking PVC/conditional offered rate by tenderers into account, such manual tabulation statements shall be vetted by accounts as per existing procedure.

g) After opening, verifying and acknowledging of each offer by tender opening officials, such offer details shall remain in secured encrypted form and stored in archive.
Any change in tender opening officials’ name and ID can be made before tender opening date and time by the administrator, who can access and modify  the name and ID of tender opening officials. However, such changes shall not be carried out in routine manner. Tender decision shall continue to be taken as per existing guidelines.
After opening of the tender in EPS, post tender activities shall be carried out as follows:

  • Negotiation: Shall be created directly in EPS in notices folder under negotiation.
  • Counter offer: Shall be created directly in EPS in notices folder under counter offer.
  • Advance acceptance: Shall be created as per notice folder under advance acceptance.
  • Purchase order: Shall be created as per manual system in MMIS and uploaded in EPS in notices folder under purchase order.
  • Modification Advice (MA): Approval for MA shall be taken as per existing system. MA to be created first in MMIS as per existing system and later to be uploaded in EPS in notices folder under modification  advice for access and view by vendors.


Reverse auction, engineering stores tendering module and works tender module developed by HCL has not been rolled out in NR but will be implemented in the next phase envisaged to start from July 2008. It will be a major challenge when these modules will be operationalised due to the complex nature of works tenders. Adding an ‘e’ to procurement introduces a layer of complexity by transferring all interactions, rules and procedures into the virtual world. On the Internet, the provision of trust becomes the keystone of any successful model.

Any system has to meet four requirements:

  • Privacy: Information must be kept away from unauthorised parties.
  • Integrity: Message must not be altered or tampered with.
  • Authentication: Sender and recipient must prove their identities to each other.

Non-repudiation: Proof is needed that the message was indeed received.

The application used by NR incorporates all security measures but risks of a breakdown or security breach always exist. Utmost care should be taken to ensure confidentiality of quoted rates and tender details to inspire confidence in the suppliers to use the system and to address the lower level of trust in electronic procurement and lack of initiative by participative industry.

A major issue that needs to be addressed here is training of railway staff and vendors to educate them with the application software for smooth functioning of the system and overcome the inertia to work with latest technology. This poses a bigger challenge of universal Internet accessibility and IT literacy. e-Tendering is often condemned for discriminating against small vendors who are not comfortable with the use of IT or devoid of high speed internet access. There should be an effective inbuilt grievance redressal system for any problems encountered in the use of the software. A disaster recovery mechanism must also be in place as a backup for all the databases and electronic records, as such systems are always vulnerable to virus attacks.


As this is just the beginning of the application, it will pose many more challenges and opportunities to redesign the system. It is a crucial initiative in the direction of increasing transparency and saving time and costs. In more than 150 years of its existence, IR has successfully adapted to the changing needs of travel and transport and absorbed the advancements in technology and successfully met the requirement of moving large volumes of freight and passenger traffic. IR was the pioneer in developing a dedicated skeletal communication network, as a basic requirement for its reservation system and other applications. e-Procurement in IR reflects the earnestness and dynamism of Indian Railways to keep pace with the latest technologies and reap the benefits, e-Business generates.

India: Orissa Government to Roll Out 8558 Common Service Centres

The Government of Orissa has signed a memorandum of understanding (MoU) with three private operators to roll out 8558 Common Service Centres (CSCs) in the state. Those centres will be developed on build-own-operate (BOO) model for the first five years.

Each gram panchayat will have at least one CSC. Stringent service level agreement (SLA) has been prescribed to ensure the service quality. These CSCs will deliver government to citizen (G2C) services like land records, registration, certificates, details of the government scheme, pension scheme, utility bill payments, road transport and employment exchange. The CSCs will also deliver business to consumer (B2C) services like typing, photography, Internet surfing, agri-information, railway and air ticketing and business to business (B2B) services like market research, surveys, rural BPO services, advertising , branding and promotions.

Bangalore based CMS Computers Ltd, New Delhi-based Zoom Developers Private Ltd and the SREI Infrastructure Private Ltd. have signed MoU with the Orissa Government to set up CSCs. As per the agreement, CMS Computers will set up 4962 CSCs in zone-I, II and Zoom Developers will set up 1314 CSCs in zone III and SREI Infrastructure Finance will set up 2282 CSCs in zone-IV and VI.

The cost of setting up each Centre will be around INR. 300 000 to 400 000. Each CSC will have computer, printer, digital camera, web cam, scanner, UPS and Internet connectivity. Under the National e-Governance Plan (NeGP), the Planning Commission has approved INR 1350 million. The Orissa Government will provide INR 5000 per month per centre to the developer in zone-VI consisting of Malkangiri, Koraput, Nawaranagpur, Kalahandi, Nuapada districts and INR 1190 per centre every month in zone-III consisting of Angul, Keonjhar, Dhenkanal, Deogarh and Sundergarh districts.

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