Health Ministry Should Fine Contractor Over System Delay

Published: Tuesday October 25, 2011 MYT 10:48:00 AM
Updated: Tuesday October 25, 2011 MYT 12:11:52 PM

From: (accessed 25 October, 2011)

PETALING JAYA: The Auditor General’s Report 2010 has recommended that the contractor for the New Generation Communications System be fined over the delay in installing the system in government hospitals and institutes.

“According to the contract, NGCS needed to be completed and functioning between January and March 2008 that is, when the Server Acceptance Test (SAT) was validated by hospitals and institutes,” said the report.

“Audit checks found that the SAT was delayed by contractors in all locations between six to 102 weeks.

“The Health Ministry failed to impose RM2.21mil fine for the delay,” the report said.

The report also recommended that further investigation be carried out to identify officers responsible for improper payment and for going against the existing financial rule.

In 2007, the Ministry signed a RM46.02mil contract with DVM Innovate Sdn Bhd for the NGCS services for five years beginning Jan 1, 2008 to Dec 31, 2012 to replace the Private Automatic Branch Exchange (PABX) in 13 hospitals and institutes.

“The Audit is of the opinion that the objective of acquiring NGCS to reduce PABX phone bills was not achieved even though there were RM0.29mil savings when NGCS rental services amounting to RM10.94mil were calculated for three years,” said the report.

Moreover, RM3.22mil were paid for 37.8% of licences that could not be used, another RM2.41mil were paid for services not or not yet rendered and equipment worth RM0.78mil were paid but not provided for.

Only 30.8% of the training session schedules were carried out and only two engineers were stationed at each location when two were promised in the contract.

The audit were carried out from October to December last year at the Health Ministry, Ampang Hospital, Kajang Hospital, Klang Hospital, Kuala Lumpur Hospital, Serdang Hospital.

It was also carried out on Public Health Institute, Institute for Medical Research and Respiratory Medical Institute. (emphasis added).

2 responses to “Health Ministry Should Fine Contractor Over System Delay

  1. Again I stress, any effort to manage contracts must be based on the terms and conditions agreed to in the contract between the parties including penalty clauses which are vital to such large service contracts.

    In the absence of such penalty clauses the common law and statute can be relied upon where specific performance is required or the contract has failed for want of consideration or is frustrated by some act or omission of any of the parties or third parties and events.

    it beggars belief from the evidence available that large government contracts are not drafted on the basis of a prior and careful risk assessment of the project being contracted and the contract negotiations which are meant to be reduced in writing to evidence the bargain between the parties.

    Cut and past documents incorporating elements irrelevant to a local contract can be found in many agreements. One such was viewed by the writer for comment in 2009 involving a large telecommunications company in Malaysia.

    Government needs to rein in lawyers and modify prevailing laws to ensure they themselves do not fall victim to the loopholes in poorly drafted laws they fail to address.

  2. good comments Mr. Gopal.

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