Procurement is one of the critical activities of the government machinery and is said to be a primary source of government leakages. In recent years, the annual budget for development is about RM50 billion, which is mainly expanded through the procurement of products and services. On top of this, the budgets for operating expenditure included monies for government supplies, acquisition of movable assets, maintenance, and other services. With so much money involved in procurement, it is not surprising that this activity is receiving a lot of attention. The AG’s office has special audits on Procurement Management, and at the same time, many other audits include findings and recommendations related to procurement.The purpose of the article is not to determine the strength and weakness of the Malaysian Government Procurement practices nor to provide recommendations on how procurement can be improved. Rather, it is to show how procurement-related information is organized in the Malaysian Auditor-General’s Information Graph (MyAGR) and how researchers can search and explore to get a more comprehensive view of the procurement issues.
Before a strategy can be formulated, a diagnosis of the current issues based on the evidence provided by the AG’s report is a prerequisite. The diagnosis would help the researchers, and policy makers identify the actual problems and their root causes if any. Verification on the ground may also be required. To tackle the “real” problems must be identified first before we can formulate a set of coherent plans. The plans must take cognizance of the complexity of the government machinery with about 3100 public entities as one size is unlikely to fit all.
Procurement is a delicate balance between price, quality, and delivery. Good quality and timely delivery come with a price. The total cost of ownership and value for money is also important considerations.
Procurement Audits in the AG’s Report
Based on the three annual AG’s reports in our current system, there are about 690 audits. The next screen shows that there are 256 audits with procurement issues.
This list is already very useful to the researcher as the review required is now narrowed down to 256 audits instead of 690.
Issues of procurement
In MyAGR, we have identified 14 sub-issues of procurement. These sub-issues will be rationalized as we process more annual AG’s reports. The next screen shows these sub-issues together with the number of related audits. This screen provides a more detailed overview of government procurement.
To further understand the procurement issues, the researcher will need answers to questions such as:
- What actually happened?
- More details are required in each case for the evaluation.
- When did the issues arise?
- Are these long-standing issues or are they new?
- Is there any pattern to the issues?
- Who is having these issues?
- Federal or state?
- Ministry, department, agencies, statutory bodies or government companies?
- The people directly or indirectly involved?
- Where are the issues occurring?
- Top management, senior management, administration, project management, field work, planning, design, etc.
- Why did the issues arise?
- Has the root causes been identified?
- Is it because of negligence, fraud, incompetence, work procedures, etc.?
- Is this a systemic problem?
- How did the issues happen?
- What are the modi operandi if any?
Some of the answers to the above questions can be readily found in the information graph but others will need to be gleaned from the annual AG’s report and other related sources.
Criteria used to Categorizing Procurement Issues
The table below gives the criteria used to determine the categorization of the audits. This list is work-in-progress and will be updated and rationalized as more audits are processed. The criteria used will also need to be reviewed to reduce ambiguity and duplication.
|1||Approvals (Procurement)||40||Letter of acceptance, approval of a contract, approval of scope.|
|2||Bonds, Guarantees, and Insurance.||31||Bank guarantee, bonds, insurance policy, performance bond, tender bond, etc.|
|3||Consultant selection||Not experienced, not qualified and not enough know-how.|
|4||Contractor selection||24||Not experienced, not qualified, lack capabilities and resources.|
|5||Cost overrun||16||Cost exceeded, escalated, overrun. Excessive variation orders.|
|6||Late delivery||4||Arrive, delivered, received sent late.|
|7||Miscellaneous||Other procurement issues.|
|8||Documentation||36||No agreement or contract. Indent incomplete. Contract not clear, not signed, signed late, no penalty clause, no service level agreement, no termination clause, no provision on quality, etc.|
|9||Purchasing||50||No competitive bid, no tender, lengthy tender, use of local order, negotiated contract, open tender, irregular purchase, etc.|
|10||Scheduling||48||Not in accordance to schedule, do not meet schedule, no coordination of procurement, schedules not prepared or well planned, etc.|
|11||Short or non-supply||22||Short, non, late and inability to supply.|
|12||Specifications||88||Do not comply with specifications, specifications are poor or incomplete. Requirements are not clear.|
|13||Value for money||50||Non-competitive rate, no market prices, market research, and market study.|
|14||Wastage in procurement||Wastage, unused or unusable purchases.|
Exploring the Procurement Issues
To understand the procurement issues better, the researcher would have to explore each of the issues listed. There is no intention to sub-divide these issues further as it will become too technical for the content management staffs to handle. Furthermore, the number of sub-issues can easily become too large to handle and may result in many duplicates and ambiguities. Nevertheless, the system enables the researchers to view these issues from many perspectives. As an example, we will explore the “Specifications” issue.
The next screen shows the list of 88 audits related to procurement with issues in specifications. In the live system, you can click on any of the audits reports to view the content of the audits, intisari laporan and summary.
The next screen shows the audits grouped to the audit areas which represent the business areas been audited. This should be quite useful for any researcher.
Interactive list processing
With the full list, the interactive list processing facility can be used to group the list using any of the options available in the picklist:
The next few screens shows the list grouped to:
- Federal ministries,
- Federal statutory bodies,
- Federal agencies,
- Federal departments, and
- State departments.
Many other possibilities are not shown. All these facilities are intended to help the researcher view the integrated information from different perspectives. The same process can be applied to the other procurement issues.
This article demonstrates how meaningful insights can be gained on a complex subject like government procurement using the information graph. By making the audit information more accessible, integrated and usable the system can organize and present information from multiple perspectives. This is computer-aided thinking, but the actual thinking is left to the humans. Humans may have other background information that is not documented or available in this system but are crucial in decision making.
The screens shown are a snapshot of the current information available in the system. As more annual reports are processed, the screens will be changed with the additional information.
The system is still in beta and more facilities for manipulating and displaying graph information will be added as part of the learning and development cycles.