PUBLIC PROCUREMENT/SUPPLY MANAGEMENT CHAPTER 6 PUBLIC PROCUREMENT/SUPPLY MANAGEMENT

Tips of the day….. What lies behind us and what lies before us are tiny matters compared to what lies within us… Holmes

9.1 INTRODUCTION Supply management system is vital towards on time supply of equipments & goods in government sector. To ensure all government programmes & activities can operate efficiently to meet their objectives.

9.2 IMPORTANCE OF SUPPLY MGT SYSTEM To ensure effectiveness of the public service operations To avoid dishonesty & misuse of money, power To minimize government expenditure To minimize maintenance cost To ensure the positive national economy growth

9.3 PUBLIC PURCHASING PROCUREMENT SUPPLY MANAGEMENT Purchase in supply mgt. is to procure goods & services for specific purpose. Planning, negotiations, training & good understanding about rules & regulations in public purchasing are components of good Public Purchasing practice

All purchasing systems need 5 essential ingredients 1. honest and competent personnel 2. centralisation 3. regulations 4. effective purchasing procedures 5. effective inventory procedures ( reference- Charles K.Coe, Public financial Management, 1989)

9.4 TYPES OF PUBLIC PURCHASING Casual purchase - less than RM50k Quotation - RM 50k – RM500k Tender - more than RM500k Emergency Purchase - AP 173b Foreign Purchase - ssp 18/77 Based from Treasury Circular

Casual Purchase less than RM50,000

Casual Purchase-less than RM50,000 Amount not exceeding RM50,000 per year. Goods purchased normally used by that department examples are stationary & office equipment. Purchase order will be prepared by the department by identifying: the type of goods, size, quality quantity supplier.

Casual Purchase-less than RM50,000 Head of Department can make the casual purchase Two situations: Below RM10,000 per year RM10,000 – RM50,000 per year FORM

Casual Purchase-less than RM50,000 Procedures: Prepare the purchase order Submit to suppliers Suppliers must revert within 14 days Below RM10,000, can purchase from any vendor/supplier RM10,000 – RM50,000 to Bumiputera suppliers – registered –reasonable price Payment will be made after the goods are received accordingly and purchase order & invoices have been prepared & signed by both parties.

Quotation RM 50,000 – RM500,000

Quotation is a procurement of goods ranging from RM50,000 – RM500,000. Quotation - RM 50,000 – RM200,000 Quotation is a procurement of goods ranging from RM50,000 – RM500,000. Example, facilities, equipments for organizations’ operation

Procedures: Identify the goods or services Quotation - RM 50,000 – RM500,000 Procedures: Identify the goods or services Invite at least 5 Bumiputera suppliers that registered with MoF. Form Suppliers submit the quotation Departments’ Quotation Committee (at lest 3) will evaluate the quotation & will make a decision to accept it based on: cost, quality & purpose.

Quotation - RM 50,000 – RM500,000

Tender - more than RM500,000

It is procurement of goods that is more than RM500,000. Tender - more than RM200,000 It is procurement of goods that is more than RM500,000. Specification of tender must be made comprehensively.

Tender - more than RM500,000 Procedures: Advertise in Malay newspaper (at least one major circulating newspaper) Tender deposit must be prepared by tender bidder to reflect their commitment. Department must set procedures regarding submission of tender, dateline and reference no on top of the envelope. The decision to select the best tender is rested to controlling officer. He/she must ensure that the tender is beneficial to the government by obtaining the quality of goods at the lowest price.

Processing the application Tender - more than RM500,000 Advertise Bid the tender Processing the application Approval

Emergency Purchase-AP 170/171/172 It is made during emergency period / to be made immediately, whereby the delay in procurement will affect national interest. Purchase during emergency period must serve emergency requirement only.

Emergency Purchase-AP 170/171/172 Procedures: Limited only to fulfill the emergency needs. Must prepare the report of the emergency purchase To be submitted to the Controlling Officer Submit the report to the Secretary General of Treasury (Federal) or State Financial Officer (State) Within one month

Emergency Purchase-AP 170/171/172 Example of emergency purchase, in the event of war, heavy floods or natural disaster.

Foreign Purchase Purchase of goods that are not offered by local suppliers. Advertisements are made by local suppliers. Advertisements are made locally & externally to publicize the offer.

9.5 MAIN CRITERIA IN PROCUREMENT Reasonable price Reasonable Quality Accurate Quantity Valid and registered supplier Timely

9.6 PROBLEMS IN PROCUREMENT Misuse of power Misuse of public money Time consuming Corruption / bribery Problems in specification for highly specialised goods In foreign buying, there is a need to look into Malaysias foreign policy

TUTORIAL EXPLAIN CASUAL PURCHASE EXPLAIN QUOTATION EXPLAIN TENDER DISCUSS THE PROBLEMS DISCUSS THE CURRENT ISSUES ON CORRUPTION IN PROCUREMENT