FACULTY OF ADMINISTRATIVE SCIENCE & POLICY STUDIES

DIPLOMA IN PUBLIC ADMINISTRATION

(OCTOBER 2022 – FEBRUARY 2023)

PAD 370
PUBLIC FINANCIAL ADMINISTRATION
ISSUES IN GOVERNMENT PROCUREMENT

GROUP:
AM1105D

PREPARED BY:

NAME MATRIC
MUHAMMAD ADIB LUQMAN BIN MOHD HAMIZAN 2020851598
MUHAMMAD AFIQ AIMAN MAULA MUHAMD BASIRUN 2020892348
NUR SITI BATRISYA BINTI NORAZMAN 2020479038
NUR IFFAH ISZA BINTI ISA 2020821122
MUHAMMAD ALIF FARIS BIN MOHD AZHAR 2020845472
NUR JASMINE BINTI SHAHZAN 2020472042

PREPARED FOR:
DR. ILYAS BIN ABDULLLAH
FACULTY OF ADMINISTRATIVE SCIENCE & POLICY STUDIES

DATE OF SUBMISSION:
31/12/2022
 ACKNOWLEDGEMENT

This written assignment has taken a lot of time and work on our part. However, the
completion of this project would not have been achievable without the help and advice of a large
number of people. We want to express our heartfelt gratitude to every one of them. First and
foremost, praise and appreciation to Allah S.W.T, the Almighty, for showering His blessings on
us throughout our study effort and allowing us to complete our written assignment successfully.
Without any participation and endless support from many people who contributed to this project,
it would not have been possible to complete the assignment. However, we want to convey our
gratitude and obligation to our lecturer and family members for their unwavering support,
kindness, and patience during the project.

In order to achieve our mission, we needed to recruit the help and counsel of a few well-
known people, and we owe them our utmost appreciation. We are happy with how this project
turned out. We wanted to state our most tremendous thankfulness to Dr. Ilyas bin Abdullah as our
course lecturer to provide us with a decent assignment guideline through multiple talks and
explanation. We had also like to thank everyone who has assisted us in the writing of this
assignment, both internally and externally. We would also like to express our appreciation for our
college for providing us with all of the materials we required for the project. With that, we end this
with thousands of appreciations and thanks.

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 TABLE OF CONTENTS

ACKNOWLEDGEMENT ........................................................................................................................ 2

1.1 INTRODUCTION ............................................................................................................................... 4

2.1 ISSUE 1: PERSONNEL INVOLVED IN THE PROCUREMENT SYSTEM ........................... 8

3.1 ISSUE 2 : ETHICAL CONCERNS IN THE PROCUREMENT OF PROJECTS ................... 11

4.1 ISSUE 3 : GREEN GOVERNMENT PROCUREMENT,

ENVIRONMENTALDEGRADATION ............................................................................................... 13

4.1.1 Familiarity with policies on green government procurement .......................................... 14

4.1.2 Organization initiatives in supporting the green government procurement ........................ 15

4.1.3 Supplier availability to produce eco-friedly products ........................................................... 15

5.1 DISCUSSION 1: A GROWING FOCUS ON SUCCESSFUL PROCUREMENT

MANAGEMENT ..................................................................................................................................... 16

6.1 DISCUSSION 2 : 4 ESSENTIAL RESEARCH DIMENSIONS FOR SUCCESSFUL

PROCUREMENT .................................................................................................................................... 21

6.1.1 Purpose of procurement for sustainable competitive advantage ...................................... 21

6.1.2 Scope of procurement: value creation and delivery ......................................................... 22

6.1.3 Professional development of procurement ....................................................................... 23

6.1.4 Technologies for procurement ......................................................................................... 23

6.1.5 Performance measures of procurement ............................................................................ 24

7.1 CONCLUSION .................................................................................................................................. 25

REFERENCES ......................................................................................................................................... 26

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1.1 INTRODUCTION

The term "government procurement" defines the purchasing of goods, services, or labour
(or any combination thereof) by an agency that has been granted permission by the Treasury to do
so, with funds that have been appropriated by the federal government (in whole or in part), for the
purposes of the agency's operations, the delivery of government services, or the protection of the
public interest (Malaysia, 2022) Acquisitions that are carried out using the Public Private
Partnership (PPP) financing method, whether through the Build operate-Transfer (BOT) method
or work concession contracts, as well as other methods of a similar nature, are not considered to
be examples of government procurement by the Public Private Partnership Unit, Prime Minister's
Department (UKAS, JPM).

Procurement can be done through five methods, namely casual/direct purchase, quotation,
tender, emergency purchase and foreign purchase (Malaysia, 2022) Firstly, the direct/casual
purchase. Direct Purchase is understood to mean buying goods or services with an annual cost of
up to RM20,000 or through a contract (Perbendaharaan Malaysia Kerajaan Malaysia, 2022) Each
type of item is seen as a good or service that serves the same purpose and can be bought from a
single source. This makes it possible to plan for procurement. Using the Rate Table Price,
requisition work is also seen as small jobs and repairs that don't change the original structure. Also,
up to RM50,000 can be spent directly with suppliers or companies registered with the Ministry of
Finance for printing services, travel agent services, the supply of overseas printed books, and
Multimodal Transport Operator (MTO) services (Perbendaharaan Malaysia Kerajaan Malaysia,
2022) Next, the Central Contract and Centralized Panel Contract items must be bought from the
company that handles that type of contract.

