Tuesday 20 November 2012

'Direct negotiations better for project awards'

Experience has shown that direct negotiations for awarding projects is a better method than the open tender process, says Rural and Regional Development Deputy Minister Hasan Malek.

This was why, Hasan told the Dewan Rakyat during Question Time today, Majlis Amanah Rakyat (Mara) awarded a campus construction project worth RM179.78 million directly to Nadi Cergas Sdn Bhd via direct negotiations.

NONEReplying Mahfuz Omar (PAS-Pokok Sena, right), he said Mara, which runs the Malaysian Institute of Aviation Technology (Miat), tried tendering out contracts before, and this did not guarantee results.

"The ministry, especially Mara, has awarded contracts via direct negotiations and limited tender and both have pros and cons, profits and losses. It is based on Mara's experience that we chose to award (this project) via direct negotiations.

"Based on our experience of open tenders, some projects would still fail. Limited tenders, there were also failed projects.

"We take all these into account to choose direct negotiations. In my opinion, muafakat membawa berkat (consensus brings more benefits). It's better to negotiate things," Hasan said.
Initial cost of project was RM200 million

He also said that the project had initially cost RM200 million but the total cost was shaved after a value management exercise led by the Economic Planning Unit was carried out.

In his supplementary question, Mahfuz had asked why the project was awarded via direct negotiations with Nadi Cergas, which has "no experience constructing hangars" and may "sub-contract" the project to other contractors.

However, the deputy minister said the competency of Nadi Cergas had been taken into account.

"These big companies will suffer losses if they don't have the expertise. Based on our negotiations, we feel that this company is qualified but this is our opinion and you may not share it.

"We are confident (of its abilities) and pray that this project will succeed... I believe my answer is clear, so if there is anything that is still unclear please approach me outside the House," Hasan said.

According to him, Miat, was moving from its current premises in Sepang to Subang as the institute required access to an operational aircraft and taxiway for its aircraft maintenance courses.

Hasan said that the cost of construction included two hangars, an academic block, a taxiway, workshop and purchase of equipment.

Nadi Cergas was mentioned in testimonies in the ongoing money laundering trial of Hasbie Satar, the former political secretary to Minister in Prime Minister's Department Nor Mohamed Yakcop.

A witness had claimed that Nadi Cergas had entered joint ventures with other bumiputera companies to secure government projects and would later sub-contract parts of the projects.

In a press statement on a separate matter earlier this year, ratings company Rating Agency Malaysia said Nadi Cergas "has a fairly established track record of completing building jobs within budget and on time".

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