Boosting transparency will address weak procedures

COMMENT The chief secretary to the government, Ali Hamsa, was reported to have said that there was no element of corruption found in the recently-released Auditor-General’s Report. Instead, what the report found was that the wastage that totalled in the hundreds of millions was mostly a result of weak procedures and rules.

Ali went on to say that for corrective reprimands, chief secretaries and secretaries-general in state governments have been requested to improve rules, procedures and work processes immediately.

Ideas has been working on the issue of weak procurement processes and procedures since June 2013 and yesterday we released our final report, as a direct response to Ali Hamsa’s urging for improvement.

The report is the result of nine months of research and stakeholders engagement, including engagements with 22 stakeholder groups such as the auditor-general, the Prime Minister’s Department, the Finance Ministry, local and international trade associations, and international procurement experts.

We welcome Ali Hamsa’s statement that the national audit did not find any corruption. However, we believe that the government must be more serious in addressing the very serious flaws in our procurement rules and processes. Our country has been inundated with the problem of wastage for too long and it is unacceptable if this known problem continues.

In our briefing paper, we outline our five groups of recommendations, which can be summarised as follows:

Firstly, we found that there are various procedural weaknesses that can be addressed as follows:

• Evaluation criteria and the weightage given to each criterion should be specified in tender notices or tender documents. At the moment information about evaluation criteria and their weightage are not available in tender notices. Contractors can be made more accountable if these are publicly known.
• Preferences given to bumiputeras should always be stated in the tender notice or tender documents even if the weightage is zero. The preferential treatment is a distortion of market competition and it should be made clear if it is a factor in the award decision.
• Independent observers should attend bid and contract evaluation meetings and should be allowed to report publicly if they see problems. Contracts are public money and the public should have a bigger say in how it is spent.
• Publish the details of contracts awarded through mechanisms other than open competitive tender as soon as the government and contractors/suppliers sign the agreement. The practice of non-competitive direct negotiation should not be kept as secrets as this opens the door to misdemeanor.
• After the award of a contract, the government must release information about the decision. At the very least, the public should be told why the award was justifiable and if subcontracting is allowed.
• A review phase should be incorporated into the process to allow other contractors to file complaints if they are not happy with the award decision. This will ensure that the government’s justification are credible and beyond reproach.
• Create and publish the ministry/agency’s annual procurement plan. The auditor-general has repeatedly highlighted the lack of planning as an issue and an annual plan will ensure spending is done more transparently.

Enable the public to be involved

Secondly, we believe the government should improve accountability by strengthening investigation process and punitive actions and enabling the public to be involved in ensuring the transparency and accountability of government contracting.

On paper, Malaysia has rather robust procurement regulations. But successive Auditor-General’s Reports have regularly pointed to almost the same problems over and over again. From the public’s point of view, those who are responsible for leakages, wastages, and inefficiencies when spending public money are still not being held responsible, and there are still many high-profile cases that are not resolved satisfactorily. This needs to be corrected.

Thirdly, the government should streamline and utilise electronic platforms to create a credible, efficient and transparent procurement system. This will minimise direct contact between procurement officers and bidders which in turn will minimise the potentials of corrupt practices.

Fourthly, the government should enhance the professionalism and integrity of procurement officers. It is unacceptable that officers can be transferred to a completely unrelated field after working as procurement officers. Procurement should be made a specialised profession within the civil service.

Fifthly, Public Private Partnership (PPPs) projects under the PPP Unit (Unit Kerjasama Awam Swasta) must follow the same transparency rules as other government contracts. We fail to understand why there is a need to have a unit that awards contracts under the Prime Minister’s Department when it should be the purview of the Finance Ministry.

But while we have this anomaly, we should ensure that contracts issued by UKAS is subjected to the same rule as any other contracts, and the prime minister should just as accountable as any other minister if things go wrong.

We have presented these proposals to government ministers and we will continue to brief policymakers as necessary. We hope Ali Hamsa will be open to these ideas as we believe it will directly help him address the problems that he himself has identified two weeks ago.

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The Institute for Democracy and Economic Affairs (Ideas) is a Malaysian libertarian think tank dedicated to promoting market-based solutions to public policy challenges.