Faculty of Science and Technology
PhD proposal on
The Transparency of Public Bidding and Contracting using
e-Procurement in Malaysia SMPPs
Mohamed Fathi Alaweti 4110109
Email (mralakrami@gmail.com)
Supervisor :
Dr. Nurdiana Binti Azizan
Dr. Qais Faryadi
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ABSTRACT
E-procurement has been recognized as an electronic acquisition of goods and services in
organizations. Before decades ago the development in e-procurement was limited and
took little attention by researchers. Nowadays e-procurement becomes an essential part in
most of public bidding in developing countries like China, Australia, U.S.A and Great
Britain. This research focuses on implementation e-procurement system in government
agencies in Malaysia and critical success factors that improving the transparency level of
public bidding and contracting by utilizing the advantages of e-procurmeent technology
in ensuring efficient evaluation of bid and tendering process for small medium public
projects (SMPP). The purpose of the research is to find the right way for installing
electronic tendering systems of e-procurement systems in government agencies in
Malaysia in order to increase the level of public bidding transparency amongst (SMPP).
Data collection of this research will be obtained from utilizing a set of three
methodologies (Descriptive- Qualitative- Correlational Analyses) in order to increase the
reliability of the study hypothesis and the precision of study solution a research
questionnaire will be submitted to the managers and officials in major Malaysia
government which are associated with procurement and public projects. The result of the
research tries to provide recommendation about future intention of electronic tendering
systems of e-procurement in Malaysian government agencies amongst (SMPP).
Keywords
Procurement, e-procurement, Transparency, small medium public projects (SMPP),
Efficiency, Government Agency, Focus Group
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1. Introduction
E-procurement which is also referred as an electronic procurement is business-toconsumer, or a business-to-business, or a Business-to-government purchase and sales of
goods. E-procurement process involves sales and business transaction services through
the Internet.
E-Procurement is more than just a system for making purchases online. A properly
implemented system can connect companies and their business processes directly with
suppliers while managing all interactions between them. This includes management of
correspondence, bids, questions and answers, previous pricing, and multiple emails sent
to multiple participants.
A good e-procurement system helps a firm organize its interactions with its most crucial
suppliers. It provides those who use it with a set of built-in monitoring tools to help
control costs and assure maximum supplier performance. It provides an organized way to
keep an open line of communication with potential suppliers during a business process.
The system allows managers to confirm pricing, and leverage previous agreements to
assure each new price quote is more competitive than the last.
Small and medium public projects (SMPP) organizations use e-procurement for high
transparent contracting and disclosed for the public in most of times to achieve
significant benefits such as cost savings and increased efficiency, other advantages faster
government procurement process and higher transparency comparing to traditional
procurement and tendering ways. All these advantages provide high control over
corruption in procurement services and tendering.
Well-managed e-procurement helps reduce inventory levels. Knowing product numbers,
bid prices and contact points can help businesses close a deal while other suppliers are
struggling to gather their relevant data.
E-procurement is emerging rapidly in many developed countries internationally. Many
established e-procurement projects have been implemented in Singapore, Australia, UK,
USA, Australia and European Union. E-Tendering is one of the most popular types of eprocurement and website installed with e-tendering portals provides information about
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business opportunities listed by different agencies government and private. It includes
future and current business opportunities, also transparent details about awarded
contracts. Applying e-procurement to list public tenders nowadays is the main
government procurement methods applied in developed countries to avoid corruption and
also save cost due to high public competitiveness.
E-Procurement helps the directors and managers in commercial departments inside
government agencies in decision-making process through providing easy access relevant
information about each bid and competitors, the awarding process will be very organized
and precise using e-procurement. Keeping track all offers and bid will help the decision
committees to have better knowledge about theses bids and obtain better pricing which
will save a lot of unnecessary costs. E-procurements also help private organizations to
focus on their trading partners and contracts.
2 - Literature Review
E-procurement technologies have been improving so far. With emerging e-catalog
standards, for instance, it is now possible to go beyond the usual keyword product search
by using attribute based search engines, including parametric and preference searches,
both of which result in better and faster search results (Doring, et al., 2006).
