IPOH , March 16 — The procurement method used by the navy to source parts for its fleet may have been manipulated by a small group of Royal Malaysian Navy staff and suppliers to mark up prices of certain items, claims a former high-ranking naval officer. 

Retired First Admiral Mohamad Imran Abdul Hamid, who served for several years at the Lumut naval base, said fleet procurement came under a special unit called Depot Bekalan Armada (Fleet Supply Depot).

This unit sourced parts from suppliers through a three-tier procurement system.

In an interview with Malay Mail yesterday, Imran said the three tiers of procurement were known as the Quotation Management System (QMS), e-procurement and e-bidding.

In detail, he said QMS was used to source parts which cost RM20,000 or less each.

If the part costs between RM20,000 and RM50,000, the e-procurement method is used.

E-bidding is for parts costing between RM50,000 and RM250,000.

He said the Fleet Supply Depot was headed by a commanding officer, usually a captain, with a commander as his deputy.

“Below them are the material controllers or MCs,” he said.

“Each MC is in charge of different parts or needs of the fleet.

“It is the MCs who normally send out the request for parts to suppliers using one of the three procurement methods.

“In the case of the e-bidding, when tenders have been received, a special panel consisting of the MCs, the commanding officer and the deputy will decide on the best pricing.”

Asked how it was possible for the depot staff to mark up prices if the three-tier procurement mechanism already exist, Imran said it was not impossible provided the staff in the depot unit had “an understanding” on the matter.

He said he was aware of a particular naval part which was purchased for more than RM180,000 when he claimed it cost only RM30,000.

“I brought it up in Parliament and urged the government to tighten the naval procurement system,” said Imran, who became MP for Lumut after he retired from the navy.

He said it needed “teamwork” or “network” already established between the navy staff and suppliers over a long period of time to enable millions to change hands between the two sides.

Pointing out the probable way the two sides manipulated the system, he said this could have been done by pushing up an item fit for QMS or e-procurement into the e-bidding system.

“Let’s say one of the items to be procured is worth RM20,000.

“By right, the depot unit should use the QMS method to acquire it.

“However, this item is pushed either to e-procurement or e-bidding.

“Of course, the money is bigger in e-bidding.

He said once suppliers have locked in their quotations by the end of the tender period, the tenders are then reviewed by the procurement panel at the depot.

Since the value of items are not in millions the decision is finalised at the panel stage.

Imran, who once headed the navy’s logistics department, said once an item was purchased at a higher price, the procurement record would carry the new higher price instead of the older lower price, thus “helping” the “fixers” to reap profit from the marked-up item even for future transactions. 

He stressed the procurement method would be susceptible to manipulation as long as the same staff were allowed to work in the same unit for years.

Last week, the MACC arrested six naval personnel and nine suppliers in connection with malpractice and corruption in the order of millions of ringgit, believed to have been carried out over the past five years.

All 16 of them are remanded until today but the MACC is expected to apply for an extention of their remand period.