New immigration system tender attracts 30 bids

This article first appeared in The Edge Malaysia Weekly, on September 9, 2019 - September 15, 2019.
New immigration system tender attracts 30 bids
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BIDS ranging from RM1 billion to RM1.8 billion have been submitted by some 30 bidders for the development of the Integrated Immigration System (IIS), according to sources with direct knowledge of the Ministry of Home Affairs’ (MoH) request for proposal.

“Since it is an open tender, a lot of vendors would like to participate. Plus, the funding will come from the government’s development expenditure, so there are fewer risks for the winning vendor as they only have to develop the system,” says a source.

Scicom MSC Bhd and Datasonic Group Bhd are among the companies known to have submitted a bid. Bestinet Sdn Bhd — the developer and operator of the Foreign Worker Centralised Management System (FWCMS) — is another, the sources say, adding that the developer of the Malaysian Immigration System (MyIMMS), HeiTech Padu Bhd, is also believed to have put in a proposal for the new IIS.

The government is in the process of pre-qualifying the bidders after the tender closed on Aug 19, the sources say.

A RM3.5 billion contract for the new immigration system to replace MyIMMS was initially awarded to Prestariang Bhd in 2017, by the previous administration, through a public private partnership (PPP) model covering a concession period of 15 years.

However, last December, MoH terminated the contract because it was too expensive. The company awarded the contract, Prestariang SKIN Sdn Bhd (PSKIN), has taken the government to court to claim RM732.86 million in compensation.

The sources say that payments for the contract will be based on project milestones agreed to by the vendor and the government. This means the appointed vendor will get paid even before the project goes live and key performance indicators (KPI) are met.

“The project’s execution risk will be borne by the government under a model called ‘direct expenditure’, as the appointed vendor will still get paid based on the agreed milestones, even if the project does not meet its KPIs,” says a source.

“This is different from the PPP model signed with PSKIN, whereby the company bears all execution and completion risk and the government only has to pay after the project goes live and meets all the KPIs.”

This raises the question of whether RM1.8 billion in direct expenditure, payable based on agreed upon project milestones, is indeed cheaper than the RM3.5 billion PPP model. One source says it is cheaper as the government requires a bigger scope under the IIS than under the SKIN contract, and as the highest bid is purportedly RM1.8 billion, the government is getting a better deal given the larger scope.

The larger scope includes Advance Passenger Screening Services (APSS), a system to screen air passengers prior to them entering the country, says a source with knowledge of the tender.

“The new tender has also consolidated the current Datasonic contract with print/encoding of passports and eGates. Enhancements of the current foreigner biometric scanners are also included as are other small requirements by the divisions within the Immigration Department,” he says.

The MyIMMS system is said to be obsolete as it was first developed in 1993. At the same time, its design is fragmented, with different functions developed and operated by different vendors. Above all, the system has been found to be susceptible to hacking and fraudulent activity.

In the Auditor-General’s Report 2018 Series 1, audit analysis results showed a quota of 32,424 foreign workers was created and approved for 123 employers, and first-time levy payments amounting to RM40.79 million “were done in an unorganised and dubious manner”.

The 2018 AG’s report was not the first time the implementation of MyIMMS was found to be unsatisfactory.

The AG’s Report 2015 Series 1 revealed that the system, which was developed to support the main operations of the Immigration Department, was unsatisfactory and had affected the department’s objectives.

Under the IIS, the various scopes, such as the foreign workers application and processing system, the visitors entry and exit clearance system, APSS and other requirements, will be contained within the core system itself.

With only one vendor appointed to develop and commission the system, after which it will be transferred to the Immigration Department to be implemented, it is expected to function better than the current MyIMMS.

The share prices of Bursa Malaysia-listed IT system developers and integrators have rallied this year on the back of various proposed developments to the government’s electronic systems, including the IIS.

Heitech has rallied 175.3% and was hovering at RM1.17 last Thursday, while Datasonic has risen more than 100% to 88.5 sen. MyEG Services Bhd — another company that is said to have put in a bid for the IIS — has seen its share price rise 45% so far.

Scicom and Prestariang are the two IT system integrators and developers that have yet to see a share price rally this year. Scicom was trading at 91.5 sen per share last Thursday, 15.3% lower than the start of the year, while Prestariang was 42.5 sen per share compared with 46 sen on Jan 2.

 

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