Mindef report: 21 years – but contractor yet to complete National Defence Institute project

  • Nation
  • Wednesday, 15 May 2019

A file picture of then-prime minister Tun Abdullah Ahmad Badawi (left) looking a model of the National Defence Institute (Puspahanas) project in Putrajaya back in November 2008.

PETALING JAYA: It has been 21 years – but a contractor has yet to complete the National Defence Institute (Puspahanas) project in Putrajaya, according to the Defence Ministry's audit report on land swaps.

The setbacks included an order to relocate an initial project site from Rawang Templer Park to Presint 1 Putrajaya so as not to disturb the green lung, revaluation of a land bond during economic downturn, local authorities' delay in granting a development order to carry out projects on swapped land in Selangor to finance the Puspahanas project, and then Pakatan Rakyat-controlled Selangor government's additional condition imposed on the contractor to build a hospital before approving title deed transfer.

Noting that the Puspahanas project had been 98.13% completed as of Oct 31 last year, the Governance, Procurement and Finance Investigating Committee (GPFIC) suggested engaging another contractor to "save the project" and let the original contractor bear the cost should there be any further delay.

The ministry released the Puspahanas report, along with two other controversial projects, namely Territorial Army Regiment 502 transit camp in Kuala Lumpur and Kem Terendak in Melaka, in keeping with its promise to expose all the 16 reports involving controversial land swap deals in stages throughout this week.

GPFIC noted that the construction of the Puspahanas building was completed, but the fitting of furniture and Information and Communications Technology (ICT) equipment was still in progress during its site visit in November last year.

The Puspahanas project was carried out under a privatisation scheme through a land swap deal, where the contractor was awarded three plots of land in Kapar and Bukit Raja in Selangor.

The Puspahanas project was mooted in the 1970s, and the Cabinet gave the nod in 1997.

In 2001, the Valuation and Property Services Department (JPPH) revalued the swapped land from RM77mil to RM72.5mil upon the contractor's appeal, in view of the devalued ringgit and economic slowdown, and the contract was finally endorsed in 2005.

Between 2006 and 2008, the proposed project site was relocated from Templer Park to Presint 11 and finally to Presint 1, following the local authorities' decision to preserve the existing green lung.

Two supplementary agreements were endorsed in 2014 and 2017, following failure to complete the project within the stipulated time frame.

GPFIC noted that interests of the government were not safeguarded in the contract.

It added that the title deed should not have been surrendered to the contractor prior to completion of the project, as the government was at risk of losing the land if the project was not delivered.

"The title deed was transferred in 2015, but until 2018, the project was not completed," the report said.

It suggested the authorities put a caveat on the swapped land, until the project was completed and delivered.

It called for stern action against two top officials if negligence was proven in giving an additional 3ha of land to the contractor in the 2014 land swap deal.

It also called on the authorities to demand from the contractor the Liquidated and Ascertained Damages payment for late delivery that amounted to a few million ringgit.

On the RM60mil project to refurbish the Transit Camp and Territorial Army Regiment 502 in Kuala Lumpur, the committee found that the cost was higher than JPPH's valuation of RM58.3mil.

It noted that the Cabinet had in 1995 agreed in principle to privatise the refurbishment project, and in return award two plots of land in Ampang for the contractor to carry out a mixed development project.

The government, it said, had to reject a land bond issued by an unauthorised financial institution, and hence could not proceed with the transfer of the title deed.

In May 1999, then Defence Minister Datuk Seri Najib Razak sought then Prime Minister Datuk Seri Dr Mahathir Mohamad's approval to cancel the contract and offer the project to another contractor.

The then army commander in 2002 expressed dissatisfaction with shoddy and slow work.

GPFIC noted that the ministry had failed to issue a Certificate of Non-Completion and did not demand compensation for late delivery, although the project was still not completed by the extended deadline of November 2005.

Although the project was eventually completed, it was of substandard quality.

On the investigation into the development of Territorial Army Regiment 514 camp in Sungai Putat and proposed redevelopment of army housing in Kem Terendak, in Melaka, the committee found weaknesses in the administration, procurement and planning process.

Noting that projects were contractor-driven, and the land swap deal was yet to be finalised, the committee called on the ministry to review the necessity of the project.

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