20 September 2007

Government tenders: Too many flaws in procedure


THERE is a growing concern over too many government open tenders and quotations being postponed.

And the most popular method of doing this is to extend their validity period of such tenders.

There were reported cases of extensions of up to one year or a few rounds of three-month validity periods.

A serious repercussion of this practice is that it may open a huge opportunity for breach of trust and abuse of power.

Extending the open tender validity period is a good excuse to prevent a tender being awarded, besides cancelling or recalling a tender.
While the latter means more complicated paperwork, extending validity is a lot easier and I believe far more "effective" for an "opportunist".

The standard six-month tender validity period issued by government agencies is still the longest period of any organisation.

To extend it only shows a lack of commitment and professionalism among those in charge of it.

The immediate losers are the contractors and suppliers.

It also involves a full circle of sub-suppliers, sub-contractors, principals and manufacturers.

You have to agree to extend or you will be disqualified.

The problem is that costing as well as terms and conditions will have to be renegotiated.

Suppliers and manufacturers are a non-negotiable lot. Bankers are even worse.

Credit is based on success rate and interest is charged regardless of usage.

Bid securities have to be extended and these, of course, incurs extra cost.

When projects are delayed, the overheads continue to run and at the end of the day, the tenderer will be at the losing end.

Tender documents are not cheap either.

An average contractor spends between RM10,000 and RM30,000 a year on tender documents, with a very slim chance of success (banks give the success rate for open tenders at only one to two per cent).

Today, it is a common sight to see 60 to 80 Class A contractors rushing to buy a RM1,500 open tender document.

Obviously, there will be only one winner. The remaining 79 companies will lose a minimum of RM1,500.

The government department in turn earns a staggering RM120,000 by simply preparing the tender papers.

And that is only for one tender from one government department!

In the era of globalisation, Internet, borderless world, upgrading of human capital and a whole lot more of technical mumbo-jumbo, our tender evaluation process remains primitive.

It is a slap in the face of our continuous campaign towards higher productivity and efficiency.

It is my sincere hope to see all the problems associated with the tender process being dealt with seriously.

We must make it our national priority as projects from government tenders alone constitute billions of taxpayers' ringgit.

They must be acknowledged, addressed, discussed and rectified as soon as possible.

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