AUDIT REPORT An unqualified contractor was found to have been awarded an RM71.49 million project to build a Service Technical Centre (STC) for the Royal Malaysian Air Force’s jet fighters.

 

The Auditor-General’s Report 2015 (Series 2) said the contract was awarded to Sharikat Pembenaan Setia Jaya Sdn Bhd (SPSJ) via restricted tender, even though all nine contractors invited to the tender process did not qualify.

It said the nine contractors scored between 1 to 36 out of 100 points, while the passing mark was 60 points.

“In the audit’s opinion, this project should have been re-tendered after all companies failed the tender evaluation process.

“Project urgency should not be used as an excuse to appoint a company that is incapable of executing the project, and ultimately failed in delivering it.

“The objective of holding restricted tenders is to ensure that only experienced and qualified contractors are involved, but this is not achieved when unqualified companies are invited to the tender and go on to be awarded the project,” says the report that was released yesterday.

The STC at the Gong Kedak airbase, Terengganu, is meant to serve as a maintenance and amelioration centre for the RMAF’s Sukhoi Su-30MKM multirole fighter jets, to ensure their combat readiness.

In March 2012, the report said, the Ministry of Defence (MOD) had initially written a letter to the Ministry of Finance (MOF) to ask for the STC project to be awarded via direct negotiation, but was told to award the project through open tender instead.

In July, the contractor SPSJ asked the MOD to award the tender via restricted tender. The MOD wrote to the MOF for permission to do so in September 2012, and this was approved in December that year.

SPSJ garnered the highest score during the tendering process, and was endorsed by the Tender Evaluation Committee for offering the lowest price, not having any pending jobs, offering a project completion time of 78 weeks, and supposedly had enough capital.

The endorsement did not receive the approval of the Public Works Department (PWD) Procurement Board A, nor the MOF. The MOF ordered for the project to be put up for open tender pre-qualification.

“On the same day, the PWD applied for the MOF’s approval to expedite the project by approving the contractor endorsed by the Tender Evaluation Committee. This was approved by the MOF,” the report says.

This was despite SPSJ not having any experience in building infrastructure for aircraft maintenance, and was a loss-making company as of June 2014.

It said that the appointment of an unqualified candidate had resulted in the project missing its deadline of Sept 20, 2015.

By December 2014, the report said, the project was scheduled to be 39.1 percent completed, but a mere 3.3 percent of the project was actually done.

The pace of the construction markedly improved after one of the project sub-contractors, Solar Alert Sdn Bhd, took over the project on Jan 15, 2015.

By February this year, 86 percent of the project was completed. However, the audit report said, Solar Alert, too, was behind schedule, as 98 percent of the STC project was supposed to be completed by then.