SYARIKAT Prasarana Negara Berhad (Prasarana), the project and asset owner of the LRT Line Extension Project, views with concern statements made in the media by various quarters regarding the Ampang Line systems works contract.
AMG Systems is part of the AMG Line Extension Project. The new systems will be installed and commissioned for the extended line whilst the existing line will be suitably upgraded to ensure at par performance and optimum integration for seamless train operations when completed in 2015.
The scope of AMG Systems is a multi-disciplinary type that is no less than seven major sub-systems must be tested, commissioned and integrated (signalling, trackworks & 3rd rail, power supply, COMMS, SCADA, depot equipment, etc). For such complex and diverse scopes, no single contractor would be able to meet the project requirements. Thus, consortiums, or JVs, are typically formed in order to undertake the works.
Collaborations could involve local and foreign expertise, where each member would complement the strength of the other members and together, offer a valuable proposition as required under the tender.
As for AMG Systems, no one company has either the breadth or the expertise to manage this project alone. In fact, all submitted bids comprised of three or more partnerships per tenderer.
In the course of the tender evaluation, the technical competency of each tenderer was reviewed as a whole offering, whilst observations were recorded for any shortcomings found in a submission. Ultimately, the results from the technical evaluation will reveal the pass/fail position of each tenderer, and thus, the ability to implement the same.
Alongside the outcome of technical, financial and commercial evaluation results, the compliance to the conditions of contract must also be read together so that fair remarks can be made where relevant. As this project is not all about the lowest price alone, all elements of evaluation parameters must be moderated so that the results reflect any qualifiers or deviation from the conditions of contract that has a direct impact on the management of risk and eventually, the overall success of the project.
For instance, a tenderer may submit a low price, but at the expense of not meeting the tender requirements fully or by qualifying or deviating from the conditions of contract. Such a bid must be considered carefully as it may not be in Prasarana's best interest.
Due process for a tender award has to be recognised and in this case, Prasarana undertook the first round of tender evaluations and made the necessary recommendations to the Finance Ministry. The recommendations were made based on a set of evaluation criteria to determine the technical competencies of the bidders, alongside the commercial proposal.
As approved at Prasarana's board level, the same was extended for further deliberations, considerations and approval at the ministry level.
The awarding process is not necessarily achieved within a single seating as, sometimes, clarifications are sought to ensure all perspectives are given their due recognition before the ultimate decision is reached. At this level, the Government will scrutinise all recommendations and seek further clarifications if necessary.
These cycles of deliberations may take a few rounds and that is perhaps what the market has been speculating about i.e. the "interim picture" before the final award. Updated information from the clarifications are to ensure all concerns are backed by necessary facts, critical before any award process is concluded.
The Government is not obliged to award anything to those with the lowest bid, but rather, to look at the totality of the offer and consider the choice that is most beneficial to the project in the long run. For instance, life cycle costs that would bring about reduced operating expenditure over equipment lifespan. Likewise for equipment/sub-system commonality that would benefit the operators with increased efficiency from cross-function competency between lines, standardised training and operations procedures, and maintenance economies of scale.
Additionally, any implementation of a capital-intensive public infrastructure project, such as AMG Systems, should warrant a best-fit solution that takes into account the spin-off it could generate to the economy and knowledge transfers to local companies, among other things, on top of technical competency to undertake the implementation itself.
The leaked information found in the media recently does not give the public a full picture of the process explained above. Dated selective excerpts have been superseded by new information resulting from the clarifications. They did not do justice by labelling certain activities as "interference" when what were and are being done are due diligence processes by the Government.
Eventually, in reaching for the AMG System decision, benefits from the competitive project cost point of view, long-term Operating Expenditure (OPEX) savings solution for the operator, and the opportunity for local companies to prosper and lead the development, must be articulately balanced.
The process to deliberate and reach a certain decision takes time to finalise, and projects of such magnitude and complexity (like AMG Systems) would, typically, consume an additional review period. The project is currently slightly behind schedule, but we are looking at all available floats in the critical path to accelerate certain activities to catch up with the implementation schedule.
The evaluation of tender recommendations and the awarding process is all at the ministry's prerogative. As chairman of the RM300 million and above tender awards, it is the duty of the Prime Minister, who is also the Finance Minister, to moderate all recommendations and decide with committee members on who the award goes to or whether more clarification is required from a tender. It would be unfair to misconstrue the due process by using any other term (such as "interfere") when the committee is vested with the required level of authority to make the necessary decisions.
To date, a final decision on the award has yet to be made. An official announcement on the award will be made by the ministry when all matters regarding the contract has been considered and studied.
In the end, the rakyat should win from this exercise and for us in Prasarana, we are professional in our work. The reliable operation of the Kelana Jaya and Ampang LRT lines and KL Monorail, the transportation backbone of Kuala Lumpur, is proof of our good work. We have to focus our efforts to ensure the timely completion of another public infrastructure project. Passenger safety in existing and future systems have always reigned paramount in our work ethic and we thank all for the continuous support with the AMG Line Extension Project.