I read with interest on one article that appeared in the Star Paper on 26 October 2009 that says “Layers of Sub-Contracting add to total cost” and “Are Tenders Open and Fairs? The articles said there are some company who won lucrative government tender to sub the whole project to the third party who may then further sub-contract down the line. The articles claimed that this has becoming a common practice for some company and all they do is lobbying for large development projects, expensive maintenance contracts. This also one of the factors that increase the government cost of purchase.
The issue of the winning bidders sub contracting the jobs to another contractor is not new. Among the usual reasons cited are a shortage of capital and manpower or a lack of a certain skills to complete the job. But in the end it is up to the contractors themselves to decide what is best for them.
This sometime pushes the cost of the contract substantially because each contractor has to make his own profit margin. Some projects have three or four layers of “Sub-contractors” which add to the final project cost.
As I looked back to our project list over the last 12 years I must say that most of our contract is directly from the owner or from the privately owned company. We will bid for any open tenders that call for light and sound system. If it is government tender then we will quote to the interest bidder with the hope that they will win the contracts and we will be the sub-contractor.
As an Audio Visual system integrator we were probably the last company to be sub to undertake to complete the project installation. We have our in house technical team to produce drawing and site team to implement the project. We purchased the equipments directly from the oversea manufacturer or through local distributors. Our reputation is important as we have to follow strictly on the agreed BQ and follow the written specification in order to complete the project without problem.
We don’t really care who won the contract and how they won it but if we agreed to undertake the project then the payment terms must be right. We must get paid once we deliver the equipment or completed the project.
But I fully agreed to have the open tender system whether it is a public listed project or government project. This will ensure that every qualified and interested company can bid for the project. The government policy will have all major public projects go through the open tender process. The threshold for the open tender is from the projects valued above RM500,000. Only by this way the projects will carry out professionally. Try to reduce direct negotiation contract unless it is a special contract like the arm forces or specialize project. Without the open system government can’t get the best deal. The government will win and the public interest will be protected.