A study titles; “Striving for Transparency and Efficiency in e-Government: Procurement
Reform through e-Procurement” by Jungwoo Lee, Kang-Tak Oh, Hun Yeong Kwon ,
2009 showed that Government procurement consists of three general steps: (1) planning
stage where needs are identified, business cases are established, purchase plans are made
and bidding documents are developed, (2) formation stage where bids are
invited/received and evaluated, due diligence is negotiated and performed, and the
contracts are finalized and awarded, and (3) management stage where contracts are
actually executed with periodical reviews.
Satisfaction levels with the use of the newer e-procurement venues are quite acceptable
considering that firms are new lead users and there are no established reference
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benchmarks for the online buying experience. The highest levels of satisfaction were
reported by firms using supplier-administered sell-side e-procurement systems, closed
point-to-point EDI systems, and buy-side e-procurement systems. Business practices that
encourage successful e-procurement implementation are involving preferred and strategic
suppliers in e-procurement planning, selecting e-procurement software and services
following the development of a solid business case, and the consolidation of suppliers
and procurement contracts. Major obstacles include the lack of standard interchange
formats for e-procurement, difficulty in taking spend data from e-commerce driven
transactions and connecting it to the rest of purchase transaction data collected through
other systems, and internal end user resistance to learn multiple procurement systems.
(Rebecca
Angeles.
2007,
BUSINESS-TO-BUSINESS
E-PROCUREMENT
CORPORATE
INITIATIVE: A DESCRIPTIVE EMPIRICAL STUDY)
A study by Wei Jiang, 2010, title: “E-Procurement and Market Evolution: An
Evolutionary Game Approach” showed that e-procurement offers significant cost savings
both within and between corporations, and provokes efficient competition among
suppliers. When the competition is not so fierce to make the e-marketplace formidable, eprocurement is definitely a better choice for both the buyer and the supplier. In the long
run, however, it is inevitable that much more efficient competition permeates the Internet
arena. The study also found that many practical strategies for making a difference,
including a benefit transfer and a downsized strategic network.
(Simon Fong and Zhuang Yan, 2008, Design of a Web-based Tendering System for eGovernment Procurement) highlighted that e-Tendering is more than a front-end website
on which suppliers are invited and bidding takes place. The study indicated that a large
amount of backend processes follow behind the scene in the e-Tendering cycle. In the
context of e-Government who is one of the major users of e-Tendering, the back office
processes are bureaucratic.
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(Kishor Vaidya, PhD, A.S.M. Sajeev, Professor, Junbin Gao, Senior, 2009,
e-Procurement Assimilation: An Assessment of E -business Capabilities and Supplier
Readiness in the Australian Public Sector) This paper highlighted the need to assess the
organization's e- Business capability and suppliers’ e-Business readiness for the
successful assimilation of e-Procurement. Drawing upon the Resourced-based View of
the firm literature, we provided theoretical support for how e-Business capabilities such
as authentication, interoperability, legal frameworks, open standards, and security and
privacy and also supplier e-Business readiness can impact the transactional and strategic
assimilation of e-Procurement.
Through automating the tactical processes and workflows associated with purchasing, the
firm expects to increase the productivity of its purchasing agents, lower purchase prices
of different types of goods and services, streamline the information flow, business
processes, and workflows involved in purchasing, eliminate maverick buying
(i.e., buying from unauthorized vendors), reduce order fulfillment and processing times,
reduce the number of suppliers the firm is dealing with, streamline invoice reconciliation
and dispute resolution, reduce the administrative processing cost per purchase order,
integrate budgetary controls into the procurement process, minimize human errors in the
buying and shipping processes, and monitoring and regulating buying behavior (Turban,
et al., 2006).
3. The Research Problem
E-procurement initiatives has received significant support from the major developed
countries like Australia, France, Singapore and United States, other developed countries s
started to plan for applying e-tendering as one of the main types of e-procurement in most
of its public contracting and big projects. The previous governments of Malaysia has
done many attempts to control the contracting transparency in government agencies,
many of the public tenders has been awarded to companies not based on performance or
terms and conditions(wan. S, zakaria. A, Md. A, Dayang.H 2011).
