Why can’t Putrajaya have open tenders?

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KUALA LUMPUR: The Pakatan Rakyat-ruled Selangor and Penang, which have practised an open tender system for more than five years for public projects, have poured cold water on Putrajaya’s excuse that implementing the same system was “very hard” and would “take time”.

Current and former officials from both states said an open tender system was one of the best ways to ensure that public money was properly spent, and that it was “lame” of the Barisan Nasional (BN) federal government to say that it could not do the same.

They also quashed suggestions from a federal minister that such a system would take a long time to implement, adding that Pakatan state governments had been able to entrench the practice months after they took office in March 2008.

“I cannot buy the excuse that the system is difficult or that it takes time to put in place. That’s a lame excuse,” said Penang Deputy Chief Minister II Dr P Ramasamy.

“Unless your real reason is that you want your cronies to benefit [from government procurement].”

By 2009, Ramasamy said, Penang had fully adopted open tenders at all levels of the state machinery, from state-level agencies to local councils.

It did this by creating tender committees in all departments, which were staffed by qualified senior officers in the state civil service who were tasked with evaluating bids and choosing the best ones.

The committees’ decisions and proposals for big projects would then have to be approved by the state executive council, which is chaired by the chief minister.

In Penang’s case, the tender committees would require bids for all projects to submit more than one quotation.

“Even for the smallest projects which cost a few thousand ringgit, you must have at least three quotations before the application can be processed,” Ramasamy said.

His portfolio covers economic planning, education, human resources, science, technology and innovation.

In Selangor, the open-tender process has helped save money by cutting out the middlemen who over-inflated project costs, said former executive councillor (exco) Dr Yaakop Sapari.

He said the system also weeded out the “rentiers” from the real contractors who could deliver on an order, or who could complete a project.

“It is the best way to prevent corruption. A closed tender system results in people who are actually qualified being denied opportunities.”

The debate over the open versus closed tender was reignited by revelations in the Auditor-General’s 2013 report that four incinerator projects faced construction delays.

The projects had been awarded through direct negotiations to one company, XCN Technology Sdn Bhd, which was found to use unproven technology. In December 2013, Serdang MP Dr Ong Kian Ming had said the company had little experience in building and operating incinerator plants.

In fact on Nov 11, Public Accounts Committee chairman Datuk Nur Jazlan Mohamed had recommended that the government take action against officials whom he claimed were negligent in approving the projects.

When asked whether the federal government was on its way to fully implementing an open tender policy, Minister in the Prime Minister’s Department Datuk Paul Low said it  “would be long time”.

Low had said it was “very hard” to enforce an open tender system for government procurement, which he had announced in January.

He added that it was a “journey” that would take some time.

“We have begun implementing it. But it takes time to change the practice. I don’t know when we can fully implement it,” the minister responsible for promoting governance and integrity said.

Both Ramasamy and Yaakop disagreed with this assessment.

“What’s so hard about implementing an open tender? All you have to do is set up tender committees in all departments.

“The people are already there,” said Ramasamy, referring to the civil service staff whom Penang appointed to the tender committees.

Yaakop said the incinerators were not the first time a federal government project was of substandard quality.

“When you have direct negotiations, the guy who gets the project sometimes is not the guy who implements it. He takes a cut and subcontracts it to someone else.”

As the subcontractor would then have to implement the project at a reduced cost, they cannot afford to produce it according to the quality set in the original specifications, said Yaakop.

Yaakop was exco for Agriculture Modernisation, Natural Resources Management and Entrepreneur Development in the 2008 to 2013 Selangor Pakatan administration.

At the end of the day, said Ramasamy, whether or not the BN government puts in place an open tender system depended not on the system itself.

“It’s about political will. If you don’t have it, you will come out with all kinds of excuses why you can’t do it.” — The Malaysian Insider


This article first appeared in The Edge Financial Daily, on November 20, 2014.