Everything to Know about RA (Reverse Auction)

Government procurement in India has become more transparent since the competition is real. Digital platforms like GeM (Government e-Marketplace) use one of the important methods to get the best price from bidders, which is the Reverse Auction (RA). Many people know this term, but do not understand it completely. So in this guide, we have made it simpler for anyone who wants to participate in a Reverse Auction in the GeM portal.  We have mentioned everything about the RA meaning, types, process, GeM process and many more things. Read the complete blog to master this method!

What is a Reverse Auction?

A reverse auction is the bidding process where multiple bidders compete by lowering their prices to win the tender contract. Unlike the normal auction, where buyers increase their bids, in RA, bidders can decrease their quoted price stepwise.

Moreover, the tender sets eligibility criteria and sellers or potential bidders can participate directly in the live event. Whoever among the participating businesses or companies offers the lowest acceptable price within the defined rules usually wins the contract.

Reverse Auction Meaning is that sellers (participating company, business, or individual) are allowed to decrease the quoted price for winning the project.

Where this method is used – Reverse Auction in India

In India, the RA method is commonly used in:

• Government procurement
• PSU purchases
• GeM portal buying
• Large corporate sourcing
• Infrastructure and service contracts

The reason GeM uses this method is to ensure fair competition, transparency, and cost savings for government authorities.

What are Reverse Auction Types?

RA can be conducted in different formats that completely depend on the procurement needs:

Open Reverse Auction

This one is open to all the qualified bidders. The purpose of an open reverse auction is to see the current lowest bid price (not bidder names or reputation). Bidders can continuously lower the price during the auction window. This format is commonly used when the supplier base is large.

Closed Reverse Auction

This one is completely different from the open RA, because closed reverse auctions only invite selected or shortlisted vendors to participate. That is the reason it is generally used when specialized products or limited suppliers are available.

Rank-Based Reverse Auction

Bidders see their ranking as L1, L2, L3 instead of exact prices and try to improve their position based on this. It is commonly used when price confidentiality is required, but competition is also needed.

Read More: Difference Between L1, L2 and L3 Tenders and Procurement | TenderShark 

Multi-Round Reverse Auction

Now, this format of Reverse Auction includes when the auction is conducted in multiple phases with revised price opportunities. This is used when the high value or strategic procurement is involved.

How Reverse Auction Works?

The Reverse Auction specifically follows the structured process-

Requirement and Specifications

In this, the buyer clearly defines the project (Service or process) requirement, like quantity, quality standards, and delivery terms.

Eligible Vendors Are Shortlisted

The potential businesses will submit their bid and required documents. Afterwards, the buyer checks whether they meet technical and eligibility criteria like certifications, experience, and compliance requirements. The shortlisted participants move forward for further processing.

Base Price or Starting Bid Is Set

Before the live auction, a starting price is fixed in the system. This is usually based on the lowest qualified price received earlier or the estimated procurement value. On this point, bidders can only quote lower prices.

Event Is Scheduled

Next, all the qualified receive the full details about the auction window, including the date and time. Also, this information includes the price reduction amount, and the bidding rules so the bidder can prepare early.

Bidders Log in at Auction Time

Now, at the scheduled time, qualified bidders MUST log into the portal to participate in the live auction. By any chance, if bidders miss the auction window, they lose the opportunity to revise their price and compete further.

Reducing Prices

In the live auction, bidders are allowed to compete by lowering their quoted price step by step. Each new bid must be lower than the current lowest bid.

The best part is that the bidder can update their price multiple times within the allowed time.

System Updates Lowest Bid Live

The system automatically shows the latest lowest bid or rank live. This actually helps sellers to understand the competition level and decide whether to make any changes in their quoted price.

Auction Closes at Deadline

When the auction time ends, the system stops accepting new bids. But if anyone places the bid at the last moment around the closing time, then the system will automatically extend. This is important for fair competition.

Lowest Bidder Wins

After the auction closes, the lowest bid is finalized, but the award still depends on the compliance check and approval. If the conditions match, the contract will be issued to that win bidder.

How Reverse Auction Works in GeM – Step by Step

The following are the Reverse Auctions in the GeM portal-

Step 1 – Bid Creation

It starts from the government authorities, or the buyer creates the bid on GeM with details including-

• Product or service details
• Technical specifications
• Quantity
• Delivery terms
• Eligibility criteria

Step 2 – Technical Evaluation

Next, the potential bidder will submit a bid with technical details, and reviewed by the authorities-

• Documents
• Certifications
• Compliance
• Experience criteria

Only the technically qualified bidder is allowed to move to the RA stage.

Step 3 – RA Invitation

The qualified bidder will receive the “Reverse Auction Invitation” with complete details –

• RA date and time
• Duration
• Starting price
• Minimum decrement value

Step 4 – Reverse Auction Live Event

During the auction, here’s what happens-

• Sellers log into GeM
• See the current lowest bid
• Reduce their price strategically
• Bid multiple times within the allowed limits

The best part is that if the bid is placed near closing time, the system may auto extend the auction to allow fair competition.

Step 5 – Auction Close

When the time ends, the lowest price becomes the L1, then the buyer verifies compliance and the order is awarded.

Learn More GeM bidding Methods: Types of Bidding Methods on GeM Portal: Direct, L1, BOQ, RA | TenderShark 

What are the RA Rules?

Reverse auctions comply with strict rules to ensure fairness:

Eligibility Rules: Only technically qualified bidders can participate, and the documents must be approved first.

Price Rules

1. Each new bid must be lower than the current lowest.
2. The minimum decreased value is predefined.
3. No price increase allowed.

Time Rules

• Fixed auction duration
• Auto-extension if bids come at the last minute
• Late entries not accepted

Participation Rules

• Bidders must remain logged in
• Proxy bidding is not allowed unless the system is enabled.
• Manual interference is restricted

Compliance Rules

• The lowest bidder must still meet technical and contractual conditions
• The buyer can reject separately low bids if unjustified

Reverse Auction vs. Tender – Understanding the Difference

Many people confuse reverse auctions with tenders. A reverse auction is actually a pricing stage within certain tenders. This is not always a separate process.

Difference Between Reverse Auction and Tender
Factor	Reverse Auction	Tender
Process Type	Live price competition	Formal bid submission
Price Movement	Prices go downward	Prices are quoted once
Interaction	Real time bidding	No live competition
Stages	It happened after the technical qualification	It include full procurement cycle
Transparency	Dynamic and visible price changes	Static price quotes
Speed	Faster price clarification	Slow evaluation
Usage	Price optimization	Vendor selection and contracting

Tip: Find the most active tenders on a regular basis on TenderShark, where you can find the government tenders, e-tendering guide, and more information in a simple. While this platform allows you to do free searches so you can find the tenders that fit perfectly with your business.

Final Thoughts

Reverse auctions on GeM are made to bring maximum transparency, competition, and cost efficiency into government projects. For businesses and companies, understanding the RA process is really important to avoid the last minute panic and protect profit margins. While for tenders, RA helps to ensure they receive the best possible value.