Mayors have more authority on project tendering

JAKARTA (JP): Mayors and regents now have the authority to determine the winners of projects which have a value of up to Rp 2 billion (US$934,579) each, based on Presidential Decree No. 16/1994 on the implementation of state budgets.

The decree, which is a revision of Presidential Decree No. 29/1984, seeks to decentralize decision making.

According to the new decree, mayors and regents can decide on the executor of projects worth between Rp 2 billion and Rp 5 billion, pending approval from the governor, and of projects worth between Rp 5 billion and Rp 10 billion upon approval from the minister of home affairs. For projects valued at more than Rp 10 billion, approval must be obtained from the coordinating minister for economy and finance.

Previously, mayoralty and regency leaders were only allowed to decide on projects valued at Rp 500 million at the most.

The new decree, effective early this month, has also decentralized the authority to revise the lists of development projects worth no more than Rp 1 billion each.

This amount was previously Rp 200 million.

Decree No. 16/1994 also streamlines bidding procedures, since a bid attended by less than three parties does not need to be repeated and can be directly assessed.

The minimum number of participants for limited bids, which are opened for special projects, is now reduced to five selected parties from the previous 10 parties.

Initially, in the case of the withdrawal of a winner (or the one with the proposal with lowest cost), the second lowest-cost bidder can replace the winner if the cost in its new proposal does not exceed that of the initial winner's.

The new decree designates that the second lowest-cost bidder can propose a new price, as long as it does not exceed that of the owner's estimate.

The new decree stipulates that cooperatives and small and medium-scale firms can act as contractors of government projects.

Small and medium firms can acquire a 10 percent margin of preference when competing with larger companies if the cost of a project does not exceed Rp 200 million and if their assets reach Rp 400 million for construction entities and Rp 200 million for traders.

They can be given a 30 percent down-payment of the project's value, while larger firms can only be given 20 percent. (10)