Construction Sector - Bidding process for MRT rolling stocks unveiled OVERWEIGHT

- In an unprecedented move, MRT Corp has recently made public – details of its tender evaluation process for the rolling stock contract under the Sg.Buloh-Kajang (SBK) MRT project. Through this disclosure, MRT Corp hoped it would be able to showcase the stringent steps that it had taken to ensure that only the best companies were chosen to supply the electric trains for Malaysia’s first MRT line.

- MRT Corp revealed that following the closure of tenders on June 11, all bidders were subjected to a four-stage evaluation process. The bidders must get through one stage in order to proceed to the next. The evaluation process is as follow:

Stage 1: Completeness of basic documents as specified in the tender documents.

Stage 2: Several criteria are being assessed. This includes technical solution & competence, re-confirmation of financial strength and legal evaluation [The first item at this stage addresses the bidders experience on similar projects using driverless trains. On legal evaluation, MRT Corp would look out for incidences where the contractor was taken to court for non-performance/delivery of their contracts].

Stage 3: The commercial package of the bidder and proposal for the mandatory off-set program are evaluated. The latter is vital to ensure local participation via the opening of new markets, technology transfer and even the creation of a local facility to deliver the rolling stock.

Stage 4: The best bid is determined through the combined results of the technical, commercial and offset programme evaluations. Each criterion is accorded with a particular weightage, with the technical criterion carrying the highest weightage.

- MRT Corp further explained that it was mandatory for bidders to clear all four stages of the exercise. The disclosure by MRT Corp follows previous reports that indicated the tendering period for the SBK rolling stock package had been extended by a month to June 11.

- China’s CSR Zhuzhou had earlier been rumoured to be the sole bidder for this job which had allegedly received tepid responses from others – an allegation that MRT Corp has since dismissed as ‘factually incorrect.’ MRT Corp had clarified that the lack of any submissions was due to the extensions of time requested by four out of the six companies pre-qualified for the job, including CSR Zhuzhou. The Chinese contractor had earlier won the RM530mil contract to supply trains for the Ampang Line LRT extension project. It is also constructing its RM400mil- locomotive manufacturing plant in Perak, due to be completed in two years.

- We believe the chances of seeing Malaysian contractors winning MRT jobs is more confined to the civil portion, given the lack of local expertise. We draw comfort that the momentum of contract awards should intensify going into 2H12. The latest award for pre-cast concrete tunnel segment linings to Kim Lun Corp brings the total value of major jobs awarded to-date to ~RM14bil out of an estimated initial cost of RM20bil.      

Source: AmeSecurities