Secondly, quotation. Basically, the quotation has rules. That is firstly, the agency must
first look at the annual procurement value or the value of the contract to decide whether to use the
quotation method of procurement. Agencies are not allowed to split up the buying of supplies,
services, or work to avoid invitations for quotes or tenders. Both agencies are allowed to do job
acquisition as a package, which includes master work and work that uses Cost Money Prime.
However, the Agency will require the main contractor to hire subcontractors who are registered
with CIDB and have a Government Employment Certificate (SPKK) in Grade, Category, and the

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relevant specialisation. (Perbendaharaan Malaysia Kerajaan Malaysia, 2022) Furthermore, when
making a purchase between RM20,000 and RM200,000, the department is required to solicit bids
from at least five (5) vendors who are approved by MOF to sell the item's code. Work procurement
also a necessitated quotation. According to the Civil Engineering Standard Methods of
Measurement, these prices should be between RM20,000 and RM100,000 (CESMM). When
purchasing services or goods costing more than RM20,000 but less than RM500,000, a minimum
of five quotations must be invited (5). A PKK and CIDB registration are mandatory for all
interested contractors. The district or neighbouring district's 'Class F' contractors will vote on who
will serve as the contractor (CIDB Malaysia, 2021) However, before obtaining quotes, the
Technical Department of the Treasury must be consulted with any repairs, maintenance, or
renovations that necessitated adjustments.

Thirdly, tender. Tender is a process that must be used to buy works, supplies, and services
that cost more than RM500,000 (Perbendaharaan Malaysia Kerajaan Malaysia, 2022) The
Government must register all contractors who want to bid on local contracts. If there are no
supplies or services that can be made or found locally, international bids will be called for. For
certain jobs, if local contractors don't have the right skills and knowledge, they may be asked to
work with foreign contractors in a joint venture to help transfer technology. When local contractors
don't have the skills or knowledge to do the job and a joint venture isn't an option, international
bids may be called. Limited tender was for goods and services that didn't cost more than RM5
million and were okayed by the agency's Procurement Board. Most of the time, only Bumiputera
suppliers can do it. All bids worth more than RM5 million must be approved by the treasury.

There are four (4) types of tenders that are Open Tender, Selective Tender, Negotiated
Tender and Single-Stage and Two-Stage Tender. Firstly, Open Tender. The primary method of
procurement that is utilised by both the public sector and the commercial sector is known as open
tendering. An open tendering process allows anybody to submit a bid to supply the required goods
or services and provides an equal opportunity for any organisation to submit a bid. Open tendering
also ensures that all bids are evaluated fairly. The engineering and construction industries are the
ones that use this particular form of tender the most frequently. The open solicitation of bids from
potential suppliers results in the most intense level of competition among those providers, and it
also provides opportunity for new or nascent suppliers to compete for work. However, it is possible

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that not all of those who bid will be qualified for the job, thus a longer period of time will be
needed to analyse the proposals. Secondly, Selective Tender. Only invited vendors may submit
their proposals in a procedure known as selective tendering. These vendors are those who have
already demonstrated their ability to fulfil the conditions of a contract with the necessary scope,
complexity, and scale. When a selected bidding process is implemented, clients are more confident
that their needs will be satisfied. Contracts requiring specialised knowledge, complexity, or
contracts for which there are only a few appropriate firms may benefit the most from it. However,
smaller suppliers or those who are still trying to establish themselves in a new market may be shut
out of the market as a result. Thirdly, tender with negotiations. Throughout the engineering and
construction industries, negotiated tenders are utilised often, from the initial bidding stage to the
resolution of any issues that may arise. If the contract's execution will need extensive specialised
knowledge or if the scope of the existing contract needs to be expanded, it may make sense to
negotiate with a single supplier. It is cost-effective and encourages early participation from
contractors. Having the contractor on board for the duration of the project facilitates open lines of
communication and the free flow of data and finally, the tenders that have one or two stages.
Single-stage tendering is utilised when all relevant information needed to set a reasonable price is
readily available at the outset of the bidding process. Potential vendors receive a request for
proposals, which they use to formulate and submit their proposals. After talks, a preferred tenderer
is selected and considered for employment. So that a supplier can be selected rapidly, even before
they have all the information, they need to propose a fixed price, two-stage tendering is utilised.
First, a time-restricted appointment is set up so that work can begin. The second stage involves
settling on a firm price for the contract.

Next, emergency purchase. The term "emergency purchase" refers to a purchase that is
either made during an emergency time or is scheduled to be done promptly; any delay in the
procurement process will have a negative impact on national interest. The purchase made during
the emergency period must solely satisfy the requirements for the emergency. As a result, the
processes come first, and their scope is restricted to meeting the requirements of an emergency.
Second, it is necessary for it to write up a report on the emergency purchase. Next, one-month
period given to submit the work to the Controlling Officer. The report should be delivered to the
Secretary General of the Treasury (for the federal government) or the State Financial Officer (for

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the state government) within a month (Perbendaharaan Malaysia, 2020) The examples of
emergency purchase, are in the event of war, heavy floods or natural disaster.

