Procurement Procedures for Unsolicited Proposal

Although the term unsolicited proposal is used globally, the respondents were more familiar with the term private-initiated project. Either they are not familiar with the term and the concept or they are not comfortable with the term unsolicited. When asked the numbers received as unsolicited proposals, Respondent R2, R3, R4, R5 and R6 stated that UKAS and clients did receive many of them. This is not surprising, since UKAS welcomes unsolicited proposals in their guideline. However, due to the confidentiality of the documents and information, the statistics on numbers of unsolicited proposals received by UKAS were unavailable. The impression given by the respondents were alike: Our project is mostly private initiated (Respondent R1); We receive quite a lot of privately initiated proposals

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believe every work section received many unsolicited proposals. Either they were sent directly to us or to the ministry and other stakeholders (Respondent R4); and Lately it is more private driven (Respondent R5). Respondent R5 however emphasised back again to the numbers of unsolicited proposals received. Yes, we received many unsolicited proposals, but not every project will be realised especially if it is not in the ministry’s or agency’s planning. According to Respondent R9, most of the proposals received were not feasible or were lopsided. Despite the benefits that can be brought by the private sector, there were attempts to squeeze the government for a supra-profit contract. Due to the vast numbers of unsolicited proposals received, the policy maker in UKAS admits there is a need for a proper method to manage it.

Figure 5.23 demonstrates the nodes for the overall picture of the respondents’ feedback on the practice of unsolicited proposals by UKAS.

Figure 5.23 - Procurement Procedures for Unsolicited Proposals

5.10.2.1 Open Tendering for Request for Proposal

Despite the perception of a link between unsolicited proposals and direct negotiations, UKAS did try to inculcate some element of competition for unsolicited proposals. Respondent R3 stressed that If there were more than one proposal for the same infrastructure, UKAS might suggest an open competition for Request for Proposal. In contrast, private practitioners may

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take the opposite view. Respondent R10 stated that it was unfair not to award a concession to the original proposer: But I don’t think it’s fair for an unsolicited proposal to be called for

another round of tendering. The original proposer has the advantage of having extra info and extra time for preparing the proposal. Sometimes I see this exercise as just a formality when in the end; they will still award it to the original proposer. Overall, the differences in these views are not surprising since the aims and objectives of the government and the private sector will not be the same. The government should always advocate good governance while the private sector aims for maximum profit.

5.10.2.2 Direct Negotiation with Original Proposer

From an expert’s point of view, Respondent R12 asserted that a pure private-initiated proposal typically comprised the private company’s own initiative and effort to conduct research, studies and the proposal of risk in implementation. There was also a hefty price absorbed by the private companies in order to produce the proposal. This explains why the private sector would prefer direct negotiation when submitting an unsolicited proposal. It is important to distinguish between the direct negotiation procurement procedures of a government-initiated project and a purely private-initiated unsolicited proposal. Unlike the government, the private company sees the potential and takes the risks, especially in implementation.

Respondent R4, however, suggested that, based on experience, Most of my projects are direct negotiation projects. It’s either because the project is complicated or they were the only one interested in initiating and sending us a proposal.

5.10.2.3 Swiss Challenge

Although the Swiss Challenge is nowhere mentioned in the UKAS guideline or on the UKAS website, UKAS have been experimenting with it but with no success. When asked to define

no success, Respondent R2 replied In the end, the original proposer’s offer is still the best. As shown in the nodes in Figure 5.23, the responses to implementation of the Swiss Challenge by UKAS are expressed in four nodes;

 Achieves competition – Respondent R3 was satisfied with the mechanism in dealing with unsolicited proposals: “Nevertheless the experience was ok and

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we know that by doing that we have alternatives. The prices submitted by other interested participants were quite competitive.

 Time consuming - Respondent R1 believed that the whole process of the Swiss Challenge was time consuming, stating Swiss Challenges can even take up to two years. It’s too long. … If six months, it’s ok. But can it be done in six months? If we can accomplish the Swiss Challenge process within one year, it is considered as an achievement. This may be caused by the unavailability of guidelines on dealing with unsolicited proposals.

 Feels an unethical move by the government – The respondents were also of the opinion that the Swiss Challenge is unfair and unethical. This can be seen by these responses: … I don’t think it’s fair for an unsolicited proposal to be

called for another round of tendering (Respondent R10); I’m not sure at that

time whether it’s the right thing to do, in the sense that the proposal was initiated by the private sector but yet we invited others to bid. We also added some requirements to the need statement for other companies (Respondent R3); On the other hand to call a competition exercise for an unsolicited proposal is not ethically right. PPP is not as simple as conventional procurement (Respondent R9). Another bold statement made by Respondent R9 was UKAS tried to avoid the Swiss Challenge if possible; to them it’s not

fair to the original proposer. The researcher observed that the views under this node were however based on sentiment by the respondents. The only problem legally related to unethical and unfair behaviour in the Swiss Challenge is the issue of the intellectual property, which can be managed in an appropriate way.

 Advantage to the original proposer –Theresearcher looked deeper into why the Swiss Challenge is undesirable. A clear indication given by an expert was that the process was merely a waste of time and money, for both government and the private sector. The reason given by Respondent R13 was, It’s a bit of

nonsense. To me I’m not keen simply because, the original proposer will have the edge against others. He knows what he is proposing. In this situation, the original proposer owns a Tunnel Boring Machine. He pointed out that, in whatever situation, the original proposer will always hold an upper edge in a

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Swiss Challenge. The reason for this advantage was spelled out by Respondent R10: The original proposer has the advantage of having extra info and extra time for preparing the proposal. Sometimes I see this exercise as just a formality when in the end they will still award it to the original proposer. This view is supported by Respondent R9: We can see that whoever proposes a project will have the upper hand in terms of knowing what they want; how to do it; what business model they are going to propose and present to the government.

Notwithstanding the good intention of organising competition through Swiss Challenge, Respondent R2 believed that it could not achieve competition since it would not attract other bidders. He stated that Normally since a private company initiated a proposal, they will be the only one interested with that project. Failure to attract bidders defeats the purpose of having a Swiss Challenge.

5.11New Economic Policy

The government created the New Economic Policy much earlier than the PPP programme, and even earlier than privatisation. Since then, it has been used to in an attempt to balance the socio-economic equality of the multi-racial citizens of Malaysia, consequently aiming for national unity. As tools to achieve the national agenda, privatisation and PPP have been used. Little is known about the implementation of the New Economic Policy incorporated in the PPP procurement process by UKAS. In public procurement regulations set by the Malaysian Treasury, there are clear guidelines on the implementation of the New Economic Policy, although there are none for the PPP procurement process. As discussed in an earlier section, UKAS did not follow the public procurement regulations. Figure 5.24 shows the findings derived for the New Economic Policy incorporated within PPP in nodes.

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Figure 5.24 - New Economic Policy