Thursday, April 08, 2010

MyProcurement: A Joke?

The MyProcurement Portal was launched by the Prime Minister, Datuk Seri Najib Abdul Razak with much fanfare last week. He said that “the move is to boost transparency and to prevent any corrupt practices in the awarding of projects and procurement.”

The new MACC chief commissioner Datuk Abu Kassim Mohamed was quick to add that “this is one of the things that the MACC has sanctioned and I believe it is a step towards increasing transparency in the Government’s acquisitions.”

I'm not sure if Datuk Abu Kassim did his homework, but a quick study of the MyProcurement portal will certainly leave one with plenty to be desired, for based information available often leads to more questions than answers.

Firstly, there is a question of data integrity within the MyProcurement portal and what steps are being taken to verify the information posted on the site. If the information on the portal is to be taken seriously, then surely the information posted must be accurate to ensure a high degree of integrity.

A quick check revealed that the largest contract awarded since June 2009 last year was for the amount of RM6.47 billion awarded to Syarikat Era Frozen Sdn Bhd by the Ministry of Defence. More curiously, the huge contract was for the supply of “rangsum segar” (a type of army food), which could have bought the Ministry 4 more submarines!. While the value of contract for food items would certainly raise eyebrows, I'd like to believe that there are some decimal point errors involved.

Furthermore, there are at least 38 awards amounting to RM182 million where there was no company name or company number provided. The question is how many other errors are there in the data? Hence without accurate and credible information, the MyProcurement portal will be of little use to the public.

Secondly, there is a clear lack of data available to make informed judgements with regards to a particular contract award. For example, a tender to supply and deliver “vest body protection (level III)” for the armed forces was awarded for RM82.8 million. The most basic question to ask, before any judgement can be even made is, what is the quantity requested. Without the quantity, one would not be able to know per unit price. In fact, the MyProcurement portal do not even provide basic useful information such as the date of tender, date of award, number of participants.

In Singapore, the Government e-procurement portal (http://www.gebiz.gov.sg) publishes not only all the above information, it even provides detailed information on the tender request with relevant attachments, a schedule of all competitive bids and the details of the successful bid. We hope that the Government will keep its promise of greater transparency and use the Singapore's GeBiz portal as a yardstick to measure our own achievements.

Finally and most disappointingly, Datuk Seri Najib Abdul Razak disclosed that contracts which have been awarded via direct negotiations will not be published in the Myprocurement portal. When queried by a reporter, he had sheepishly responded that “It will not because... very limited, because it is a security-related exercise.”

The biggest problems of the government's procurement system is the award of directly negotiated contracts for these contracts have are often awarded via patronage to rent-seekers, resulting in not only wastage and corruption, but also substandard and even failed projects.

The most recent example is that of the Shah Alam Hospital project which is now in deep after the project was awarded to Sunshine Fleet Sdn Bhd, a perfect example of an “Ali-Baba” contractor who subsequently subcontracted the entire project to subcontractors. The project which is already delayed will face further set backs as the current subcontractor, GMH Healthcare is now in a serious legal dispute with the main-contractor. This project was originally budgeted for RM300 million to be awarded via an open tender, but was in the end awarded via direct negotiations for a much higher RM482 million.

The Prime Minister has promised in his speech on the New Economic Model that “we can no longer tolerate practices that support the behaviour of rent seeking and patronage which have long tarnished the altruistic aims of the New Economic Policy.”

His “Government Transformation Plan” (GTP) Roadmap has also stated that “people in both public and private sectors are particularly sceptical of unnecessary projects, award decisions that are not made public or sufficiently justified, project delays, contract variations and concealment of substandard work.” The roadmap has called for all procurement contracts to be disclosed publicly, without making an exception for directly negotiated contracts quoting case studies from Singapore and South Korea.

Therefore Datuk Seri Najib's response towards publishing information of contracts which have been awarded without any tenders that they will not be made publicly available is most disappointing, and raises strong doubts as to whether he has the political will to carry out the necessary reforms to wipe out rent-seeking and patronage which is so entrenched in our government procurement system.
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