Lastly, foreign purchase. Foreign purchase is the acquisition of items that are not made
available by the local providers (Malaysia, 2022) Local vendors are the ones who create the
advertisements. Publicity for the offer is generated both internally and externally through
advertisements. The first steps in the procurement process are preparation and decision-making
over what to acquire, followed by selecting the quantity and pricing. Secondly, picking the
supplier, and evaluating the supplier's previous performance are the two steps in this process.
Following this step is the preparation of the contract agreement, as well as the monitoring of the
services or fulfilment according to the agreement. The next step is to make sure that the products
are delivered on schedule, are in satisfactory shape, and live up to the quality requirements outlined
in the contract.

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2.1 ISSUE 1: PERSONNEL INVOLVED IN THE PROCUREMENT SYSTEM
One of the most significant aspects that contribute to the inefficiency of the procurement
system is the personnel that is involved in the process. Management practices should be the
primary focus of attention because the working culture is highly dependent on such practices. An
efficient management system is one of the most effective techniques for disease prevention. It
encourages transparency and accountability, makes supervision easier, and gives a solid
foundation on which to build an anti-corruption strategy. One local authority implements a rotation
policy for its finance officers, allowing each officer to have exposure to a unique set of working
conditions and circumstances, such as those associated with finance, procurement, or human
resources. On the other hand, some procurement officials have proposed that the employees should
only be rotated once every five years so that individuals have sufficient time to become educated
in the role that they are now holding. Additionally, by rotating the employees, it is possible to
prevent deep and prolonged relationships from developing between the officers and particular
powerful contractors who want the officers to operate as insider informants. (Hui et all., 2011)

The rotation is a requirement that even applies to contractors. In Malacca, a newly

developed method that is both innovative and efficient has been implemented for rotating
contractors. There are 44 different sites where the trash can be collected. Nevertheless, the council
chooses 45 companies to work on the project. In order to collect garbage, specific areas of duty
have been assigned to each of the 44 contractors. The garbage that was left behind by the other 44
contractors would be collected by the 45th contractor when they went around the area. After then,
the 45th contractor would submit a claim for any garbage that they had collected. In a nutshell, the
ineffectiveness of the work performed by other appointed contractors contributes to the payment
of the contractor. Additionally, a scorecard detailing each contractor's performance is kept on file
for evaluation purposes. In addition, the municipal council is able to track down contractors that
outsource some of their work to other businesses. In this scenario, the principal contractor would
be subject to penalties for any delays as well as for any jobs that were not completed. (Hui et all.,
2011)

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 The job rotation in procurement is quite important since the personnel will feel they still
have a lot to learn in the organization and not leave the organization too early due to the reason
them feeling like they’re doing the same job every day or quitting the job because of them finding
other jobs in other places.

Training is also an important part of making sure that the whole tender process goes quickly
and smoothly. Top senior officers who know the ins and outs of how the government buys things
must give the new officers the right orientation and training. This is important for officers and
accountants who are in charge of e-procurement. But local governments don't have enough
training. The officer must have been trained and know all of the rules about procurement and
procedures related to it. They need to know exactly what they can do and what they can't. (Hui et
all., 2011) If the officer didn’t go through enough training, it could affect the organization in terms
of ignorance and poor practices towards the procurement system. Ignorance is inexcusable when
it comes to procurement, and bad procedures can have tragic results. It can range from low-impact
issues like irate customers leaving bad reviews to high-impact issues like reputation and brand
image issues. These issues frequently result in the bidding process being ruined or in future bid
possibilities being lost (Chui, 2022).

Officers must keep learning about different parts of procurement and the documents and
agreements that go with it. As part of their training plans, they should also go to other local
governments for academic visits and workshops where they can talk with other local government
officers and learn from them. Soft skills, like customer service, should also be emphasised when
working with the public. A talk or seminar on accounting, information technology, or management
should also be helpful. For example, officers can use soft skills when negotiating with supplier
representatives. (Halliday, 2016)

If they are good at communication and adapting to any situation, then a successful
negotiation will be achieved. Every month, there should be a campaign to raise awareness of issues
like shopping from an Islamic perspective and advocating transparency as a method to do business.
Some council members believed they were the only ones with the authority to decide and that
others could never challenge their judgement. They should learn about corruption and
wrongdoings like signing off on work that hasn't been done yet to get paid. In addition to training,
every officer should have meetings every two weeks to talk about their KPIs. This way, the

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progress and results of procurement, quotation, and tender can be closely watched. (Hui et all.,
2011)

Based on the information provided above, it has been determined that the implementation
of rotation principles for procurement officers and contractors, the creation of multidisciplinary
and multiparty evaluation committees, the establishment of accountability and report procedures,
the establishment of multidisciplinary and multiparty evaluation committees, and the adequate
training of procurement officers are essential strategies for combating corruption and pro-
corruption. There is a requirement for incentives that encourage "good conduct" on the part of
employees, such as performance-based staff incentive structures. (Hui et all., 2011)

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3.1 ISSUE 2: ETHICAL CONCERNS IN THE PROCUREMENT OF PROJECTS
The term "procurement" refers to a collection of actions made by a client to obtain a new
structure as a method for attaining project goals and maximising value for money while taking
risks into consideration and influencing decisions about the project's funding source and asset
ownership. Project procurement is one of the topics that practitioners and researchers have focused
on in their extensive discussions and debates about ethics in project management. One of the main
project management areas that has contributed to ethical problems during project implementation
has been identified as this one (Hassim et al., 2010). Ethics include more than just behaviour it
also takes into account one's thoughts, language, reasoning, processes, and judgement, all of which
influence the decisions one makes on a daily basis that have an impact on both their own and other
people's wellbeing. It is not just about how we act, think, or conduct. There are more aspects that
determine whether we act in an ethical or immoral manner, which in turn influences how we make
decisions (Hassim et al., 2010).

