Monday October 26, 2009
Overcharged for ICT It mainly involves outsourced services
PETALING JAYA: Ministries that outsource their information and communications technology (ICT) services are being overcharged to the tune of hundreds of millions of ringgit and often by companies that are relatively unknown for their expertise in the industry.
ICT is a multi-billion ringgit industry with value-added services, according to Pikom, the association that represents the local ICT industry. ICT contributed 10.8% to the country’s gross domestic product last year while the overall industry accounted for 26.9% of the manufacturing sector.
A source familiar with such deals said this typically happened in the multi-million ringgit deals involving outsourced services instead of the procurement of computer hardware.
“The contract price can be more than 50% higher than if the deals were done on an open tender basis,” he said, adding that ministries had overpaid for these services.
He blamed the negotiated deals for this.
“One example is that of a number of little-known deals totalling around half-a-billion ringgit for ICT services that were awarded to several unknown companies two to three years back,” he said.
He said the contracts were initially tagged at RM1bil but were later reviewed and the value reduced after industry players pointed out the discrepancy in the costs versus the market price.
He said once awarded, the contract-winning companies would often subcontract them out to other companies as they lacked the expertise.
“This is part of the reason why the prices are uncompetitive. The other being the companies involved in the work will itemise various services in the bill to justify the cost but that is hard to prove,” he added.
However, in the Auditor-General’s 2007 report, it was noted that even where the procurement of computer hardware was concerned, there were discrepancies.
The report found that in the Education Ministry’s Teaching and Learning Science and Mathematics in English, there was an excess of between one and 20 computer notebooks compared with the number of teachers for the programme in each school.
The ministry was approved an allocation of RM4.99bil for use in the programme from 2002 to 2008, of which RM2.21bil was used from 2002 to 2007 for the procurement of computers, LCD projectors, screens, trolleys, loudspeakers, televisions and training for users of these equipment.
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