A reverse auction in GeM is a live round of downward bidding among technically qualified sellers, in which the GeM system sets the start price and the step of each decrement, and any lower bid in the last 15 minutes extends the close by another 15. “We were L-1 and still did not get the order.” That sentence is the most common complaint from sellers new to the portal, and the answer is in a clause nobody reads. A reverse auction in GeM does not simply hand the work to the lowest number on screen: the terms decide what happens when several bidders land on the same price, and a separate rule decides which document wins when the buyer’s own conditions contradict the portal’s standard ones.

What a reverse auction in GeM does to your price

An ordinary tender is a sealed exercise. You submit a price, the envelopes open, and the lowest evaluated bidder is L-1. A reverse auction adds a live round on top of that, where bidders compete downward inside a window on the Government e-Marketplace portal. The name describes the direction: bidders drive the price down rather than up.

For a machine owner the difference is psychological before it is commercial. A sealed bid is a decision you make once, at your desk, with your costing sheet open. An auction is a decision you make repeatedly, in minutes, watching someone else undercut you. Those are not the same skill, and the second one has bankrupted people who were perfectly good at the first.

Whether a bid goes to auction at all, and which bidders get into it, is set for that bid by the buyer. There is no single national decrement or duration to memorise: the decrement is set by the GeM system for each bid, and the auction runs until no lower bid lands in its closing minutes. That is the first thing to accept before reading any general advice about tactics.

How a reverse auction in GeM runs under the current terms

The rules sit in clause 4(xiii) of the GeM General Terms and Conditions, version 1.29 of 25 March 2026. When creating a bid, the buyer may select the Bid to RA option. Sellers then submit their technical and commercial bids as usual, the buyer completes technical evaluation, and the auction runs among the technically qualified bidders under one of two entry rules the buyer picks.

Entry rule Who gets into the auction When everyone stays in
Bid to RA with 50% elimination The lowest-priced half of the technically qualified bidders, rounded up: seven qualified bidders means L-1 to L-4 Two or three qualified bidders. Sellers are also added back to keep a second manufacturer in contention, and MSE sellers within 15% or Make in India sellers within 20% of the relevant L-1 join
Bid to RA with H-1 elimination Every technically qualified bidder except the highest quoting one Two or three qualified bidders, a bid split among several sellers, a single manufacturer left in contention, or an H-1 inside the MSE or Make in India price band

The buyer does not set the price ladder. Clause 4(xiii)(d) leaves the start price and the step value of each decrement to the GeM system, and both are shown when the auction opens. Each bidder can then see the start price, the decrement, the prevailing lowest bid and its own last bid, and may bid one or more steps below the prevailing lowest. A lower bid inside the last 15 minutes pushes the end time out by another 15 minutes, and that repeats for as long as late bids keep arriving.

Two things make an auction bid harder to walk back than a sealed one. The Ministry of Finance’s Manual for Procurement of Goods, 2024 says at paragraph 4.5.4 that every bid submitted during an e-reverse auction is legally binding on the bidder and that there is no negotiation once the auction closes. And under clause 4(xiii)(n) and (o) of the GTC, a seller who withdraws or modifies its bid within the validity period can lose its bid security and be debarred from GeM for at least three months on a first offence.

The MSE and Make in India add-backs come from the purchase preference rules, which Make in India purchase preference sets out for local suppliers.

Nor is the auction compulsory. Clause 4 of the GTC makes a buyer spending above ₹10 lakh obtain bids through online bidding or the reverse auction tool, either one, and lets it use the auction below that figure if its competent authority decides to. The same procurement manual says e-reverse auction should not be used indiscriminately or as a default mode of procurement.

The precedence rule that decides everything else

Before you look at auction mechanics, look at which document governs them.

The Gauhati High Court, in Premier Cryogenics Ltd v State of Assam (WP(C) 3540/2024, decided on 14 August 2024), quoted the order a GeM service level agreement itself uses, and clause 5 of the current GTC states the same rule. Where there is a conflict between the General Terms and Conditions for Goods and Services, the Service Specific Terms and Conditions, and the bid or reverse auction specific Additional Terms and Conditions specified by the buyer, the ATC supersedes the STC, which in turn supersedes the GTC.

Rank Document Who writes it
Wins Additional Terms and Conditions (ATC), specific to the bid or reverse auction The buyer, for that procurement
Second Service Specific Terms and Conditions (STC) GeM, for that service category
Third General Terms and Conditions (GTC) for Goods and Services GeM, for the whole portal

That order runs opposite to how most sellers read a tender. People skim the buyer’s few extra paragraphs and then study the long standard document, on the reasonable assumption that the long official one is the real rulebook. It is the weakest of the three. The buyer’s own added conditions — the shortest thing in the pack, often written for that one procurement — override both documents above them.

