KUALA LUMPUR (July 21): The auditor general recommends ending the pre-qualification procurement system in favour of full open tenders, according to the auditor's latest report released Monday.

Unless major reforms are implemented, the current system is prone to manipulation while carrying risks of delays and inefficiency, with unqualified firms found to have advanced to tender stages, the report from the National Audit Department said.

“If the government decides to continue with the method, comprehensive improvements to the aspects of thoroughness and monitoring need to be made so that it becomes an efficient and effective method,” the report said.

The procurement system was introduced by the Ministry of Finance for all ministries and agencies for projects in 2023 and 2024. The system was meant to speed up the procurement process and implementation of government projects.

However, an audit covering 71 projects worth RM20.1 billion across three ministries found that the system did not achieve its objectives.

Among others, there were ineligible contractors approved by the Ministry of Energy Transition and Water Transformation (Petra), including six firms that submitted no documents and seven without necessary certification.

The Ministry of National and Rural Development, meanwhile, awarded a RM40.1 million project to a company failing financial criteria.

The audit found unauthorised subcontracting occurred in Pan Borneo Highway projects led by the Works Ministry. The lack of a deed of assignment, however, jeopardises protection of the government's rights.

All three ministries have no centralised contractor database, leading to ad hoc selections and reduced competition, the auditor general said. Instead, Petra relied on unverified email invitations, while the Ministry of National and Rural Development used web advertisements on its website.

Such systems limited bidder pools, favouring select companies and undermining fair competition, while a lack of transparency in pre-qualification compromised accountability, the auditor general cautioned.

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