In recent years, many constructive efforts have been made by the Malaysian government
to systematically control the transparency and bidding in (SMPP). Unfortunately until
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date all previous attempts failed to control this critical success phenomenon. From this
point the study will analyze the main advantages of e-procurement and trying critical
success factors to build a smooth system of government agencies that prevent successful
implementation of electronic bidding systems that provide high level of (SMPP).
4. The Research Objectives
1. To critical investigate the existing public tendering system in Malaysian (SMPP)
system and evaluate its strengths and weakness.
2. To identify the problem and obstacles related to the existing tendering system in
Malaysian (SMPP).
3. To Finding the right critical success factors to implement the tendering system
using e-procurement in Malaysia(SMPP).
5-The Research Questions
In order to achieve the objectives of the research, the principal research question is
formulated as follows:
1. What is the existing public system in Malaysia (SMPP) ?
2. What are the problems and obstacles related to the existing tendering system in
Malaysian (SMPP)?
3. What are the main success factors bodies that are responsible for initiate (SMPP)
e-procurement systems?
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6- The Contribution of the study
The research is to find the critical success factors for installing electronic tendering
systems of e-procurement systems in government agencies in Malaysia in order to
increase the level of public bidding transparency, save cost of (SMPP). The study also
will help the government of Malaysia to save huge funds due to awarding contract for
non-qualified bidders. The study also aim to help the Malaysian government to measure
the critical success factors in order to pave the way for smooth installation of eprocurement systems.
The main contribution of this study in increasing the level of transparency and efficiency
of public procurement and tendering which save a lot of funds on (SMPP) controlled by
government agencies. The findings and results of this study will push forward the efforts
to success factors that completely implements e-procurement system in all government
agencies in Malaysia. This study will pave the way for further researches on this subject
in Malaysia and contribute the economy of Malaysia by saving huge funds that might be
wasted on non qualified public bids and inefficient contracting process for (SMPP).
7-Research methodology
The results of this research will be obtained from utilizing a set of three methodologies
(Descriptive- Qualitative- Correlational Analyses) in order to increase the reliability of
the study hypothesis and the precision of study solution. the results should be more than
just a one-off finding and be fundamentally repeatable. This precondition is a must to a
hypothesis creating itself as an accepted scientific truth. The first methodology will be
applied in this study is a descriptive methodology to describes the primary and secondary
data collected from the survey and describing the effects of applying e-procurements in
Malaysia from different views. The reason for selecting the descriptive methods in this
study in order to answers the research questions precisely. The descriptive methodology
is an accurate and systematic methodology, however we still need to use another
methodology to complement other requirements in this research that can’t be described
using the descriptive methodology like the causes for non-transparency in the case of
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Malaysia. The internal validity can’t be obtained using the descriptive methodology
therefore the study will complement the requirement using a second methodology and
this will be in the second part of analysis.
As the research questionnaire will be submitted to the managers and officials in major
government agencies in Malaysia which are associated with procurement and
construction projects. The qualitative methodology will be applied to know precisely
what government officials believe and think about the implementation of e-procurement
in their management systems, qualitative approach draw out causal constructs those
managers have in their mind, therefore a focus group approach will be applied for this
study, and conducting focus group interview methods due to the efficiency of this
methods in knowing the exact thinking of participants (officials and managers). The
focus group is essential in this study because it brings several Malaysian official
participants into a guided interview that answer the main research questions and to
explore the main obstacles that prevent applying e-procurement in government agencies
in Malaysia. The approach is highly favorite and widely used in studies related to public
opinion and studies.
The study will include a selected delegate from particular government agencies to
participate in designed interviews. The delegates will be Malaysian officials who are
responsible for implementation and development and of e-procurement. Last the
Correlation analyses (Cohen et al., 2003). The statistical correlation is very strong in
evaluating the strength of the relations between the study variables. This analysis will use
the statistical software package SPSS. The correlational analyses will be applied in this
study to measure the support /reject hypotheses. In addition to that a test measurement
model will be used to verify the internal consistency (Cronbach’s α) and discriminant
validity (correlations).
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