KUALA LUMPUR (Dec 4): The government has introduced a new pre-qualified open tender system to replace selective tenders to accelerate critical public projects, while direct negotiations for contracts are now largely reserved for cases involving security considerations or when there is only a single supplier, the Public Accounts Committee (PAC) was told.
Critical projects include those for flood mitigation, rural infrastructure and school facility upgrades. The new pre-qualified open tender system, detailed in a PAC report released on Thursday following a briefing by the Ministry of Finance (MOF) on government procurement and contract administration, creates a two-stage screening process in which relevant ministries must first screen companies on their technical and financial capabilities before they can be shortlisted to participate in a tender.
In the report, Treasury secretary general Datuk Johan Mahmood Merican was quoted as saying that the previous selective tender approach was discontinued because “although it was said that the bidders were supposed to be capable, there was no screening process”.
“This can be considered an improvement compared with the previous selected tender practice,” Johan said, noting that the model was introduced in the context of the Madani government’s effort to reduce direct negotiation.
He acknowledged that open tenders involving a large number of bidders, particularly design-and-build projects, would take significantly longer to evaluate.
“Therefore, through the pre-qualified tender approach, the MOF allows ministries to shortlist from a database of vetted and capable contractors, limiting it to, for example, five to 10 contractors who meet the requirements to tender,” he said. “By reducing the number of bidders, the evaluation process can be completed more quickly.”
This shift is part of a broader procurement reform driven by the need for greater transparency and measures to mitigate the risk of bid-rigging, according to the PAC.
Johan, meanwhile, further confirmed in the report that the practice of direct negotiation, under the Madani government, is now far lower than before. "Ordinary projects such as schools, roads and so on are no longer carried out through direct negotiation in the past two years," Johan was quoted as saying during the proceeding dated Aug 4 this year.
"Usually, direct negotiation is only for matters involving security, or where there is only one supplier. Other than that, most are done through tender, including the pre-qualified tender method," he added.
The PAC report further noted that even when the criteria for direct negotiations are met, approval is not automatically granted as it still requires the final MOF clearance.