AG Report: Take action over problematic RM200.7m hospital upgrading project

24 Nov 2015 / 10:57 H.

PETALING JAYA: The Auditor General (AG) has recommended that action be taken against a contractor and relevant government officers who were in charge of the RM200.7 million Sultanah Nora Ismail Hospital upgrading project.
This was because the AG report 2014 series 3 found that the project by contractor Sejagat Bakti was plagued with a slew of issues and non-compliance.
The Report recommended that Sejagat Bakti be slapped with Liquidated and Ascertained Damages (LAD) of RM13.34 million as a Certification of Practical Completion (CPC) was issued even though the project was incomplete.
Furthermore, the AG also recommended that action be taken against government officers who neglected their duty to ensure contractor compliance on rules and regulations.
According to report, Sejagat Bakti, an inexperienced company with no history of working on hospital or medical projects, was appointed through direct negotiations and was given the fast-track by the Finance Ministry.
Despite accepting the contract on Feb 25, 2008, a formal agreement for the 33-month long upgrade works was only signed on Oct 16, 2008, well after construction was supposed to start on March 16 2008
The project was completed on Match 15, 2011, 90 days past the deadline of Dec 15 2010 and a CPC was issued on June 1, 2011 but it was only handed over to the Health Ministry on April 30 2012.
Even though, the project was delayed for one and a half years, the Report pointed out that the Defects Liability Period (DLP) was extended for another year without any official agreement.
This led to shoddy work that affected delivery of health services in the hospital, such as four elevators costing RM2.03 million that are non-compliant to specifications, which caused difficulties in transporting ICU beds.
In a response, the Works Ministry said 4,198 complaints were recorded during the DLP and the contractor had failed to address all of them before the period ended, forcing the Ministry to appoint 45 third party contractors to rectify the defects.
The Ministry also noted that Sejagat Bakti had difficulties managing its subcontractors and the Ministry had to intervene so that unaddressed defects could be corrected.
On imposing LAD on Sejagat Bakti, the Works Ministry clarified that the contractor had applied for a second extension after the initial 90 days but this was rejected and LAD was to be imposed.
However, the Finance Ministry approved the LAD exemption for Sejagat Bakti on July 3 2015.
The Works Ministry added that CPC was issued according to procedure and most issues were due to lack of maintenance which arose from transferring management from the contractor to the hospital.

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