Saturday, 24 February 2018 | MYT 12:00 AM
Follow World Bank’s procurement guidelines
I refer to the articles in The Star (Feb 15) with the titles “Ramasamy meets MACC” and “Land in question not transferred to SPV, says Lim”. The 44.5ha of land is worth a few hundred million ringgit.
I suggest the Penang state government follow the World Bank’s procurement guidelines to prevent corruption and abuse of power.
Implement the World Bank’s procurement guidelines
The World Bank has a procurement guideline which all the borrowers have to follow. The guideline includes the system of calling tenders. It is a system which has helped to prevent corruption even in the most corrupted countries in the world.
The borrower must engage a reputable engineering consulting firm which has had experience with similar projects to put up a proposal and to open the project bidding to all contractors to tender. The most important thing to note is that the consulting company responsible for the tender process should be independent and should have no interest whatsoever in the project implementation.
This ensures that there is no hanky panky or “insider trading”. After the contract is awarded, the consultant must make sure that the project is completed within cost and scheduled time.
All the contractors must be pre-qualified based on their technical and financial ability. All contractors must submit tenders conforming to the original design so that the cheapest tender can be selected. If all the contractors are pre-qualified, the government tender board has only to look at the tendered price.
It is important not to allow anybody from the government to negotiate with any contractor to avoid corruption.
Transparency and accountability require that all documents on the proposal be placed in the public sphere – not just limited information but detailed and full breakdowns in accordance with international best practices. This will ensure public monitoring and curbing of cost overruns which have plagued all mega projects in the country.
On the tender opening day, all contractors and the representatives of press should be invited to witness the opening of bids and their tender prices should be publicly announced.
All contractors have to submit their tender according to the original design provided by the appointed consultant.
A contractor can also submit an alternative design provided that the price is cheaper and the quality is not inferior.
Besides the Bank’s guidelines, I would like to propose the following safeguards since open tenders alone will not ensure a foolproof no-abuse procurement system for mega projects.
These additional safeguards are based on my experience as a chartered engineer and as a member of the Malaysian Board of Engineers for three two-year terms.
I am also one of the founders of Mudajaya, Gamuda and IJM Corporation.
Never invite contractors to submit proposals for any mega project because each contractor will submit his own planning and design which will be impossible for the tender board to evaluate. You cannot compare the cost of an apple with the cost of an orange, a banana or a pineapple.
A contractor should not be permitted to take on the role of the engineering consultant responsible for design as well as that of the role of a construction contractor responsible for the project implementation as the two roles are of conflicting interest.
If the company is permitted to do so, it will lead to public perception of abuse and corruption.
To save time and cost
For mega projects, it is cheaper to employ a really qualified consultant to design the whole project rather than to ask each contractor to provide designs for different phases. The latter is a false economy and will result in ballooning of costs.
Just say “No” to negotiated tenders
As reported, the budget for the Penang Mass Transit project is about RM46bil. Which is the correct price if the negotiated price is RM44, RM45 or RM46bil? Which negotiator would not be tempted to take a RM1bil bribe?
The Penang state government should follow the World Bank’s procurement guidelines to save cost, time and to avoid suspicion of corruption.
Editor’s note: This is an edited copy of a posting by developer Koon Yew Yin on his blog.