Open tender the way forward

(File pix) Pix by Ahmad Othman

THE suggestion by Prime Minister Tun Dr Mahathir Mohamad that, henceforth, public procurement will be by open tender is indeed welcome news.

There will not be any more direct negotiated tenders and limited tenders that had, until now, been awarded without an open tender. The lack of transparency is among the reasons that the national debt has increased, according to Economic Affairs Minister Datuk Seri Azmin Ali. To avoid the further ballooning of national debt, the way forward is to award contracts by open tender.

Open tendering provides an effective way by which companies can tender based on the expertise available in their organisations.

However, open tendering does not mean that a supplier cannot be reappointed. If the organisation is the best to deliver the services or goods, then the tender can be awarded again to the same tenderer.

When a procurement exercise is carried out in accordance with the fundamental principles of public procurement, it helps to streamline processes, reduce raw material prices and costs, and assists in identifying better sources of supply.

The main culprit in public procurement is vulnerability to corruption.

The financial interests at stake, the volume of transactions and the close interaction between public and private sectors in the award of public contracts are perceived to be of high risk to integrity.

In an open tender exercise, the bidding is open to all qualified bidders and the sealed bids are opened in public. The criteria for selection will be objective, with clear technical specifications, in simple language. Most, not all, will be chosen on the basis of price and quality. There will not be any negotiation with the tenderers.

In making the decision, sometimes, the price factor may not be the deciding factor, as the quality of work and the track record of bidders will take precedence.

Hence, the name competitive tender or public tender.

Due to the fact of the style that open tender employs, it has been opined that it is primarily designed for the procurement of simple goods, and not for complex procurements, where the focus is more on output and outcome of the contracting process rather than on strict adherence to standards.

However, this can be overcome as the open bid can still be used for large complex projects by the filtration method. The client may then call for a pre-qualification process that produces a shortlist of suitable tenderers by asking them for an expression of interest.

The shortlisted bidders will be invited to participate in the tender process.

The open tender method is not without disadvantages, as it requires strict adherence to procedures and, depending on the kind of procurement, may be lengthy. The process has been criticised for being slow and costly, attracting a large number of expressions of interest from bidders who may be unsuitable for the contract. The filtering process takes time and costs money.

However, the benefits of open tendering are many. It offers the greatest competition and has the advantage of allowing new or emerging suppliers to try and secure contracts. This facilitates greater innovation. By employing the filtration process, or the prequalification process, the number of firms tendering can be reduced.

Having a standard framework questionnaire can reduce the time and effort on the part of the tenderers when applying for the work, as they will know if they are competent to tender for the particular project.

Open tender method provides the best possible value for money.

It ensures a healthy and competitive marketplace with companies providing the best products and services. Suppliers will be encouraged to deliver on time, adhere to the quality required and offer competitive prices.

A government or organisation that subscribes to the open tender system shows the mark of good governance.


Research fellow, Faculty of Law, University of Malaya.

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