Open tender or negotiated tender? Initially China Railway Construction Ltd (CRCL) had tied up with IJM Corporation Bhd to bid for the tender to build the 4.2km Gurney Drive-Lebuhraya Tun Dr Lim Chong Eu coastal bypass.
It seems like it failed to get the project and was subsequently asked to regroup with others and eventually rewarded the mega project. Is this the right practice?
Why VST were rejected when they were the original group that submitted its proposal to build all four projects with a asking price of RM6.6 billion and a land swap deal of 171.3 acres?
It seems like Consortium Zenith BUCG Sdn Bhd was formed during the post tender negotiation. It was asked to accept the deal with four projects including the undersea tunnel for RM6.3 billion and a land swap deal of 110 acres.
This was reported in malaysiadaily as follows:
Its director, Datuk Zarul Ahmad Zulkifli said the state government was presently giving BUCG a ‘hard time‘ since the contract that has yet to be signed, is subject to terms and conditions.
“Seriously, where can you get four projects including the undersea tunnel for RM6.3 billion? We had no information as to the amount our competitors had set for the projects. We had to dig and search (for information).”
The consortium might not know the asking price of VST, but the state government had forced it to accept the pre-arranged deal to defeat VST!
Negotiations should not just be seen as a process of selecting the lowest-priced, compliant bid.
Post-tender negotiations should be considered an important part of a purchasing strategy in all government procurement. Some key principles should prevail:
1. Equal opportunity for tenderers
Once the tender is closed the procurement team makes an initial assessment and selects the best bids to make up a short-list. These short-listed tenderers are selected on the basis that they satisfy mandatory and desirable criteria and offer acceptable solutions. Once the best bids have been selected, or short-listed, it is essential that the equality of opportunity these tenderers (or preferred bidders) is maintained throughout the post-tender negotiations. This can be achieved by ensuring that the following occurs:
if any changes to the requirements are made (which do not substantially alter the specification) then all short-listed tenderers are given the same information and have the same opportunity to revise their offer; and
the same general questions and propositions are put to all short-listed tenderers (e.g. the opportunity to improve the solution tendered and/or reduce the costs in a last and final offer)
In this process questions of clarification from particular tenders can be answered.
2. Competitive negotiations
When post-tender negotiations are being made at the same time with two or more short-listed tenderers, it can become a competitive process and such a situation should be viewed as a purchasing strategy that provides benefits to both buyer and seller.
Usually such competitive negotiations are only done in high value ($) and/or large and complex purchases. This technique maintains a competitive market situation between the tenderers during the tender evaluation process and post-tender negotiations and one which places the purchaser in a good position to negotiate on price and terms. Although lower costs can be a likely outcome of post-tender negotiations, there are more issues to consider than just obtaining a lower price.
3. The ethical and probity challenges
Post-tender negotiations can raise serious ethical issues that arise when government officers engage with the commercial market, often referred to as probity. These challenges can be addressed through carrying out tender processes in an open, transparent and fair manner throughout the whole procurement cycle and ensuring all tenderers have the access to the same opportunities and information.
There are a number of ways probity can be achieved (as listed below)
Good record keeping
Clear evaluation criteria
Impartial and fair supplier relationships (open meetings and transparency in specification changes)
Planned approach to negotiations and detailed negotiation guidelines
Professional and objective price negotiations
Trained and experienced negotiators
Guan Eng’s administration is seem to be guilty of fixing the deal and denied VST Cemerlang with China State Corporation a fair opportunity for a fair and no favor competition for tender.
The RM6.3 billion and a land swap deal of 110 acres is not significant compared to the RM6.6 billion and a land swap deal of 171.3 acres asked by VST.
This forced deal was designed to give the opportunity to BUCG. Guan Eng has made a mockery on open tender, equal opportunity, competitive negotiations.
The deal has raised serious ethical issues that arise when government officers engage with the commercial market by asking Consortium Zenith and BUCG to accept a pre-fixed lower deal to defeat VST, often referred to as probity.
The tender processes is not conducted in an open, transparent and fair manner throughout the whole procurement cycle that ensures all tenderers have the access to the same opportunities and information.
It is time to report this case to MACC to put Guan Eng on trial in a court of law to answer for this strange and illogical arrangement.