KUALA LUMPUR (March 31): Most of the nine ongoing government contracts that Datasonic Group Bhd clinched were initially won through open tender, the group clarified in a statement on Friday (March 31).
The company only proposed a contract to the government to be awarded via direct negotiation after securing the initial contract through open tender. It had also resulted in the government enjoying savings through price cuts, and superior product and service quality, it said.
“We are at all times rendering our best in term of pricing, value proposition (value for money), enhanced quality and security standards to the Government for best public delivery services and we are rendering our products, solutions and services in accordance to the implementation schedules and requirements as stated in the agreement and contracts without compromising on the quality and security of our national identification documents,” said the group.
The statement was in response to an article published in The Edge’s CEO Morning Brief on Wednesday based on a written reply by Home Minister Datuk Seri Saifuddin Nasution Ismail to the question raised by Bagan MP Lim Guan Eng regarding contracts awarded to Datasonic.
Lim had raised the question to the Home Minister to find out how many of the contracts that were awarded by the government to Datasonic were done through direct negotiation and open tender.
Seven out of the nine contracts with the Home Ministry awarded between 2016 and 2022 were through direct negotiation.
In the statement made available to select media firms, Datasonic said that it had secured the contracts to supply the polycarbonate-based MyKad in 2012 through open tender, by demonstrating its enhanced quality and security features, as well as significantly lower price compared with the previous vendor.
“This helped the Government to enjoy significant savings. It has also helped to resolve the past quality issues (card body splitting, high failure rate of reading the MyKad chip, etc),” said Datasonic.
However, in 2022, the government awarded Datasonic a 12-month contract for the supply of the MyKad. Datasonic said that due to the nature of this security project, going through a long tendering process might not have been effective and timely.
“Therefore, we were engaged through a direct negotiation process. It has been a common practice that our price negotiations always result in a 5% to 10% price reduction,” claimed Datasonic.
The group also participated and won the tender to supply the polycarbonate data pages for passports in 2012. Datasonic said that it won the contract due to its innovative value proposition to the government, whereby only passports that are successfully personalised and issued to the public are paid.
After winning the contract to supply the polycarbonate page, Datasonic claimed that as it is safer and following international standard for the passport chips to be bonded into the polycarbonate data page, it is only logical that the chip also be supplied by the vendor of the polycarbonate data page.
“So, in 2015, the company proposed to the Government to supply the highest-tier/level chip, yet with a 15% discount to the price supplied by the then vendor, and enhanced with improved chip security features and to enable the fast reading of our Malaysian passport via the electronic autogates nationwide, which is supported by our in-house developed facial recognition system that is on par, if not better, than international vendors,” said Datasonic.
In 2016, the company proposed to the government and won the passport booklet contract with the value proposition of a 15% discount compared with the price of the then vendor. In November 2021, this contract was extended for two years without additional value over the period.
“Even after all these years, our passport price offered to the Government back in 2016 remains much cheaper than what our neighbouring countries like Singapore and Thailand are paying today. Not to mention, our passport boasts superior quality,” claimed Datasonic.
On the MACS eGate system project, Datasonic said the government awarded the second phase to the company through direct negotiation in 2021 and an extension in 2022 without additional contract value because the project site was not ready during the pandemic period.
“We are at all times rendering our best in terms of pricing, value proposition, enhanced quality and security standards to the government for best public delivery services,” Datasonic said.
“And we are rendering our products, solutions and services in accordance with the implementation schedules and requirements as stated in the agreement and contracts without compromising on the quality and security of our national identification documents.”
As for the iKad project, the group said it had participated in an open tender in 2020 before it was called for direct negotiation in November 2022, when Datasonic learnt that the specification and bidding price had remained unchanged.
Datasonic said the seven direct negotiation contracts, worth RM1.04 billion, mentioned in Parliament essentially referred to four products — the passport, MyKad, MACS autogate, and iKad.
Datasonic's share price settled unchanged on Friday at 42 sen, valuing the group at RM1.23 billion.