Several ethical problems can arise in relation to the project procurement procedures. First,
there are matters of influence, where conduct or acts like giving presents to sellers, providing
entertainment, or outright bribery may have a negative impact on or appear to have a bad impact
on purchasing decisions. Second, perceived improper behaviour, such as the perception of
dishonesty or compromising behaviour in interactions, deeds, and communications. Thirdly, any
conflicts of interest, whether they be personal, professional, or stem from other actions that go
against the employer's legitimate interests (Hassim et al., 2010). Next, private and confidential
material that violates privacy, non-disclosure, and intellectual property rights reciprocity that
involves improper reciprocal agreements is another. Last but not least, infractions of law, rules,
and trade agreements (Hassim et al., 2010).

There are numerous reasons why people get involved in unethical project procurement
practises. The project procurement process is where the majority of these unethical behaviours
occur. One of the elements, that lead to unethical project procurement behaviour is Economic
downturn. Most industries experienced financial challenges during the economic downturn; the
construction sector in particular. According to Works Ministry (2009), most industries experienced
financial challenges during the economic downturn, the construction sector in particular. these
businesses are prepared to do anything to survive the crisis, especially if it means winning contracts

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or projects from the public sector. For instance, from 2017 through August of this year, the
Malaysian Anti-Corruption Commission (MACC) arrested 59 workers of public and private
colleges for corruption; 49 of them have since been charged in court. In one recent example, a
director of a public university was accused of accepting a car as payment for allegedly helping a
business win a RM1.6 million contract. In another, a university lecturer was detained for reportedly
making false statements totalling RM66,000 about a research fund (The Star Online, 2022).

The next part is the non-Transparent selection process. The fact that the selection process
is not clear is one of the main things that leads to ethical problems in plan procurement. For
example, government contracts and concessions do not always lead to the best results (Beh, 2007).
Also, the Public Works Department of Malaysia is being criticised for the mistakes with MRR2,
the Matrade Building, and the Navy Recruit Training Centre, which cost billions of ringgits and
have been blamed on corruption (Beh, 2007). Today, the Matrade projects are still not done, and
the MRR2 project is having trouble because pile faults were found. Thus, in order to avoid these
problems with how a project is carried out, it is important that the process of getting plans is clear.
In order to answer the following questions, public sector procurement processes must be open and
clear. This is to avoid ethical problems.

During the planning process for a purchase, any ethical problems or unethical behaviour
should be dealt with. For example, what procurement systems does the ministry use? How can it
improve its procurement practises to avoid ethical problems? Who will be involved in the plan
procurement? How can the public sector make the plan procurement process transparent in a way
that upholds moral principles? (Hassim et al., 2010). These questions will help the public sector
figure out how to handle moral problems that come up during the procurement process.

The organisation, as well as external elements like governmental policy, the economics,
politics, and social issues, are all impacted by ethical dilemmas in addition to individual behaviour.
In order to minimise challenges in meeting project procurement needs and objectives, which could
result in a high risk of project completion, the pre-stage of project procurement is a crucial step of
project procurement management.

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4.1 ISSUE 3: GREEN GOVERNMENT PROCUREMENT, ENVIRONMENTAL
DEGRADATION
One of the important topics that is currently being actively explored on a worldwide scale
is sustainability. Due to growing environmental awareness, the green trend of protecting the
environment and saving resources is sweeping the globe. In response to the argument made in
support of boosting public procurement regulations that encourage the manufacture and
dissemination of ecologically sound goods and services, many nations have actively embraced the
sustainable green living concept in their day-to-day lives. (WSSD, 2002). Public procurement has
been acknowledged as an essential tool for promoting the use of more environmentally friendly
goods and services as a component of sustainable development. Government spending, which is
regarded as the primary consumer in both developed and developing nations, accounts for a sizable
share of total public spending (UNEP, 2011). Public procurement is being used by nations, both
in developed and developing countries, to pursue social goals like lowering the unemployment
rate, raising the minimum wage, and giving disabled people employment opportunity. Gender,
racial, and ethnic equality are also promoted by using public procurement (McCrudden, 2004).

The Malaysian administrative system considers public procurement to be a crucial element.

