New Delhi, April 5: The government has made e-procurement mandatory for tenders valued above Rs 5 lakh from April 1 to ensure transparency and prevent cartelisation.

The new rule will be applicable to all central government procurement, their attached subordinate offices, public sector units under the Centre, autonomous and statutory bodies, a finance ministry official said.

The government has cut the mandatory e-procurement tender value by half and plans to reduce the tender value to Rs 2 lakh from April 1, 2016.

The official said the changes had been made "in order to ensure maximum participation in tenders through the e-procurement route".

Public procurement constitutes around 30 per cent of GDP (gross domestic product), with the total annual tenders amounting to about Rs 15-20 lakh crore.

Departments such as defence, railways, health and telecom allocate about 50 per cent of their budget to procurement, which is higher than the expenditure of most state governments.

Tendering has been vulnerable to corruption, not only between the suppliers and the government staff but also among suppliers in the form of cartels that have attracted charges of bid rigging and collusive bidding.

Recently, ONGC director technical and field services Shashi Shankar was suspended for alleged irregularities in a Rs 23-crore tender, the first such action against the company's official in more than two decades.

ONGC had not awarded that tender.

Shankar, who annually handled at least Rs 15,000 crore of contracts for rigs and oilfield services, was suspended in a case of a tender to procure 21 blowout preventers, the oil ministry had stated.

The ministry has directed PSUs to strictly adhere to the blacklisting of vendors. If a vendor is involved in any forgery or malpractice while dealing with one company, it may be blacklisted by others.

Moreover, several projects of state-owned companies have faced inordinate delays because of conflicting claims and counter claims by contractors, delay in material supply and additional cost claims by contractors.

"Malfeasance in public procurement can perhaps be contained by having a procurement law and an institutional structure consistent with the UNCITRAL (UN trade rules) model. I believe, Parliament needs to take a view soon on whether we need a procurement law, and if so, what shape it should take," finance minister Arun Jaitley said in the budget for 2015-16.

The Narendra Modi-government has decided to revive the long-pending Public Procurement Bill, 2012 that was framed by the former UPA government.

The finance ministry has sought proposals for any change in the bill from civil society, non-government organisations, lawyers and industry bodies by April 10. The bill had lapsed after the dissolution of the last Lok Sabha.