MOT to reopen tender for largest contract in ‘direct tender’ list

The Transport Ministry (MOT) will reopen the tender for the Klang Valley Double Tracking (Phase 2) (KVDT 2) project which is the largest in terms of value in a list of contracts awarded through direct negotiations that was released by Finance Minister Tengku Zafrul Abdul Aziz on Wednesday.

Transport Minister Wee Ka Siong said this was because an investigation has found that the RM4.475 billion project was still overpriced despite cost-cutting by the previous Pakatan Harapan administration.

He said the Harapan cabinet had agreed to allow the project to continue with a 15 percent reduced cost on July 5, 2019, down from the RM5.265 billion with a reduced scope of work.

However, a year earlier in October 2018, a consultant appointed by the Transport Ministry had conducted a review of the project and concluded that it only costs RM3.398 billion based on the contractor Dhaya Maju LTAT Sdn Bhd's original scope of work.

"This information was never made available to the cabinet at the time. After taking into consideration the results of extensive study and investigation, the ministry has determined that the current project cost is overpriced.

"Pursuant to this, the Perikatan Nasional cabinet has agreed that continuing with the implementation of the project based on direct negotiation is untenable.

"It is now prudent to reopen the bidding process via an open tender system following the proper procedures instead of via direct negotiation as done previously," Wee said in a statement today, which also included a chronology of the project.

The chronology backs Harapan's claim that it had attempted to terminate the award of the contract and retender it through open tender but backtracked after DM-LTAT appealed to avoid a lawsuit.

It also showed that the PN administration had conducted investigations on the project since it took over the government in March, leading to the current decision to cancel the KVDT2 project to retender it.

Wee said an independent checking consultant would be appointed before a new contractor is appointed via open tender for the project, in order to shorten the construction period of the project from seven years to five years.

"This is important in view of the urgency to complete the project to serve an estimated 80,000 daily KTM Komuter riders," he said.

Previously, Zafrul had revealed a list of 101 government contracts worth RM6.61 billion that were supposedly awarded via direct negotiations by the Harapan administration.

The largest item on the list was the KVDT2 project, which made up 67.7 percent of the value of all the projects on the list.

Zafrul's predecessor Lim Guan Eng countered that many projects on the list including KVDT2 were BN legacy projects inherited by the Harapan administration.

He said the deal with DM-LTAT had to be renegotiated to avoid further delays on the project and the Harapan administration should be given credit for saving RM790 million in taxpayers' money in the process.

Lembah Pantai MP Fahmi Fadzil, meanwhile, had pointed to then transport minister Anthony Loke's explanation to the Dewan Rakyat on July 9, 2019, that the project was not retendered to avoid paying compensation to DM-LTAT.

Loke had told Parliament that DM-LTAT had estimated that compensation for terminating the contract would amount to RM2.5 billion.

 

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