It has been identified as a key tool for reaching socioeconomic and development goals. A decision
has been made by the government to introduce Green Government Procurement (GGP) procedures
in Malaysia as a result of this issue. Green Government Procurement (GGP) has been widely
adopted in many nations, including the UK, Canada, Japan, and the EU nations. The pledges made
by the government to preserve an environment that the entire community can imitate can be used
to measure the implementation of GGP. The goal of GGP is to encourage manufacturers to develop
and produce products that are environmentally friendly through public purchasing initiatives,
thereby reducing the environmental effect of consumer goods across their entire life cycles
(Alhola, 2008). The proper implementation of green government procurement is urgently required
due to growing environmental concerns and the depletion of resources and may have a higher
impact in developing countries than in developed ones (Geng & Doberstein, 2008). By putting the
GGP into place, the government will be able to do two important things: buy things on the market
and regulate it by using its buying power to promote ideas of social justice (McCrudden, 2004).
Hence o, the government has to do a lot to increase the demand for environmentally friendly
products and get businesses involved in green projects.
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 The GGP effort is talked about in Chapter 6 of the 10th Malaysian Plan, which is about
valuing the country's environmental assets. The main goal of Malaysian government procurement
is to help policy efforts by getting the best value when buying goods, services, and labour. The
Malaysian government will take the lead by acting in line with environmental sustainability, which
focuses on protecting the environment, creating business models, and setting values that can help
solve environmental problems (EPU, 2010). However, and because there are no clear policies and
procedures in place yet, GGP is still seen as a new idea in Malaysia (IGPN, 2010). The Government
is working hard with KeTTHA and the Ministry of Finance to come up with specific rules and
policies for GGP. The Malaysian government has set a goal that by 2020, an eco-label will be on
50% of all goods and services from all ministries. Even though GGP practises are still pretty new
in Malaysia, this is the circumstance on what actually happens (PEMANDU, 2010). The
government is also working with SIRIM to create eco-labelling for regional goods, which will help
green purchasing around the world.

The Malaysian government has started a few programmes to get people to buy things in a
more environmentally friendly way. Awareness campaigns are one way to make sure that a policy
or programme is carried out well. The Green Technology and Eco-Products Exhibition (IEGM)
will feature green technology, eco-products, and services to promote green growth and Malaysia
as a centre for green technology. There are many ways to tell if a government purchase is green
(GGP).

4.1.1 Familiarity with policies on green government procurement

The first key indicators of Green Government Procurement are familiarity with policies.
Implementation of green procurement methods in the organisations is influenced by familiarity
with policies, legislation, and regulations connected to procurement. According to Alhola (2008),
the organization's procurement unit must be familiar with the rules, laws, and regulations that are
relevant to the tendering and contracting processes. Given that GGP practises are linked to the
sustainability idea, the policies must be in line with an environmentally friendly setting, including
consideration of environmental factors when awarding contracts and tenders to suppliers.

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4.1.2 Organizational initiatives in supporting the green government procurement
Organizations are crucial in putting green government procurement strategies into effect.
It was stated by Gelderman (2006), who discovered that the organisation itself plays a crucial role
in the GGP practises in countries of the European Union. The strategy and directives of senior
management in government organisations may have a significant impact on the compliance
behaviour of purchasing staff. The GGP practises can be used to assess an organization's
commitment to environmental issues (Salam, 2008). It demonstrates the organization's desire to
realise the goals set forth by the Malaysian government in terms of national ambitions.

4.1.3 Supplier availability to produce eco-friedly products

In Malaysia, the adoption of GGP principles is crucially dependent on suppliers. The
importance of offering products and services made with sustainable practises will enable public
sector organisations to successfully implement GGP principles (Walker & Brammer, 2009).
Additionally, the view of public procurers regarding the supplier's preparedness to act is likely to
have an impact on compliance with the requirements. Due to their regard for the suppliers, the
buyer may consider the suppliers' familiarity and knowledge of the rules when presenting them
with a tender or contract.

Even though GGP is a relatively new idea in Malaysia, the country's government has
demonstrated its dedication to putting this strategy into impacts. If just the government is involved
in carrying out the policy, the aims will not be achieved. To work together to accomplish the
intended result, the government-affiliated corporation (GLC), statutory organisations, ministries,
private companies, and the citizens themselves must each play their part. In general, it is
anticipated that the implementation of GGP in Malaysia will accelerate the country's economic
and social development and consequently raise the standard of living of its citizens.

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5.1 DISCUSSION 1: A GROWING FOCUS ON SUCCESSFUL PROCUREMENT
MANAGEMENT
The source-to-settle technique is another name for the procurement management process.
It involves assessing, choosing, and creating formal contracts as well as keeping the business's
continuous relationships with suppliers. The field of procurement encompasses a wide range of
actions that are all connected. The source-to-settle cycle is completed by the procurement
management process, which includes transactional purchases of goods and services as well as
integration with accounts payable by delivering supporting documents to aid in the processing of
supplier invoices for payment.

Malaysia's procurement system is made up of three different parts: direct purchase, tender,
which can be both open and closed, and direct negotiation. The Ministry of Finance in Malaysia
puts the rules, regulations, and policy guidelines for different types of procurement in print and on
its website so that procurement officials and users, mostly contractors, can use them. Most of the
time, direct purchase procurement is used for purchases that cost less than RM50,000. The
procurement system will ask departments that need things to fill out several copies of "demand
forms." After that, the request forms are sent to the buying department for approval. The
purchasing specialist will call a lot of different vendors to find out about prices, products, and
shipping times. After hearing what the suppliers have to say, the buying officers will do an analysis
to figure out which goods to buy. The person will then give the purchase order and finish the
transaction. Closed tendering would be used for purchases between RM50,000 and RM200,000,
and open tendering would be used for purchases over RM200,000. Direct negotiation should only
be used when it is absolutely necessary; in this case, an open bid should not be used. Since there
is only one source and the purchase must be made right away, there is no way to compare prices
and specs. In general, the chosen contractor must be a professional with a good reputation for
dependability, broad knowledge, careful planning, attractive price terms, and, most importantly,
must be the only supplier or contractor in the country for getting the item. Because of this, it is
likely that direct negotiation will go faster than open tender. Even though direct negotiation is
faster, all of the necessary rules must still be followed at every step (Hui et al., 2011)

