'RM500mil losses' claims 'without foundation'

The Ministry of Rural and Regional Development (KKLW) has described DAP’s Beruas MP Ngeh Koo Ham’s claim that hundreds of millions of ringgit had been lost due to irregularities in the awarding of contracts as being “without foundation”.

Responding to the Perak DAP chief’s statement issued last week, KKLW in a press release said Ngeh (left) was wrong on several points, most notably Ngeh’s assertion that it should have abided by the practice of awarding contracts simply to the lowest tenders.

Such a practice should not mean that the party with the lowest tender would be awarded, as there are other criteria and qualifications that come into consideration, such as the bidders’ minimum capital requirement, past and current work performance, and financial and technical capabilities.  

“Furthermore, if the ministry awarded a contract purely on the basis of lowest price and then the contractor failed to meet the technical requirements or even became insolvent, then that would be a matter of justifiable concern,” said KKLW in the press release signed by its corporate communications head Meor Hafizan Abdul Ghani.
                            
Ngeh had demanded that KKLW answer for nearly RM500 million in alleged irregularities, which he said could have been saved had the ministry followed the practice of awarding contracts to the lowest qualified tenders.

Awarding the lowest qualifying bidders would also have been fair to those who had made the effort to submit the tenders, said Ngeh.

KKLW said its evaluation of tenders are conducted through its work tender evaluation committees, which was established based on the Treasury and the Public Works Department’s (PWD) guidelines.

'Freak price'

Those guidelines, it explained further, contain provisions on the “The Usage and Determination of ‘Cut-off’ Price Based on Statistical Methods in the Tender Evaluation and Recommendation.”

“The 'cut-off' price is the lowest price level considered reasonable for recommendation. If the tender price is lower than the ’cut-off' price, then the formula contained in the guidelines will indicate this as too low and, thus, unlikely to ensure the success of project.

“If the tender price is too low or too high it will be considered a ‘freak price’ and such will not be considered,” said KKLW.

As such, only bidders who have tendered prices above the cut-off price and who meet the aforementioned criteria will be recommended and considered by KKLW’s tender board.

Citing the example of a project where a bidder submitted a tender of RM7.7 million, whereas the ministry eventually awarded the contract to a party that had submitted a tender for RM41.7 million, KKLW said this was a clear example of freak price.

“The rest of the bidders’ average price was around RM40 million,” it noted further.

“The ministry would like to remind YB Ngeh that it has an obligation and a duty to secure contracts based on ‘best-value’ principles and that these include an analysis of the capacity and capability of a bidder to carry out the work to the quality standards required by the specifications.”

KKLW also chided Ngeh for what it said was his claim that the ministry had awarded 129 contracts, of which only 68 were given via open tender.

“In fact, the ministry awarded 125 open tenders.”

In his statement, however, Ngeh had explained that the ministry had lamented that only 129 awarding of projects had been announced so far out of the total of 209 projects slated for the year 2011.

Of the 129, Ngeh said he has a list of only 68 projects that were awarded through limited tenders.

'I have asked what happened to the other 80 projects. (But) the deputy (minister) has refused to reply," said Ngeh.

Ngeh also said although open tenders were conducted for the 68 projects, none were given to the lowest priced bidder except for one.

To Ngeh’s claim that that Deputy Rural and Regional Development Minister Joseph Entulu Belaun had last Monday refused to answer his questions on the matter in Parliament, KKLW said it is not true.

“The deputy minister had already answered, that with regard to tenders there was no ruling that the lowest bidder must be awarded the contract - other factors must be taken into account.

“He also mentioned that those with low priced bids might not be able to implement the project or comply with the required standards,”

The ministry also said it is always seeking to improve ways to secure the maximum value and beneficial impact of all its development work.


Related stories

Perkasa denies seeking ban on Christian teachers

Tourism Ministry: DBKL must act against Reggae Mansion

AirAsia boss hits back at attacking MPs

.