NEW DELHI: India’s biggest ecommerce companies Flipkart and Amazon are vying for the opportunity to handle purchases for the country’s largest buyer — the government.The Government e-Marketplace (GeM) portal will manage procurement for ministries and departments for items such as laptops, air conditioners, furniture and items of daily use like stationery at both the state and central level. Services such as taxis and florists also come under the purview of GeM, which was launched in August last year with the main aim of making the process much more efficient.Procurement by the central and state governments put together is estimated at Rs 5-7 lakh crore each year. The company that manages the portal could get as much as 0.5% of the total transaction value as commission, said people with knowledge of the matter. Multiple sources confirmed to ET that Flipkart and Amazon have shown interest in the contract for a managed service provider (MSP) for which the government recently issued a request for proposal (RFP). Executives of these firms have attended pre-bid meetings organised by the government ahead of the submission deadline of June 1, they said.Flipkart may tie up with Microsoft for technology since the RFP allows IT and ecommerce companies to form a consortium and bid.Software and services giants Tata Consultancy Services Accenture and Wipro are also said to be in the race for the contract spanning five years that’s extendable by two years. Amazon, sources said, is keen to provide its cloud services and has got the approval of its US headquarters to participate.An executive at a top tech firm said the project is progressing well with ecommerce firms such as Flipkart and Amazon evincing interest.“Flipkart is a logistics provider, they know the game. Amazon is also hovering,” said the person, adding that these companies will have to partner with technology vendors since they can’t offer their own platforms to the government.“It will be a mega opportunity if all the government departments start to procure through it. The size of the project could anywhere be between Rs 900-1,000 crore.”Over 21,000 products and 17 services such as security, transportation, pest control and laundry are already available on GeM, currently run in-house. The total value of purchase made on GeM amounted to Rs 454 crore between August 2016 and April 30 this year.Earlier this year, the government amended the General Financial Rules (GFR) to make it mandatory for central and state agencies to route all their office purchases through the GeM portal. Since its scope has broadened exponentially, the government is looking at roping in private companies to build and manage it.The enhanced scope of GeM has also made the opportunity more exciting for companies.Flipkart and Amazon did not respond to ET’s queries. The others cited above couldn’t be immediately reached for comment.“The value of the contract will depend on the transactions. There would be a revenue-sharing model with the MSP in which the private company's share has been capped at 0.5% of the total transaction value payable quarterly,” said an official.All government agencies will have to pay the vendor within 10 days of accepting of goods and services. GeM also aims to speed up payment, addressing one of the biggest concerns of vendors.The MSP will be paid from the GeM special purpose vehicle in a month of the transaction. Vendors will have to pay a registration charge, which will be a source of revenue for the portal.“Formation of consortium is up to the private companies. The government will only talk to the lead partner,” the official said. The successful bidder could derive advantages other than just revenue.“Whichever company gets the contract will add the country's largest buyer to its customer base,” said Mohit Bahl, partner and retail sector leader at KPMG in India.It could benefit from the data analytics that will result. “They can come out with good trends, decide prices accordingly, help in transparency and smoother process of government procurement.”