PAC identifies critical flaws in govt procurement processes, management of public funds

KUALA LUMPUR: The Public Accounts Committee (PAC) has flagged serious systemic weaknesses in the government’s procurement and management of contracts and public funds including the failure to conduct cost benefit analysis for high impact projects.

Revealing the findings, PAC chairman Datuk Mas Ermieyati Samsudin said there had been a repeated pattern of lack of compliance and inefficiency, which has raised concerns on the risk of leakages and wastage, which will eventually burden the people.

She said the weaknesses identified are huge fiscal risks and dent the public’s confidence.

One of the main issues identified is the practice of the use of government services and systems without a contract in place.

“This situation is not only increasing the risk or leakages but has also reduced the transparency in government decision making,” she said in a press conference in Parliament on Thursday (Dec 4).

She said approving high impact projects in the absence of a cost benefit analysis was unreasonable.

“The delays and inefficiencies in conducting important projects have caused wastage of public funds and service delivery failure.

“PAC has voiced concern on the size of the outstanding amount for the account receivable. The failure to collect the outstanding amount affects the country’s revenue,” she said.

The committee also identified weaknesses in the management of government-linked companies and government-linked investment companies where such companies have failed to yield returns that match the investments that went into it.

“These weaknesses are not technical issues but are a direct threat to the country’s financial stability,” she added.

She, however, welcomed the improvements made by the government in terms of implementing the recommendations by the committee.

The committee has recommended for the government to strengthen its compliance to procurement process, adding that contracts should be finalised before projects are finalised or systems are used for documentation process, strengthening discipline and making cost-benefit analysis mandatory.

The PAC also urged for the Government Procurement Act to be implemented.

“PAC urges that all high risk projects are subjected to periodic audits during implementation instead of conducting audits after the failure of the project, while improving coordination between ministries, agencies and project executor to avoid delays that will lead to additional cost,” she said.

She also said the government has to better manage the government’s revenue collection.

The government has also been urged to look into the performance of weak performing GLC’s including embarking on a restructuring exercise.

In the last press conference for 2025, Mas Ermieyati said the committee will conduct periodic follow-up proceedings on ministries and agencies.

The PAC tabled a report on the government procurement and contract administration by the Finance Ministry. – THE STAR