New tender for stalled Shah Alam Hospital project

By Clara Chooi, The Malaysian Insider

The Works Ministry has re-opened the tender to identify a “white knight” contractor to proceed with the construction of the stalled Shah Alam Hospital project, which has been fraught with allegations of mismanagement and cost overruns.

Works Minister Datuk Shaziman Abu Mansor announced in Parliament today that project’s tender advertisement had been put up since last Friday and would close by December 17.

“The Public Works Department is presently in the process of calling for a new tender to appoint a new ‘white knight’ contractor (kontraktor penyelamat) through a limited tender procurement method to proceed with the remainder of the abandoned project.

“According to the completion plan for the hospital project, the construction is estimated to take about 30 months to complete,” he said today.

Shaziman pledged that the selection process for the new contractor would be in accordance with the proper procedures and regulations as stipulated under his ministry.

He added that the contract for the project, proposed by the Health Ministry, was initially awarded by the Finance Ministry through the direct negotiation process to Sunshine Fleet Sdn Bhd.

“The project was initially due for completion in November this year but was delayed to June next year,” he said.

He said this when debating a RM10 pay cut censure motion moved against him today by Khalid Samad (PAS-Shah Alam).

The motion was however rejected by the House after it was put to a vote.

When debating the motion earlier, Khalid called for a RM10 cut on Shaziman’s salary to censure the minister for the ministry’s “culture” of awarding contracts for multi-million ringgit government projects to “OKU” companies (syarikat orang kuat Umno) or Umno cronies through direct negotiation methods instead of through open tender.

As an example, Khalid cited several examples of mega government projects like the RM482 million Shah Alam Hospital, the RM650 million Istana Negara project and the RM700 million National Cancer Institute.

“The practice of using direct negotiation shows that the works minister has failed in carrying out his duties as a minister that is responsible in managing public funds carefully and ensuring that the people get value for their money,” he said.

Khalid also blamed direct negotiation as the cause of occurrences of financial mismanagement and cost overruns in the said projects, claiming that the appointed contractors were corrupt and irresponsible, resulting in eventual delays or total abandonment.

“The Shah Alam story is a clear example of how the people are made the victims of the government’s irresponsible ways. The project has been stalled and now it has been over six months since work at the site has stopped,” he said.

Khalid urged the ministry to take over the Shah Alam Hospital project and carry it out under the scrutiny of the PWD, pointing out that the agency should be well-equipped with highly-qualified engineers.

He also continued to question the government’s rationale in refusing to take up the offer by GM Healthcare, the sub-contractor for the project, to complete construction within 18 months with a RM3 million discount.

In his response, Shaziman claimed that of the 6,124 projects under his ministry for the Ninth Malaysia Plan, only five per cent were awarded to contractors via direct negotiation.

“Only 297 projects, which mean less than five per cent were awarded via direct negotiation.

“For the House’s information, government projects are usually granted through open tender but in certain situations, we use direct negotiations.

“Only specific projects are awarded through this manner… projects that involve the aspect of safety or specialised expertise,” he explained.

Shaziman also said the Shah Alam Hospital project had been delayed due to rising costs of fuel and construction materials like steel, cement and sand.

As such, the minister claimed that the cost of the project was “reasonable”.

“Taking into consideration also that that it now has a 500-bed capacity instead of the original 300, and it also has quarters for Classes D, E, F and G, as well as a hostel for nurses and housemen quarters,” he said.

The controversial hospital project that was awarded to Sunshine Fleet via direct negotiations in 2007 for RM482 million was originally slated for completion by August this year, but has been postponed due to legal suits between the main contractor and its sub-contractors.

It was mooted some 10 years ago to ease overcrowding in the nearest government hospital for Shah Alam residents, which is the Tengku Ampuan Rahimah Hospital in Klang.

The project was later rescheduled for completion in November this year, but was later pushed again to June 2011.