KUALA LUMPUR – Ninety-three direct negotiation government projects with 392 contracts were carried out between 2014 and 2018, for a total value of RM22 billion based on the Auditor-General’s Reports from 2014 to 2018, with 60% of the projects being works projects, which usually do not qualify for direct negotiations with government agencies.
In an Institute for Democracy and Economic Affairs (Ideas) webinar, the think-tank’s public finance unit manager Sri Murniati said that works projects generally do not fall under the five criteria allowing government agencies to conduct direct negotiations.
“If we look at justification of direct negotiations in the beginning, most of them are related to goods and services procurement. But the data that we have shows that 60% of the projects are related to works projects.
“As such, we look into the justification and, in our opinion only 18 out of 76 cases are fully justified.
“Most of the projects suffered delays, incompletion, some were below required specific requirements and six projects are problematic projects, with only 24 are considered satisfactory,” Sri Murniati said in the online talk titled “Direct Negotiation: Should We Abandon the Practice?”
According to the Finance Ministry circular PK7.15, direct negotiations must be utilised under five conditions. The first is on urgent matters that require expedited service delivery, where if the procurement is too slow, it will jeopardise a public service – such as distributing Covid-19 vaccines.
The second is if the government has to maintain specialised equipment that is only offered by a single supplier. The government then has the authority to directly negotiate with the supplier.
Third would be defence projects involving the security of the state, where defence procurement must remain a national secret.
The fourth condition is when there is only a single source of equipment or expertise, and these goods or services can only be supplied by a single company.
Finally, Bumiputera manufacturers, but only for certain items, with these kinds of companies prioritised and the authorities allowed to negotiate with them.
Furthermore, Sri Murniati said that there are no clear and consistent processes for the 76 cases highlighted by the auditor-general regarding their selection.
OAKS Consultancy’s Governance and Transparency Practitioner partner Alan Kirupakaran, a panellist at the webinar, also questioned why the Finance Ministry did not raise red flags when it found 16 out of the 76 contractors evaluated were unqualified.
“One quick point on unqualified contractors that was mentioned in the report: 16 out of the 76 contractors evaluated, with values of RM3 billion, were found to be unqualified contractors.
"Why were unqualified contractors selected and why were they not red flagged at that point in time?
“When an unqualified contractor takes a job and can’t complete it, the government has to step in to meet their obligations and this is when taxpayers’ money is used unnecessarily,” said Kirupakaran. – The Vibes, November 27, 2020
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