Rules followed in Eurocopter purchase, says Ministry

KUALA LUMPUR, Oct 17 – The Ministry of Defence today reiterated that the acquisition of the Eurocopter EC725 helicopter was in accordance with the set regulations and without the influence of any party.

The Secretary General of the ministry, Datuk Abu Bakar Abdullah, in a statement today said that the price offered by Eurocopter in the tender to replace the Nuri aircraft was through an international open tender which opened on November 7, 2007.

He said the decision to acquire the Eurocopter aircraft was based on the comprehensive bid made by the company and after it scored the highest marks covering the technical assessment and the offer of a reasonable offset price.

“Eurocopter also offered a proven system and fulfilled the military specifications. The Royal Airforce of Malaysia (TUDM) is responsible for being  up to date with the latest information on current helicopter technology developments in the market which fulfill the needs of military operations.

“The assessment also took into account the suitability of use and the operations climate in Malaysia as well as in the conflicted areas in the world.

“TUDM indeed has full and comprehensive knowledge of the latest helicopters available in the market,” he said.

Abu Bakar said that after the open international tender was out, a briefing session was held on Dec 6, 2007, during the Langkawi International Marine and Aerospace (LIMA) exhibition and TUDM had provided the explanation on the technical and operational aspects expected of the potential aircraft to be purchased.

The representative from the Defence Industry Division meanwhile explained on the need for an offset package and this was in line with a letter issued by the Defence Ministry on Feb 4, 2005 on the Policy and Guideline on the Countertrade/Offset Programme. Among others, the programme stated that for any acquisition of defence equipment worth more than Euro 10 million or more, there should be an offer for countertrade/offset.

The open international tender was closed on February 12 this year and on the same date at 12 noon, the ministry’s Committee for Opening and Scheduling of Tender (JMMT) had opened all the offer documents received, witnessed by the participating companies’ representatives.

Abu Bakar said a total of seven offers were received with the bidding pricing including delivery charges.

The pricing offered by Eurocopter (Code tender: T521/07/A/006) was Euro 233,345,390.

Other tenders included T521/07/A/001 with the price in Pound Sterling amounting to 341,888,123; T521/07/A/002 (RM663,189,500), T521/07/A/003 (Euro 104,632,729); T521/07/A/004 (US$220,496,700); T521/07/A/005 (US$708,305,497) and T521/07/A/007 (US$348,178,365).

“These documents were further divided into three groups and enlisted for assessment by the Technical Assessment Committee, Offset Evaluation Committee and Price Assessment Committee.

“The output of all the three committees were tabled at the Tender A Board Meeting on July 22, 2008 and subsequently its endorsement submitted to the Finance Ministry on August 4, 2008.

“On Sept 3, 2008, the Defence Ministry received the decision and approval from the Finance Ministry to choose Eurocopter’s tender and the Ministry of Defence issued the Letter of Intention (LOI) to Eurocopter on Sept 15, 2008,”  Abu Bakar said.

The government earlier through a Cabinet meeting on July 18, 2007 had made the decision to acquire helicopters to replace the Nuri aircraft following wide complaints from the public on the performance of the Nuri. – Bernama

Sourced from TMI.

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The following comment by ‘forevermalaysian’ on the same article at TMI should bear further scrutiny:

Opened tender and evaluate papers only?
written by forevermalaysian, October 18, 2008

It’s apparent that they were no tender interview conducted to clarified all the submissions and eventually leading to shortlisting for further considerations.

The whole exercise was done merely based on paper and documents submission with no physical inspections, visits or qualifications to any alternatives being submitted. That’s why the vast differences in the tender prices because every tenderer may be offering different specifications and requirements.

The secretary general is just relating the whole procedures undertakened based on documentations available and scratching on the surface.

1. Our Public Works Department always insist on a pre-qualification tender exercise to determine the level of suitability of each tenderer. This is obvious from the statement that it was not carried out at all. I would assumed that this is our standard government policy for any tender.

2. “Following wide complaints from the public”. It was never known that any ministry takes public complaints as a directive to make acquisition of such nature especially when it involved this scale of funds. This have to be appeal and recommended with proper assesment by the relevant department for cabinet approval and not the other way round. It’s clear from the statement that the defence ministry did not make such proposal.

3. What is this “countertrade/offset” offer? to send another malaysian into space? do we really need this? are they relevant to the purchase?

4. Does the tendering conditions spelt out any maintenance, replacement and servicing programme? and for how long?

5. Between the dates of 12 February 08 (open tender) till 22 July 08, there were no elimination process or tender clarifications with tenderers to arrived at the final analysis for recomendation for award other than an endorsement of all the tabulations.

To conclude all these, I would take the example of genting’s bid for the singapore’s casino city which ran thru every process from pre-qualifications, shortlisting, evaluations, tendering, analysis and eventually leading to award.

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For the sake of clarity, let’s compare the equivalent approximate values in ringgit malaysia at prevailing forex based on the premise of 12 units to be purchased:

T521/07/A/001 – RM 2.103 billion (RM 175 million/unit)
T521/07/A/002 – RM 663 million (RM 55 million/unit)
T521/07/A/003 – RM 502 million (RM 42 million/unit)
T521/07/A/004 – RM 772 million (RM 64 million/unit)
T521/07/A/005 – RM 2.479 billion (RM 207 million/unit)
T521/07/A/006 – RM 1.120 billion (RM 93 million/unit) – Eurocopter
T521/07/A/007 – RM 1.219 billion (RM 102 million/unit)

[Forex – US$ 3.50 – Euro 4.80 – Pound Sterling 6.15]

Question – Why is the Eurocopter bid value mentioned in this report (approx RM 1.120 billion) significantly lower than the figure of RM 2.317 billion mentioned previously in the MSM reports and also in the Mentari letter?

There is also a lack of transparency and accountability from Mindef with regard to the corresponding supplier names to be attached to tender references provided in their statement.

As it is, the large price differential on the two Eurocopter valuations alone require further explanation from the MOD and MOF.

Screw the standard procedures, rules and chronological aspects of this government procurement. And in the absence of a physical pre-evaluation (test flight) of the helicopter, perhaps someone should be sent for medical evaluation instead.

Sooo.. I wanna know who’s gonna bell the effing cat-burglar?

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