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CHAPTER

6PUBLIC

PROCUREMENT/SUPPLY MANAGEMENT

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Tips of the day…..

What lies behind us and what lies

before us are tiny matters compared to

what lies within us…

Holmes

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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.

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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

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9.3 PUBLIC PURCHASINGPROCUREMENT

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

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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)

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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

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Casual Purchaseless than RM50,000

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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.

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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

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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.

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QuotationRM 50,000 – RM500,000

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Quotation - RM 50,000 – RM200,000

Quotation is a procurement of goods ranging from RM50,000 – RM500,000.

Example, facilities, equipments for organizations’ operation

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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.

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Quotation - RM 50,000 – RM500,000

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Tender - more than RM500,000

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Tender - more than RM200,000

It is procurement of goods that is more than RM500,000.

Specification of tender must be made comprehensively.

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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.

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Tender - more than RM500,000

Advertise

Bid the tender

Processing the application

Approval

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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.

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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

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Example of emergency purchase, in the event of war, heavy floods or natural disaster.

Emergency Purchase-AP 170/171/172

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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.

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9.5 MAIN CRITERIA IN PROCUREMENT

Reasonable price Reasonable Quality Accurate Quantity Valid and registered supplier Timely

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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

9.6 PROBLEMS IN PROCUREMENT

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

CORRUPTION IN PROCUREMENT