KUALA LUMPUR (Dec 4): The Parliament's Public Accounts Committee (PAC) has raised concern that the government’s use of the “proof-of-concept” (POC) approach is being exploited as a backdoor to bypass formal procurement procedures.
It warns that the practice is risking abuse, vendor lock-in and a loss of transparency in contract awards, and urges Putrajaya to strengthen the integrity of the government procurement system.
"Based on the PAC’s observations of several issues relating to the proof-of-concept (POC) implementation, it appears that it is being used as an opportunity to not follow the government’s procurement procedures," the PAC said in its statement on the Briefing on Government Procurement and Contract Administration by the Ministry of Finance (MOF) released Thursday.
A POC refers to a small-scale pilot or trial run, typically used to demonstrate the feasibility of a solution before a full contract is awarded, and is more common in technology-based or innovative projects where performance must first be tested.
PAC, however, cautioned that when a POC is allowed to progress without competition or clear evaluation rules, the vendor running the trial becomes the default supplier, making open tendering impractical and locking the government into a solution before value for money is established.
The committee said the government should continue its efforts “to strengthen the integrity of the national procurement system”, ensuring that rules are updated to prevent waste, exploitation and non-compliance.
The PAC added that the procurement framework must remain accountable and “free from wastage and misconduct” as public funds must be used transparently and responsibly.
Cartel risk in tender pricing
The PAC also pressed the MOF on the possibility of cartel behaviour influencing government tender pricing, particularly when departmental cost estimates and price bands are made public.
It warned that multiple coordinated bids may be used to manipulate pricing thresholds and limit genuine competition and urged the government to continue tightening governance to safeguard value for public spending.
In response, the MOF acknowledged that coordinated bidding could occur and said it is working with the Malaysia Competition Commission (MyCC) to detect and curb such practices.
"It is possible for a large number of coordinated bids to influence pricing cut-offs, and we are working more closely with the MyCC to reduce or detect such practices when they occur," Treasury secretary general Datuk Johan Mahmood Merican was quoted as saying during the briefing.