Thursday, August 18, 2016

Security concern on passport production

The Mole's recent posting [read here] of Deputy Home Minister Dato Nurjazlan Mohamed commenting that government will not allow Malaysian passport be made in China made us re-look our posting on the same issue [read here].

To partly answer the question as to who is to blame, MMO dated August 8th reported Jazlan slamming "the company responsible for supplying passports to the Immigration Department — Datasonic ..."

Their contract was to begin December 1st and Iris contract expired in June.

How could Home Ministry allow the period between the end of a contract and the beginning of a new contract a gap of almost 6 months?

In The Star report dated August 4th, Datasonic used that excuse to claim "they are not the current principal supplier of the Malaysian passport booklets and chips to the Home Ministry but supplies polycarbonate data pages with chips to the Government."

They claim they are the subcontractor to Percetakan Keselamatan Nasional to imbed chip into the polycarbonate page of the passport.

The chips came from Trub AG Switzerland and reject rate very low. The report has various figures of production.

Since the company offered to supply the passports earlier to “familiarise themselves with the system” and “to build a stockpile of passports”, Nurjazlan is right to ask, as reported by MMO: "Why did they offer when they were not prepared to do so?"

Datasonic claim that the shortage were due to 6-days raya vacation at PKN does not make sense. If there is an order, PKN would have built up a stockpile before going off for Raya.

Has PKN been slacking now that their contract is only an extension for June 1st to Nov 30th? Or Datasonic passing the blame?

The company usually give this statement to Bursa:
"The contract is subject to normal business risks such as increase in cost due to any escalation of material costs and contractual terms including default provisions. As such, the management would put in place control measures and operational procedures to reduce the impact or likelihood of such events."
With markets very volatile these days, who can do anything about say, currency fluctuation?


In The Star report dated December 15th, 2015, Datasonic informed Bursa Malaysia that they were awarded 5 year contract from December 2016 to November 30 2021 to supply Malaysian passport chips.

The same report highlighted that Datasonic "secured a five-year contract through an open tender to supply 10 million new passport polycarbonate datapages with laser engraving personalisation equipment to the Immigration Department from February 2013 to January 2018".

MMO reported that "Effective December 1, Datasonic will take over PKN’s role as the main contractor by printing and supplying passports to the department."

It seemed The Star reported on April 27th 2016 that Datasonic "secured a RM223.38mil deal from the Home Affairs Ministry to supply Malaysian passport documents over the same five-year period starting Dec 1, 2016, or 13.416 million units."

Isn't it worrisome that one company control the whole integrated process of supplying the passport, chip and chip-imbedded polycarbonate page, database and customising of the passport?

Do we not have local chip producer and at cheaper price? Heard we have ...

It reminded us of companies being awarded contract to print CD, VCD, DVD and etc. under license from foreign companies holding the rights.

While they manufactured under contract, at the same time, for every one original, it was said these companies manufactured and distributed ten fake at cheaper price.

Can the same happen here?

More worrisome, Datasonic is also the supply for raw polycarbonate MyKad from 2014 to 2016. In May they were awarded RM206 million contract to supply 12 million cards.

Every official identity documents of the countries is basically supplied by one company. Isn't that scary and a security nightmare?

These are publicly available news. Sue the newspaper if all these are wrong.

What were the officials at Home Ministry doing? Whose Ministry is responsible for security?

Or will the blame go to official at Ministry of Finance?

It is heard that a CEO of a company involved in a tender could be present in a Tender Board meeting and be given room to rubbish his competitor. He is not at fault but what is the official doing?

BN could lose more middle class votes if government officials continue to behave and act this way.


Anakbukitgantang said...

Dear Rocky,

I read with concern the possible security breach on our national security . I have checked IRIS Corporation and it seems that the company has filed patent rights for several innovation. And maybe there is a possibility that IRIS Corp also holds patent to the microchip presently used in Malaysian passport. In layman term that IRIS Corp produce the microchip in house.

My hunch is since IRIS holds the patent to the Malaysian passport microchip then that is the reason why Datasonic the competitor that grabs the MALAYSIA immigration TENDER AWARD had to resort to outsourcing the microchip overseas since they do not have the capacity to produce in house a similar microchip.

Now allow me to dissect this issue from my experience in the government Tender Committee.

A tender evaluation will usually look into the technology that can save cost and also local content. Local content means locally produced microchips and/or locally run plant tp produce the microchips

That will give IRIS further extra edge in winning the tender. Please be reminded that in a government tender,the lowest bidding quoted is not the only consideration . The evaluation committee will look into other aspect and as immigration department is the front liner in Malaysia security, I bet the security of the microchip, internal/locally microchip sourcing, local personnel handling the most sensitive data are put into evaluation criteria.

Having said that let me add another point in the Tender Committee evaluation criteria; that tender may be awarded to a company that can prove/or in IRIS case has proven to be the expertise in the field (of producing microchip locally).

Beyond tender award, there is the Contract Management.
For once I do not understand why the Immigration Department allow a time lapse . If the changing flagship is the issue there should be a proper handover between IRIS the former contractor to Datasonic the coming contractor. (I was put to understand that Datasonoc contract is scheduled in December 2016)

If that is the case, then Immigration Department can call for a Work Order for IRIS to continue producing the microchips even when The Contract is over! And with this month to month Work Order , The Immigration Department has to pay IRIS for extra service provided!This will alleviate the current problem of not enough microchips being produced by Datasonic (which inevitably is causing a long que in almost all the immigration department all over Malaysia currently)

Also another note on Contract Management, if Datasonic proves that indeed the microchip is produced overseas (in this case PRC China), that is a security breach. Thus under any Contract and Malaysia Law, any breach of security , misdemeanor conduct, failure to perform will lead to termination of The Contract.

The question is, who is the blue boy in the Immigration Department , Tender Committee, KDN that conveniently overlooked these matter. To make things worse, the government cannot penalised Datasonic since The Contract has not commence! Time for another MACC visit in December 2016 perhaps? (When The Contract commence)

Anonymous said...

Iris was inventor for our biometric passport. Have they been paid for their patent? Could below happen on malaysian government too?

Sloppy work Home Ministry. Will KSU answer or pass the buck to the Minister?

A Voice said...

Anak Bukit Gantang

Rocky? Are you in the right blog?

Port Klang runner said...

Pengarah kastam said in 2012 that it be ready by oktober 2014

They then say it will be ready by Jan 2016

In august Liow still talking about what the system "WILL" do.

Anonymous said...

Bro ... Mchronicle being a batu api claiming this blog as pro najib attacking zahid to make way for hisham. It makes no sense when you been complimenting zahid and non commital on hisham.

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