The Comptroller-General's Department needs to amend electronic-auction regulations to prevent collusion between Internet marketplace operators and bidders, an operator said yesterday.

The e-auction business has been hit by unlimited service-fee dumping by the operators, said Rangsee Kitiyanasap, an adviser to Pantavanij Co, one of the major players.

Firms that offer unrealistically low prices may have to seek income in illegal ways, such as by selling the password of one party to a competitor, or a password that allows a bidder to access reference prices set by the state agencies calling the auction, he said.

The cost of an e-marketplace operator to provide electronic facilities and other services for an e-auction is paid by the winning bidder - not the government agency.

The e-marketplace service business is worth about Bt300 million, 10 per cent of the Bt300 billion worth of government investment and procurements annually.

The government in the past few years has introduced e-auctions to reduce collusion, but recent reports have suggested that the measures has not been too successful.

According to records of e-auctions held between January and July, the government saved only 5.7 per cent on Bt76.9 billion of orders via e-auctions. During the implementation phase between December 2003 and May 2004, e-auctions were credited with saving 24.3 per cent of government procurements worth Bt196 million.

The government has been claiming that the transparency of e-auctions has led to savings.

Finance Ministry officials have suspected that some e-marketplace operators might have helped vendors by selling passwords.

Rangsee said that if the Comptroller-General's Department set a floor on services prices or discounts on services, e-market operators could realise a reasonable profit, so they would feel less pressure to find illicit sources of income.

Competition now is excessive and those quoting the lowest service fees may not be making any money, he said.

In the long run, most of the 10 companies in the business may be forced out of the market, which would lead to market domination and the return of corruption, he said. It would be better to let the 10 operators remain in the market rather than only a single giant entity.

Technical fixes include improving the computer programs to prevent e-market operators from getting involved in collusion. Bidders should be required to use two passwords - one assigned to the bidder to enter the online bidding system, and the other a personal password created by the bidder.

Varathep Ratanakorn, caretaker deputy finance minister, dismissed allegations of illegal sales of passwords by some operators but instructed officials to review e-auction procedures.

He also said government savings had been squeezed largely by higher costs of materials and goods following the rise in oil prices. 

Wichit Chaitrong

The Nation