Printer maintenance is 72 times purchase price

The humble dot matrix printer, among the cheaper computer printing options, is under the auditor-general’s spotlight after it was found that the Lahad Datu General Hospital was paying an exorbitant amount maintaining it.

According to the Auditor-General’s Report 2011, the Health Ministry is spending  RM53,525  - nearly the cost of a 1.6 manual Proton Waja - for a five-year maintenance contract for each of the Epson LQ300 printers it owns.

The report doesn’t state how many such units are owned by the hospital, but it did state that it cost RM738 per unit and thus maintaining a single unit for five years was 72.5 times the purchase price.

This is however the tip of the iceberg as there are many items on the establishment’s hospital information system (HIS) inventory which recorded highly suspicious maintenance costs.

For example, another printer, the more expensive and advanced Lexmark E332n laser printer which cost RM1,916 a unit, required RM16,455 in maintenance cost for a five year period.

One company, five hospitals

In contrast, maintenance cost of similar equipment in government hospitals in Keningau, Pekan, Sungai Petani and Selayang was a fraction of the price paid by the Lahad Datu hospital.

In a reply to the audit team on June 15 this year, the Health Ministry justified the maintenance cost, stating that the ministry had a “back to back” agreement with the supplier which includes a  “comprehensive” maintenance scope.

“The maintenance cost not only includes a ‘planned preventive maintenance’ but also includes corrective (measures) and replacements of the same make or better,” said the ministry.

The Health Ministry also suggested that the variance in cost of maintaining the Epson LQ300 printer could be because the supplier for the Lahad Datu hospital obtained the contract through direct negotiation.

Of the 12 hospitals involved in the HIS maintenance work, a single company - Systematic Conglomerate Sdn Bhd - received directly negotiated contracts to work on five hospitals.

Other than the Lahad Datu hospital, the four others maintained by Systematic Conglomerate were not part of the audit. Contracts for the other seven hospitals were awarded through open tender.

Ministry: We lowered the amount

The total value of tendered contracts is RM334.02 million. Of this amount, two-thirds or RM222.19 million worth of work was given to Systematic Conglomerate.

According to the Health Ministry’s explanation, the direct negotiations with Systematic Conglomerate were done by the Finance Ministry.

“However, the (health) ministry had negotiated for a lower amount of RM222.81 million, which is lower then the price of RM483.78 million sought by the contractor.

“The (health) ministry had on Oct 13, 2011 and Feb 22, 2012 appealed to the Finance Ministry to ensure that future HIS maintenance contracts be awarded through open tender,” the Health Ministry told the audit team.

In view of this, the government had on July 9 decided not to proceed with the option to extend Systematic Conglomerate’s contract by another three years.

However, this move is a bit too late as the audit team had estimated that the Health Ministry will overpay Systematic Conglomerate by 41.4 percent or RM23.95 million for emolument payments to the contractor’s staff involved in the project over the contract period.

For example, with four to 15 years experience, a branch manager involved in the project is to be paid between RM15,375 to RM22,510 a month, said the audit report.

According to the Health Ministry, the amount that will be overpaid was estimated at RM17 million while the contractor’s estimates to the ministry was at RM1.6 million.

The audit team concluded its report by recommending that the Health Ministry determine how much have been overpaid to the contractor and recover the amount.

Furthermore, the audit team also recommended that legal action be taken against the contractors who breach the terms of the contract.