Tan Sri Vincent Tan sues Malaysian gov’t Spanco over Naza-Berjaya’s loss of vehicle fleet concession deal

In February 2019, the government called for proposals for the contract to supply, maintain and manage its fleet of official cars for the next 15 years. Proposals were reportedly received from at least seven companies for the new concession.

Aside from the Naza-Berjaya consortium, formed under a 51:49 partnership to bid for the contract, other bidders included Sime Darby, DRB-Hicom, Samling Group, Comos and Go Auto as well as incumbent provider Spanco.

According to Tan, the Naza-Berjaya consortium had won the bidding with the lowest offer. “We won the contract as the lowest bidder and got the LoI. But then the government changed and Tan Sri Muhyiddin Yassin became the prime minister. Three months after that, we got a notice that our LoI had been terminated,” he said.

Tan said the government then gave the tender to Spanco, despite the Naza-Berjaya tender being RM700 million cheaper than Spanco’s. He questioned why the administration at that point had agreed to pay RM700 million more for that deal. “Maybe the new government thought that Berjaya and Naza are not good enough in the car maintenance business or the car business,” he suggested.

He said the consortium had changed its shareholder agreement, raising the Bumiputera stake in it to 60%. “Berjaya’s stake is now down to 40%. Hopefully, we will get favourable results from a court decision,” he added.

Spanco was awarded the contract to manage end-to-end fleet management of government vehicles in 1994. Its 25-year concession came to an end in December 2018, but the company was given two extensions of six months each in 2019 to continue managing the fleet until the end of that year, with a third extension reportedly given until June 2020.

The government’s fleet, all leased through a five-year replacement cycle arrangement, includes vehicles used by ministers and top civil servants, as well as police patrol vehicles. The five-year replacement cycle was meant to ensure the government’s fleet stayed current, with the maintenance cost of each of these vehicles capped at pre-determined limits.

While the value of the new concession was never revealed, it has been estimated that, based on the current fleet of 12,500 vehicles back in 2020, the contract could be worth RM300 million a year from the fifth year onwards

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