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KUALA LUMPUR: An open tender approach on sourcing for incinerators could have prevented millions in public funds from being wasted on faulty ones supplied by XCN Technology Sdn Bhd (XCNT).

Critics of the project also felt that there were questionable elements in how government officials evaluated and approved the incinerators because of how negligent they were.

They added that Putrajaya did not have to source for incinerators through direct negotiation since there are several technologies available in the market.

Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed said Putrajaya should have opened bids for other incinerator technologies instead of just settling on the one provided by XCNT.

“There should have been open bids for technology, and then tender for interested companies to carry out the construction and operation.

“Incinerators have financial, environmental and social impacts on the government and local communities.

“The incinerators provided by XCNT had problems such as the cost of fuel to burn rubbish and the disposal of burnt waste,” Nur Jazlan told The Malaysian Insider in an email interview.

According to a Nov 11 report, the XCNT incinerators faced considerable construction and operational delays.

The government had awarded the contracts for four incinerator plants to the company through direct negotiations despite the fact that it used unproven technology.

In December 2013, Serdang MP Dr Ong Kian Ming pointed out that the company had little experience in building and operating incinerator plants.

Five days ago, Nur Jazlan recommended that the government take action against officials who he claimed were negligent in approving the projects.

They include Urban Wellbeing, Housing and Local Government Ministry secretary-general, National Solid Waste Management Department director-general and the panel of experts who evaluated the projects.

“The government had decided to award five incinerator projects worth RM200 million on direct negotiation basis,” said Nur Jazlan.”It should have tried one first and see how it performed. The incinerators did not perform as per contracted.”

Transparency International Malaysia president Datuk Akhbar Satar questioned how the officials and experts had been so negligent in evaluating the project.

This is because all three main phases of government or private sector procurement usually involved steps to ensure that any project was actually necessary, was value for money, and would be delivered on time and according to specification.

“First you decide whether the public really needs the project? Or do you need it because someone wants to make money?”

Akhbar also questioned how officials approved the project based on the company’s business proposal.

A Nov 11 report said the PAC had found that the evaluation committee had made the decision on the project based only on the proposal.

“Secondly, there is the due diligence phase. How can the officials just believe what the contractor’s proposal tells them? These are officials who have been working there for years, surely they know how to do their homework?”

And during the delivery phase when the project was being implemented, Akhbar questioned why no one took action when it was clear that the plants had construction delays.

The plant on Pulau Tioman, for instance, was delayed by more than 1,000 days. It had also allegedly ignored environmental impact assessment guidelines.

“If you do not get what you ordered for, should you not have made noise and taken action?”

When asked to comment on the controversy, Minister in the Prime Minister’s Department Datuk Paul Low said that it would be a long time before a fully open tender system is implemented for government contracts to replace direct negotiations.

He said it was “very hard” to immediately enforce an open tender system for government procurement, which he announced in January.

He said that it was a “journey” that would take some time.

“We have begun implementing it. But it takes time to change the practice. I don’t know when we can fully implement it,” the minister responsible for promoting governance and integrity said. “The government is so huge but it is a journey.”

He also noted that there were certain exemptions from using an open tender system for procurement, especially in instances where the technology is exclusive, if it involves intellectual property and also during disasters.

“The Ministry of Finance is taking care of this. But we want to make sure this policy is being followed.

“At the end of the day, it depends on the people who are in charge of procurement but we will continue to monitor ministries, departments and agencies to ensure that these practices are taken into effect,” he added. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on November 18, 2014.

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