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What to expect from the Government Procurement Act

The GPA is hoped to create similar legal implication with violations against legislation passed by the Parliament Procurement legislation that the government plans to have by 2023 can replace various circulars and directives that currently govern the practice.

It should also improve the current procurement rules to address long-standing issues in government procurement such as the rampant use of direct negotiation.

Government procurement is one of the areas that the recently launched National Anti-Corruption Procurement (NACP) plans to reform.

The objective is to improve its efficiency and transparency. The plan lays out 16 initiatives; one of them is to “introduce legislation on public procurement” (Initiative 3.1.5).

Current government’s procurement practices are governed quite extensively by a myriad of circulars and directives from the Treasury.

They also have to comply with rules laid out by the Federal Constitution, Financial Procedures Act 1957 and the Government Contract Act.

The Acts cited above are used in government procurement because procurement activities involve the use of government financial resources and will subject the government to signing contracts with other entities. Hence, they need to comply with these Acts.

However, the procurement process from planning, calling for suppliers participation and awarding the contracts are governed by the above-mentioned circulars and directives.

These directives and circulars outline various methods of procurement and their threshold, methods of selecting contractors/suppliers, rules of preferences for Bumiputeras and other things that are necessary to make procurement activities achieve their intended objectives.

These circulars and directives have provided government officers systematic procedures to procure goods, works and services for the government.

They also have provided business players with some predictability because they can refer to these rules in conducting their business with governments.

Yet, these rules lack at least two things. Firstly, the circulars and directives do not carry strong legal obligations.

The violations of rules that have been outlined do not create similar legal implication with violations against legislation passed by the
Parliament.

Therefore, acts of non-compliance are likely to be taken less seriously. The Government Procurement Act (GPA) will hopefully solve this problem.

Secondly, the non-compliance can also be caused by the absence of penalties for such acts. The current circulars and directives do not outline any rules for any breaches to procurement procedures. 

Future procurement legislation, therefore, should address this problem. The UK procurement legislation, for example, provides review procedures and remedies for any breaches of the legislation. The review procedures allow contractors/suppliers to file complaints of violations to UK national courts and the proceedings will establish whether such violations have taken place.

If they have and they cause loss and damages, the courts should grant compensation to the contractors. By establishing legal procedures for violations, civil servants and contractors are compelled to avoid practices such as collusion and corruption that will joepardise economic interests of both sides. 

Another model is the Procurement Integrity Act in the US, which outlines clearly the type of violations in procurement process and penalties for committing them.

In addition to having stricter enforcement mechanism, another aspect that can be considered in the future legislation is to regulate government projects that are procured through concession and/or public-private partnership methods.

As of now, these projects are not bound by circulars and directives issued by the Treasury for procurement activities. The procedures are determined by the Public Private Partnership Unit under the Prime Minister’s Department. 

The procedures and rules for concessions could be different from traditional procurement, but they should be subject to similar level of legal scrutiny.

The UK has separate pieces of legislation for its traditional procurement and concessions. This is an important aspect that should be taken into consideration.

Procurement legislation will provide a more predictable, reliable and trusted government procurement system.

The current circulars and directives can provide the backbone for the future plan, but the government should consider improvements and modifications to the current system to be included in that legislation.

The NACP’s target of 2023 for the enactment of the GPA may seem like a long time, but the process of drafting a piece of legislation on an issue as complex as public procurement must start early.

This means engaging stakeholders and encouraging discussion on the subject by publishing documents and updates to the public.

Public engagement is paramount in the government’s discussions on how the future procurement legislation should look like.


Sri Murniati is a fellow at Institute for Democracy and Economic Affairs (Ideas).

First published in themalaysianreserve.com, 12 March 2019.

2019-03-12T14:43:18+00:00 12th March 2019|Opinion|Comments Off on What to expect from the Government Procurement Act