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 It is clear that the idea of procurement has changed over time to take into account long-
term goals and new ways of doing business. Before the 1970s, procurement was just a specialized
back-office job that helped several departments and business processes run in order. During this
time, procurement had to put the interests of suppliers first, and an "arm's length" relationship was
generally seen as the norm. In the 1980s and 1990s, running multiple business operations at the
same time required cooperation within the organization. This gave the procurement function a key
role and helped cross-functional activities. In response to a more dynamic and competitive market
environment, procurement techniques become more complex. Because there are more and more
options for outsourcing, the procurement function now requires not only cross-functional
integration but also extensive inter-organizational integration procedures. As a result, building
relationships between organizations has become more important, and procurement has become a
strategic corporate strategy for long-term competitive advantage (Hui et al., 2011). As was already
said, traditional procurement has been replaced by strategic procurement in order to gain a
competitive edge. As a result, the supplier base is expanded to include global regions, the scope of
procurement is expanded from the firm to the inter-organizational level, and a collaboration-based,
efficient governance mechanism is used to cover different levels of supplier networks. This point
of view says that happy customers are the result of good procurement management and effective
supply chain optimization. In the procurement concept, the focus on making money right away is
being replaced by a basic business strategy based on long-term success.

The first thing that is becoming more important for good procurement management is
transparency. In all of its services, the Malaysian government cares most about being open and
honest. With transparency, everyone has the same chances and access. Transparency International
(2006) defined it as making laws, regulations, institutions, plans, processes, and decisions available
to the public, or at least to public representatives, so that processes and decisions can be monitored,
reviewed, commented on, and changed by stakeholders and decision makers can be held
accountable for them. When the procurement process is clearer, it is less likely to be abused or
skewed. Transparency in a system for buying things has been a big deal in the public sector for a
long time, and it is still considered as a sensitive subject. Due to of the way things have always
been done, bad things like corruption have happened in many places. Lack of transparency in
procurement processes, especially in the public sector, can sometimes lead to bad things like
corruption, scandals, and misuse of public funds. People have said that the old way of buying
17
things is not good enough because it is not clear, costs more, and takes longer to develop. When
there are not enough resources, it takes longer to build projects and buy goods and services. People
who pay taxes often have problems and are unhappy, and they often say so in newspapers and
other public places. The first procurement system needs to figure out what needs to be bought
based on needs and demand, not to help irresponsible people get what they want. The government
has the power to decide whether to buy, sell, or outsource goods, services, or the management of
units. The risk is that the choice is made because someone wants to get something out of it, not
because it is the right thing to do or because it is necessary. When it comes to rules for buying
things, honesty should come before secrecy. Only pre-qualified suppliers should be allowed to bid,
and all suppliers should have the same access to information. All paperwork should also be public
and easy to find. The users say that evaluation and picking contractors are two big areas that need
more openness. Most likely, not all of the people who put in bids will get the job. The hardest part
is picking the best contractor for the job. A lot of the time, the job does not go to the "best
candidate." When looking at and choosing contractors, it is important to think about things like
their track record, expertise, and ability to finish work on time. People should not do things "under
the table" because it was an act of dishonesty. Things must be done in a fair and just way in order
to get them. Cronyism is not okay, especially when it comes to small projects. The rules were made
so that things would be more open and accountable, especially when choosing suppliers. But there
should be a balance between how much transparency is shown and how much it helps stop
corruption. Other things, like how well things work, should also be taken into account (OECD,
2007). In reality, many countries have changed how open and transparent their procurement
process is based on things like how sensitive the information is and how unique and valuable the
public procurement is. (Hui et al., 2011)

The most difficult thing for the tender committee to do is figure out how much different
kinds of work and services cost. This is the next rising issue. Because the prices of raw building
materials on the market can change, they do not have clear and accurate rules for how to make
estimation. Most of the time, the estimate given is just a guess. The committee will then compare
the contractor's costs to what they thought they would be. In some situations, a new bid may be
needed because the price given is much higher than what was expected. For example, the
procurement officer in Penang says that some Technical Department workers are close with
contractors, which could affect how professional they are when they are asked to give estimates
18
for upcoming projects. The officers should not tell anyone else about the estimates and should
keep them a secret. But because the officers are so busy, estimates are sometimes made by lower-
ranking staff when the officers are too busy. A ministry representative says that officers are
working with the contractors to come up with five quotes. If one of the quotes is chosen, they will
all get the same amount of money. The estimate needs to be carefully sealed and kept in a safe
place. However, sometimes insiders leak information to contractors or bidders about what prices
they should offer when they tender. Most contractors who do not know anyone on the inside had
to add 10% more to their budget estimates for building materials every year because the prices of
building materials were going up. But this would not mean that they would definitely get the bid.
Some contractors cannot finish the jobs they were given because their bids were too low and there
is a lot of competition. Some contractors are greedy and bid very low prices to get the contract,
since the government tends to go with the lowest price without looking at the experience or quality
of the contractor's work. It would be better for the government to pay a little bit more to get better
work.

