With the recent call for the enactment of a public procurement law, it is time for Malaysia to seriously consider such an enactment.
The sum spent on such procurement is large, therefore the need for transparency and integrity to be incorporated into the process of procurement.
Many countries have, during the start of the 21st century, enacted laws, or amended laws with respect to public procurement to prevent fraud, waste, corruption or protectionism and cronyism.
Regulation of public procurement is by no means a new phenomenon introduced in various jurisdictions and may be reaching the “ripe old age” status in some countries.
The countries that have public procurement laws number about 27 and it appears that many jurisdictions have enacted their regulations or amended them due to the increase of knowledge of the public in procurement issues, spread of procurement principles and accountability due to the dissemination of the subject of procurement by various academic bodies and government agencies.
Whatever the reasons, the need for regulation is essential in Malaysia.
The UNCITRAL Model Law of Procurement was adopted in 2011 and its principles are aimed at achieving value for money and avoiding abuses in the procurement process.
The text promotes objectivity, fairness, participation and competition and integrity towards these goals.
Transparency is also a key principle, allowing visible compliance with the procedures and principles.
The 2011 Model Law replaces the earlier law that was enacted in 1994, known as the 1994 UNCITRAL Model Law on Procurement of Goods, Construction and Services.
The purpose of the 2011 Model Law was in line with the desire of the United Nations Commission on International Trade Law to ensure that new practices, particularly with respect to e-procurement, were incorporated as they reflected the growing trends.
The 2011 Model Law focuses on achieving value for money which is one of the key considerations of any decision involving the use of public funds.
What then is value for money? Is it the cheapest price? Are we following the tenets of public procurement by awarding to the lowest tender? Not necessarily, as value for money is the purchase of a utility or service based not only on the minimum purchase price but also on the maximum efficiency and effectiveness of the purchase.
The UK Procurement Division of the Department of Finance has defined best value for money as the most advantageous combination of cost, quality and sustainability to meet customer requirements.
This would mean that cost takes into account the whole life cost; quality means meeting a specification which is fit for purpose and sufficient to meet the customer’s requirements and sustainability which would ensure economic, social and environmental benefits, considered from the business perspective.
Value for money in procurement would therefore have due regard to propriety and regularity. It is not about achieving the lowest price, but obtaining the optimum combination of whole life costs and quality.
When should value for money come into consideration? Value for money should be considered as part of the decision-making process for any proposal which involves the use of public resources.
This would be at the start of the procurement process. However, sometimes, contracts may need to be revalued for renewal purposes.
As such value for money can also be assessed after an intervention has been delivered, by using benefits management and evaluation to identify its actual impacts and its performance.
Contracts should not be renewed as a matter of course, rather the benefits achieved during the contract period, and the performance of the contractors should form the basis of whether the contracts are to be renewed or not.
The value for money should thus be primarily be driven by three “Es” which are economical purchase of the inputs, efficiency of converting those inputs to outputs and effectiveness of the outcomes of the outputs. There is a fourth “E” propounded by some writers, and that is equity.
Economic development is characterised by the procurement of input at the least cost for the relevant level of quality.
For instance in running training courses, the planning should be done early to ensure that flight tickets are obtained at the optimum value.
In terms of efficiency, the costs of developing a curriculum must be matched with the cultural aspects of the country for which the curriculum is prepared.
Effectiveness is measured by the number of persons that the programme reaches, for example, a programme for the landless that ultimately arrived at achieving titles for the landless community would have achieved its effectiveness.
Equitable achievement would mean that benefits are distributed fairly and a venture that does not reach the most remote and vulnerable groups of the population may not achieve the equitable component.
In conclusion, achieving value for money is important as procurement uses public funds. The funds should be used in such a way as to create and maximize public value. Public funds and resources are public sector capital and the expenditure should be such as to cater to the total well-being of the public of the nation.
Such an objective can only be achieved with clear guidelines and rules, and the best way forward is to proceed with an enactment governing public procurement as this will ensure transparency, integrity and fairness.
The writer is research fellow at the Faculty of Law, Universiti Malaya and can be reached at firstname.lastname@example.org