Flawed procurement<\/p>\n
There is nothing surprising about the uncovering of strong
\nevidence of conspiracy among bidders and collusion between
\nbidders and officials in the tendering of works for World Bank
\nand Asian Development Bank-funded projects in Sulawesi and North
\nSumatra worth more than US$103 million.<\/p>\n
The discovery of the rigged bidding process that was disclosed
\nlast week serves only to confirm the long-established perception
\nof the Indonesian government as among the most corrupt in Asia.
\nIn fact, its utterly poor financial management and flawed
\nprocurement system, which is subject to systemic abuse and
\nsystematic irregularities, are two of the major factors that have
\nbuilt up such a notorious perception.<\/p>\n
The Supreme Audit Agency's (BPK) audit of state budget
\nimplementation for the first semester of this fiscal year that
\ncoincidentally was unveiled last week also found hundreds of
\ninstances of irregularities involving Rp 6.4 trillion ($710
\nmillion) in spending. Last year, its auditors found
\nirregularities involving Rp 36.5 trillion.<\/p>\n
The striking difference in approach is that while the
\ngovernment chooses to simply ignore the findings and
\nrecommendations of BPK as it has done with most of the agency's
\nprevious audit reports, the World Bank and ADB acted immediately
\nand firmly on the preliminary results of the fiduciary reviews
\nmade by their internal audit departments.<\/p>\n
Just witness how the two multilateral aid agencies have been
\nintolerant of irregularities or violations of budgetary and
\nprocurement procedures. Both abruptly stopped further
\ndisbursements of their loans to the projects on the two islands,
\nuntil thorough investigations are completed, necessary
\ncorrections are made and those responsible for the suspected
\nmalfeasance are dealt with firmly to prevent recurrence of such
\nwrongdoings.<\/p>\n
However, BPK chairman Satrio B. Joedono has long been
\nfrustrated by the government's seeming limitless tolerance of
\nbreaches of procurement procedures and prudent financial
\nmanagement.<\/p>\n
Over the past two decades, BPK has again and again discovered
\nthe same sorts of irregularities in the public financial
\nmanagement and public procurements, but the government has simply
\ndiscarded the agency's findings and recommendations, while the
\nagency is not vested with the authority to enforce the law.<\/p>\n
A bill designed to correct this legal flaw has been stuck at
\nthe House of Representatives for almost two years, again
\nindicating the government's lack of political resolve to develop
\ngood governance.<\/p>\n
Had not the projects in Sulawesi and North Sumatra been funded
\nby the two multilateral aid agencies or had the projects been
\ninspected only the government, the kind of evidence of collusion
\nthat was uncovered by the World Bank and ADB internal audit units
\nwould have simply been cast aside as petty negligence that did
\nnot deserve further investigation.<\/p>\n
Yet the findings of the World Bank-ADB review teams are mind-
\nboggling because the subterfuges deployed by the bidders in their
\nconspiracy were not so sophisticated as to escape the scrutiny of
\nproject management officials. Their tactics were instead so crude
\nthat they had been made effective only in collusion with
\nofficials.<\/p>\n
Take for example the evidence of different bidding firms being
\nowned by the same party and bidding for the same work contract or
\nthe similarities of bid proposals between the winning and losing
\nbidders. In several cases, dozens of contractors bidding against
\neach other on the same job shared the same address and same
\ntelephone numbers.<\/p>\n
The review teams also found many cases whereby bid documents
\nwere missing, completion certificates were issued for incomplete
\nworks and contractors were allowed to change various items during
\nwork contract implementation. This simply indicated overarching
\ncollusions involving winning bidders, project management
\nofficials and supervisory consultants assigned to oversee the
\nproject implementation.<\/p>\n
There were also many cases where contracts were not supported
\nwith proper documents, fund disbursements had been made based on
\nclaims written on plain pieces of paper without letterhead and
\nheavy equipment was procured without proper invoices.<\/p>\n
All these sorts of blatant collusive and questionable
\npractices could only have occurred because the government
\nprocurement system is so disorganized and corrupt. Such large,
\nmulti-sector projects such as the urban and rural development
\nworks in Sulawesi and North Sumatra, let alone those using
\nforeign loans, are subject to multilevel oversights spanning from
\nthe directorate general of urban and rural development in Jakarta
\nand the project managers down to project management units in
\nprovincial and district towns and project implementation units
\nfor each project component.<\/p>\n
The allegedly collusive procurements for the projects in
\nSulawesi and North Sumatra once again make it more imperative
\nthan ever for the government to review all its regulations on
\npublic procurement in light of developing an effective national
\npublic procurement system. After all, an effective procurement
\nsystem and accountable financial management are key components of
\nthe anticorruption campaign to build good governance.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/flawed-procurement-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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