Subsequently, professionalism and ethics are the next issue that comes up. The flaws in
tender estimation described above, in which officers worked with contractors to come up with five
quotes, showed a lack of trust, professionalism, and ethics, which led to insider trading. Leaking
information makes contractors compete with each other in a way that is not fair, which makes them
unhappy. Officers and contractors sometimes check each other's work at the project claim stage.
One of the biggest problems is when procurement officers or people in charge of making changes
protect contractors' statements that are misleading or wrong. The contract says that before any
payment is made, the committee has to make sure that the claim is made in accordance with the
terms, product delivery, and other criteria. If certain criteria are not met, a portion of the payment
will be taken away. The procurement officer brought up one contractor because it hires its own
consultant to keep track of its progress and make sure it is on the right track and has all the supplies
and materials it needs. Since the government's monitoring was not very good, the people in charge
of making payments had to rely on the consultant's report. The above evidence would make
subcontractors or contractors more likely to build strong relationships with procurement authorities
so that bribes could be passed through them. Even if a Ministry representative said that the
procurement officers thought the money was a thank-you for their work and not a bribe, a link like
this would put their professionalism and morals at risk. Malaysia has taken steps to deal with these
19
important problems. Malaysian Prime Minister Dato' Seri Abdullah Ahmad Badawi has said that
he wants to improve the procurement process and procedure. On April 26, 2006, he released the
Red Book to help government-linked corporations (GLCs) improve their procurement process
(Transparency International, 2006). The Prime Minister says that the top 15 GLCs could save
RM15 billion if they used best practices, improved governance, and made their procurement
processes more open and accountable. By putting out the Red Book, the government shows that it
wants to reach the goal of the national integrity plan, which is to have no corruption. Even though
there have been problems with professionalism in the past, most contractors were thankful that
government employees were very professional in their jobs, making sure that the project was
finished according to the requirements set by the organizations. For example, officers would make
sure that every single tile met the requirements. Technical people are sent to work sites to inspect
and keep an eye on projects to make sure the whole job is done according to the specifications.
Contractors are finding it harder and harder to change from what was asked of them. The technical
officers will check the project when it is done. It must be done according to what is written in the
contract.

The Public are anxious about things like accountability, transparency, corruption, integrity,
and cronyism in Malaysia's procurement system, especially when it comes to mismanagement that
wastes a lot of public money. Contractors and other interested parties said that the way the
procurement method chose people was based more on cronyism and personal connections than on
their professional standing. At the time, everyone thought that the tender board made the final
decision, and no one could question their choices. People said that the procurement officials did
not do their jobs right and did not follow the rules and procedures of the system. Even though the
bad impressions have gone down a little, there are still big problems like accountability,
transparency, corruption, integrity, and cronyism. With the use of e-procurement, these problems
should be solved. It might not be completely gone, but it could be lessened. There is still a long
way to go before these bad attitudes are gone from the procurement system. There are ways and
places for the system to get better, as long as the people who run it and are affected by it are
committed to making it better from every angle.

20
6.1 DISCUSSION 2 : 4 ESSENTIAL RESEARCH DIMENSIONS FOR SUCCESSFUL
PROCUREMENT

This section identifies the five important research dimensions of successful procurement.
Firms place a premium on procurement efficiency as example is productivity as well as
effectiveness as example is strategic goal alignment. The emphasis of procurement efficiency is
on procurement cost control. On the other side, procurement effectiveness is defined as meeting
the appropriate sorts of procurement needs at the appropriate time more specifically quality,
delivery, innovativeness, and social values. In order to integrate efficiency and effectiveness,
businesses must evaluate the objective, scope, professional development, technology, and
procurement success metrics.

6.1.1 Purpose of procurement for sustainable competitive advantage

Procurement helps businesses achieve both their short-term objectives and their long-term
competitive advantage. Sourcing can be seen as both a strategic means of ensuring future value
creation and a tactical means of meeting immediate demands in the portfolio. Internal business
procedures and the capabilities of external supplier networks are necessary for a company to
maintain a competitive advantage in this volatile market over the long term. Procurement's role in
an organization's ability to compete and endure over the long term is an area that should be
explored further in future studies. Such goal-driven research should discover, comprehend, and
evaluate emerging procurement trends in order to deploy a new model for long-term competitive
advantage. A company has a competitive advantage if its products or services are superior to those
of its competitors. Advantages in the marketplace are typically built up gradually, with input from
a wide range of the company's operations. To select a portfolio of suppliers that is both effective
and aligned with the firm's vision, a company needs a smooth and effective procurement process.
To achieve this goal, it may be helpful to have a setting that encourages and rewards cross-
departmental and interdepartmental excellence in collaboration (Peterson, 2021). If an
organization wants to maintain its competitive edge, its procurement department should examine
its practices to see if it is reducing costs in all areas of the value chain. The primary focus of any
procurement firm should be the delivery of value. By finding the most affordable providers of
needed goods and services, an efficient procurement division reduces overhead costs.

21
 In addition, when a business uses smart procurement methods, it can take advantage of
warranties and/or discounts that are often overlooked or poorly managed. To successfully manage
costs, a business needs visibility into how much it is spending. Reduce dishonest purchasing
practices as much as possible. For an organization to make lasting monetary gains, it needs to be
able to cut costs where it counts procurement, strengthen connections with those with whom it
does business (stakeholders), and get insight into its buying habits (procurement) (Peterson, 2021)

6.1.2 Scope of procurement: value creation and delivery

Furthermore, effective procurement techniques allow the company to benefit from

warranties and/or discounts that are typically disregarded or poorly managed. However, if a
corporation does not know what their organization is paying, it is very difficult to regulate expenses
effectively. It is crucial to lessen unscrupulous buying practices. Successful procurement processes
provide full transparency into an organization's spending for all purchasing activities, enabling
them to reduce procurement costs, improve relationships with stakeholders, and track purchase
patterns to make long-term financial improvements.