The same judgment shows the limit of the rule. The court found the two clauses in that tender did not actually conflict, allowed the writ petition and sent the bid back to be reconsidered: the order of precedence settles a genuine conflict, not a reading the buyer happens to prefer.

So when you want to know how far the auction can go, how long the window stays open, or what qualification is being applied, the ATC for that bid is the answer, and a general article cannot be.

What happens when the auction ends in a tie

Here is the situation that produces the complaint at the top of this piece.

The price floor in an auction is not infinitely divisible. Several bidders can, and regularly do, finish on exactly the same lowest permitted figure. At that point there is no lowest bidder in the ordinary sense — there are several, all equal.

The current GTC settles it in clause 4(xiii)(h), and the answer depends on what is being bought. On a goods bid, where two or more acceptable bidders have quoted an identical lowest price, GeM runs a forced reverse auction among all the technically qualified bidders under the 50% elimination rule. On a service bid, where several L-1 bidders have quoted the lowest allowed price, the buyer places the contract on one of them selected by a random algorithm run by the GeM system. The buyer’s own tie-break criteria are gone: the archived versions carry that option up to version 1.4 of 11 September 2022, and version 1.5 of 9 October 2022 dropped it.

The older wording explains a case sellers still quote. Until October 2022 the GeM General Terms and Conditions addressed this in the clause covering e-Bidding and Reverse Auction. In Well Protect Manpower Services Pvt Ltd v Lady Hardinge Medical College, decided by the Delhi High Court on 13 April 2023, the clause was described in argument by both sides: where multiple L-1 bidders have quoted the lowest allowed price for a service, the buyer has two options. One is selection of an agency from among the L-1 bidders through a random algorithm run by the GeM system. The other is any criteria the buyer deems fit, adopted with appropriate internal approvals.

Read what that second limb did. It handed the buyer a lawful route to break a tie on its own stated criteria (turnover, past performance, whatever its committee has approved) rather than by lot. In the case itself, the court heard that the department’s committee had recommended that a tie surviving its eligibility criteria would go to the vendor with the highest average annual turnover over the last three years. The court upheld that route and dismissed the petition.

Turnover was the natural tie-breaker because buyers already measure it to qualify bidders; average annual turnover criteria in a tender explains how that figure is counted.

The practical lesson is not that the system is unfair. It is that racing to the price floor buys you a seat at a tie-break you may not win, and under the current terms the tie-break is not yours to influence: a forced second auction on goods, and a draw by the GeM system on services. Under older tenders the criteria were set by the buyer, published in its own documents, and knowable in advance if you read them.

Why L-1 is not an order

Sellers commit machines on the strength of being lowest, and then lose a month when the award goes elsewhere. What L-1 means in a tender award goes through the gap between lowest price and awarded contract in more detail, and the gap is wider on a portal where a tie is resolved by a rule rather than by negotiation.

Treat the auction close as information, not as a commitment. Until the award is issued, the machine is free to earn elsewhere, and the cost of assuming otherwise is idle days you will not be paid for.

Setting your floor before the window opens

The only defence against a live auction is a number you decided in advance.

Build it the way you would build any hire rate: machine cost recovery, operator and diesel, mobilisation both ways, insurance and statutory cost, and then the payment cycle. That last one is where government work differs from private work, and it is why a rate that looks fine on a spreadsheet loses money on a public contract. The retention and deposit side is covered in security deposit in a tender, and it is a real deduction from the cash you actually see.

Write the walk-away figure down before the window opens. During the auction, the only question you answer is whether the number on screen is above or below it. If you have never bid on the portal at all, GeM portal registration for contractors covers getting on it, and how to bid for government construction tenders covers the wider process this sits inside.

Why a GeM reverse auction is won before it opens

A reverse auction in GeM is won before the window opens, by the bidder who has read the buyer’s additional conditions and costed his own floor. The two things worth knowing are that the ATC overrides the standard terms, and that finishing level with three other bidders on the lowest allowed price puts the decision into a tie-break the GeM terms have already written down: a forced second auction on goods, a random draw on services.

Read the ATC for the specific bid. Decide your floor on paper. Then treat the auction as arithmetic rather than a contest. Live government tenders and contract opportunities are worth tracking on that basis, because the bids you decline cheaply are what let you hold your price on the ones you want.

Portal rules, general terms and bid-specific conditions change — confirm current terms on the official GeM portal and in the bid documentation before deciding. Prices, specifications and features are indicative, vary by variant, location and date, and should always be confirmed with the official OEM or authorised dealer before any purchase decision. DesiMachines is not liable for decisions taken on the basis of information that may have changed after publication.