The outbreak of a series of scandals involving the Taiwan Railway Administration's (TRA) procurement practices has put one of the country's oldest state-run corporations under tight scrutiny.
In the latest case, one of the assistant engineers at TRA's materials purchasing department was accused early last week of favoring certain contractors and allowing them to get away with construction delays without requiring them to reimburse the TRA for the losses incurred from the delays.
The scandals have prompted the Ministry of Transportation and Communications (MOTC) to conduct an internal investigation into the TRA.
The ministry's investigation has brought to light 16 cases involving questionable procurement practices, including the purchase of 316 commuter trains valued at NT$11.7 billion (US$366 million).
Minister of Transportation and Communications Kuo Yao-chi (
TRA's acting chief Ho Nuan-shuan (何煖軒) said that the investigation also found irregularities in some of the bidding notifications, with some specifiying the name of the company that would be in in charge of a particular project, even before the bidding had taken place.
Ho also found lax corporate governance at the TRA. The administration's director-general and deputy director-generals were usually only "informed" about the major procurement deals, leaving the task of signing the deals to the department chiefs.
Specialists
Some TRA officials have indicated that problems began to emerge when the ministry decided to consolidate the bidding efforts and set up an independent organization, consisting of 12 specialists, to handle them.
Government regulations mandate that qualifications for the bidders have to be set by each department that asks for the bid first.
Each specialist is unlikely to know the base price of the bid since it is placed in a sealed envelope.
Each department simply executes the contracts as soon the results of the bidding are finalized. In other words, the bidding specialists have very limited contact with the contractors throughout the bidding process.
However, a specialist who is familiar with both the construction projects and the bidding procedures may take advantage of some of the loopholes in the process.
Sources at the TRA have pointed out that the administration often determines the base price the day before the bid takes place, giving some unscrupulous companies the opportunity to find out the floor price beforehand and enhancing their chance to secure the bid.
Heavy workload
Additionally, the workload that the specialists have to handle might also hinder them from a thorough investigation of each case.
For example, the organization handled 175 construction contracts and 99 labor-related contracts last year, with total value of more than NT$500 million.
On average, each specialist handles over 20 bids a year.
The TRA also has rather lax rules governing the qualifications of the bidders. It does not conduct thorough investigations on each bidder's past performance, the bidding plan and the company's ability to fulfill the contracts.
Because of these flaws, the TRA now has to contend with construction delays or poor quality materials and equipment.
For example, the 400 PP-model cars that TRA purchased from a South Korean company have caused it NT$1.9 billion in losses owing to frequent motor breakdown.
Ho said yesterday that the ministry's investigation showed that the TRA did not even ask for the design plan of the motors when it purchased the cars, making it impossible to reproduce the same model in Taiwan.
At the same time, Ho denied rumors that the TRA was considering buying cars from the South Korean company again.
"They have to solve the problems with the motors first," Ho said.
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