Procurement goes beyond the usual make or purchase option. It encompasses both public
and private strategy, process, product, and services. Geographic location, in addition to these
categories, can be an essential element in deciding the scope of procurement. Global, national, and
regional aspects must be assessed while keeping transaction costs in mind. Procurement may offer
value by lowering costs without sacrificing quality or product characteristics, or by ensuring
operational efficiency to allow for improved quality at no extra expense. Ideally, we should seek
to attain both of these goals, which are more production and lower the costs using method such as
efficient procurement activity management to decrease transaction costs and it will allow cost
savings (Etemad, 2017). Management skill is essential aspect in procurement so the allocation of
money will be uses to purchase service or product that suitable at high quality with the lowest cost
possible. Even though may sound unrealistic but it may achievable since management skill can
make this method achievable.

22
6.1.3 Professional development of procurement
As the field of procurement grows, so do the tasks of procurement specialists. In today's
procurement operations, the people who work in purchasing organizations have a tough job.
Purchasing goods is more than just a technical job, it is also a strategic process and a way to
organize things. The people who work in procurement are agents who encourage internal
collaboration. They are also representatives who build relationships of trust with people from other
countries. Thus, professional growth at the individual level is just as important as development at
the organizational level for effective and successful procurement results. In the future, researchers
will look at how companies find, train, and develop procurement professionals who can handle
technical, tactical, and strategic tasks. Procurement professionals want to meet their own
development goals as well as certain functionally focused tasks in terms of socio-technical job
needs, human resource qualifications, and technology aptitudes.

6.1.4 Technologies for procurement

One of the main goals of procurement technology has been to reduce costs by making
processes easier and not wasting time and money. At the same time, efforts have been made to
streamline processes in order to encourage innovation. Because of this, more and more people are
starting to see technology adoption as a trend, and more and more businesses are relying on
information technology. E-procurement and business-to-business (B2B) are two popular ways to
buy things that turn transactions into online ones. Electronic procurement, also called e-
procurement or supplier exchange, is the process of requesting, ordering, and buying goods and
services online. It is a business deal between two businesses. In contrast to e-commerce, e-
procurement uses a supplier's closed system and can only be used by people who have signed up.
E-procurement makes it easier for clients and preferred suppliers to talk to each other by using
bids, purchase orders, and invoices. In the 1980s, e-procurement began after Electronic Data
Interchange (EDI) was made. Ten years later, improvements to EDI made it possible for businesses
to make online catalogues of vendors. E-procurement now includes everything from the
management of contracts to electronic orders, payments, and the evaluation and selection of
suppliers. In e-procurement, a web interface or some other type of networked system is used to
connect suppliers and clients. Most of the time, the chief procurement officer or the procurement

23
division sets the rules for an organization's e-procurement of materials (Awati & Pratt, 2021).
Adopting new technology must be done in a way that doesn't hurt the relationships built through
face-to-face business with procurement entities.

6.1.5 Performance measures of procurement

Measuring procurement results is an important step since procurement affects not just a
firm's financial success but also its entire performance. Meanwhile, as procurement needs get more
complicated, performance monitoring is becoming more difficult. Overall cost reduction through
supplier coordination, as well as the influence of supply chain coordination and alliance, have been
identified as critical procurement performance indicators. Performance metrics should be carefully
examined in advance and assessed over time when implementing an extended range of
procurement processes. Performance evaluation should be based on the assumption that
fundamental competencies are derived from the whole supply network, including a focus business.
In summary, procurement researchers should examine essential research characteristics such as
purpose, scope, professional consequences, and technology utilization in order to conduct effective
research.

24
7.1 CONCLUSION
In conclusion, the way the government procurement should be based on the principles of
fairness, equity, and honesty, and it should be done openly and honestly through competition.
Agencies should always be on task and take full responsibility for carrying out and keeping track
of government contracts. The required agency needs to make sure that all things related to
government procurement are done according to good governance practises. This is done by
following the principle of government procurement, which is public accountability. The financial
and procurement laws and rules that are already in place give people and agencies clear powers
and responsibilities when it comes to managing Government procurement. Accountability in
government procurement means that everyone involved in the process has to follow the policy,
rules, and procedures and explain things to stakeholders when they need to. The principles,
policies, rules, and procedures of the government procurement, which are laid out in the Treasury
Directive and Government Procurement Circular, will make sure that government procurement is
done in an efficient and effective way that follows best governance practises.

One of the main goals of government procurement is to make sure that every ringgit the
government spends on programmes or projects gets the best return possible. The government will
also be able to make sure that the money spent gets the best possible results. When an agency does
a procurement, it must have clear goals and results. The agency then has to come up with the right
procurement requirements and evaluation methods to make sure that the government hires
companies that are thought to be able to help the Government reach its goals and be a success.
Lastly, the agencies involved must make sure that government procurement is done according to
the rules that are currently in place. These rules were made based on the idea of government
procurement. So, if there are things that are not mentioned in any of the rules, the agency must
think about them based on the rules for how the government procurement principles.

25
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