AUDIT REPORT The government’s failure to adhere to proper tender procedures in appointing a contractor for the construction of a Royal Malaysian Navy (RMN) college training centre ultimately cost taxpayers RM10.2 million.

This is according to the second-half of the Auditor-General’s Report 2012, which was tabled in Parliament today.

NONE The contractor, Syarikat Ijhraa (M) Sdn Bhd, which was tasked with building one of two training centres, dubbed ‘KD Pelandok’, in Lumut, Perak, failed to complete the RM41.46 million project.

The company, which was granted the project on Dec 16, 2009, was only able to complete 55 percent of it after its deadline expired in Feb 27, 2012, and was granted an extension until April 16, 2012.

Syarikat Ijhraa was then terminated by the Defence Ministry and the project was categorised as ‘projek sakit’ (problematic project).

NONE According to the Auditor-General’s Report, Syarikat Ijhraa, which is a Class B contractor, was given “special permission” to participate in the tender to construct the 'KD Pelandok' in May 2009.

Of the 43 companies that took part in the tenders, nine were shortlisted and Syarikat Ijhraa, which offered the second lowest price, was finally chosen.

This was despite the company failing to abide by the proper tender rules.

‘Gov’t let slip need for compulsory documents’

“The audit review found that based on the tender evaluation report on the fulfilment of documents, Syarikat Ijhraa only furnished two of four supporting documents that were required.

NONE “The two missing documents were the audited balance sheet and supervisor’s project report. The audited balance sheet is essential to determine the tenderer’s capital capability.

“However, the procurement board chose Syarikat Ijhraa because the tender committee had decided that it was still sufficient for the company to be considered despite the absence of the two compulsory documents,” the Auditor-General’s report states.

Subsequently, the Defence Ministry appointed JJM Integrated Sdn Bhd to “rescue” the project under a new tender valued at RM42.93 million, which was RM1.47 million more than the first tender.

NONE Furthermore, the government had also paid RM8.73 million to the first failed contractor, bringing the additional cost that taxpayers had to foot to a total of RM10.2 million.

JJM Integrated, which was appointed on Oct 3, 2012,  completed 72.5 percent of the project as of Sept 3 this year. It was still behind time by 11.8 percent as the required completion as of that date was 88.3 percent.

In contrast, the other training centre, called ‘Kapal Diraja Sultan Idris’, at the same facility, which was done through open tender around the same time, was completed, albeit with some delays.

KS Development Sdn Bhd, which was appointed on April 12, 2010 for the RM48.93 million training centre, completed the project on April 29 this year, after two extensions totalling five months.