Procurement Risk:
Moderate
Score:
56/100
Government Policy
Q57
50/100
Does the country have legislation covering defence and security procurement with clauses specific to corruption risks, and are any items exempt from these laws?
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This indicator is not assigned a score in the GDI. As a basic rule, arms procurement is exempt from general procurement regulations [1] and…
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Law No.16/2012 on Defence Industry, the highest-level piece of legislation that regulates arms procurement, does not mention the risk of corruption at all. Risk…
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Not all basic rules for arms procurement are implemented. Although offset is compulsory in cases of procurement from abroad, not all cases of procurement…
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Q58
67/100
Is the defence procurement cycle process, from assessment of needs, through contract implementation and sign-off, all the way to asset disposal, disclosed to the public?
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There are formal legal procedures in place for arms procurement [1,2] but they currently focus too narrowly on two things: (a) assessment of needs…
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Procedures for the entire defence procurement cycle are outlined in Minister of Defence Regulation No. 17/2014 [1] but this is limited to four stages:…
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Procedural details of the procurement cycle of defence equipment are not open to the public, under the pretext of confidentiality. Strategic processes, such as…
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Q59
42/100
Are defence procurement oversight mechanisms in place and are these oversight mechanisms active and transparent?
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The internal supervision mechanism for arms procurement is implemented by the supervisory body within the Ministry of Defence, namely the Office of the Inspectorate…
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According to Article 19 of Minister of Defence Regulation No. 17/2014 [1], the Head of ULP has the duty and authority to ‘oversee all…
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Internal supervision of the arms procurement process is conducted by the Inspector General of the Ministry of Defence, the PPK and the Procurement Committee,…
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The direction of long-term TNI defence equipment needs is indicated through a ‘minimum capability’-based needs plan that must be fulfilled, namely the Minimum Essential…
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The purchasing plan is established for five years and includes extensive information on product types and specifications, accompanied by a financial strategy in the…
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The amount of information on arms procurement released to the public is inconsistent. There are descriptions of purchased items, prospective users, prices paid and…
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There is no publicly accessible procurement data presented in a form that enables any useful comparison. There are two ways in which announcements are…
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Capability Gap and Requirements Definition
Q62
75/100
What procedures and standards are companies required to have – such as compliance programmes and business conduct programmes – in order to be able to bid for work for the Ministry of Defence or armed forces?
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Minister of Defence Regulation No. 17/2014 requires providers wishing to take part in the arms procurement process to sign the Integrity Pact, a statement…
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The Integrity Pact is a mandatory administrative requirement for domestic and foreign providers (see Articles 38-39 of Minister of Defence Regulation No. 17/2014) [1],…
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Q63
58/100
Are procurement requirements derived from a national defence and security strategy, and are procurement decisions well-audited? Are defence purchases based on clearly identified and quantified requirements?
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Operational requirements in the arms needs plan are prepared on the basis of the 2009-2024 Minimum Essential Force (MEF) defence posture development strategy and…
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There is active scrutiny conducted through a number of legally or constitutionally mandated oversight mechanisms (e.g. the Parliamentary Oversight Committee, the Inspector General and…
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The strategy for developing defence equipment through rematerialisation, revitalisation, relocation and procurement is generally based on the requirements set out in the RPJMN and…
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Tender Solicitation, Assessment and Contract Award
Q64
NEI/100
Is defence procurement generally conducted as open competition or is there a significant element of single-sourcing (that is, without competition)?
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There is insufficient public evidence to score this indicator; as such, it is marked ‘Not Enough Information’. Minister of Defence Regulation No. 17/2014 [1]…
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Arms procurement, whether it is carried out through direct appointment or specifically supervised by the parent organisation, involves the following bodies: the PA and…
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Q65
33/100
Are tender boards subject to regulations and codes of conduct and are their decisions subject to independent audit to ensure due process and fairness?
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The tender specifications for arms procurement are formulated by the Commitment-Making Officials (Pejabat Pembuat Komitmen, PPK) as the Indonesian tender board committee, in accordance…
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There is not enough evidence to score this indicator; as such, it is marked ‘Not Enough Information’.The PPK and the procurement committee are subject…
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The regulation on procurement [1] does not contain any standalone articles that address tender board regulations or codes of conduct, but there is an…
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There selection of defence equipment technical specifications. The first is the supervision of specification modification by the PPK and the second is the supervision/audit…
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Q66
69/100
Does the country have legislation in place to discourage and punish collusion between bidders for defence and security contracts?
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Article 66 of Minister of Defence Regulation No. 17/2014 stipulates that there is to be no collusion between the bidders or between bidders and…
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Minister of Defence Regulation No. 17/2014 stipulates the requirements of main equipment and weapon systems (alutsista). Providers are required to issue a statement declaring…
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Given that they naturally involve civilians and the military, investigations and persecution of cases of fraud/corruption in defence procurement are separated into civil and…
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Interviewees stated that there are various forms of training and focus group discussions (FGD) to eliminate unfair or inefficient procurement processes. For example, there…
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Contract Delivery and In-Service Support
Q67
69/100
Are there mechanisms and procedures that ensure that contractors meet their obligations on reporting and delivery?
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Articles 58-59 of Minister of Defence Regulation No. 17/2014 stipulates procedures for checking and receiving work results [1], covering the implementation of functional tests…
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Not all procurement contracts are open to public scrutiny because they are considered state secrets under the category of defence equipment and its supporting…
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Minister of Defence Regulation No. 17/2014 obliges the PPK to deliver reports on the progress of arms procurement processes, including the disbursement of the…
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Generally speaking, all violations of arms procurement contracts are handled internally, through a sanction mechanism in accordance with Minister of Defence Regulation No. 17/2014…
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Q68
100/100
Are there mechanisms in place to allow companies to complain about perceived malpractice in procurement, and are companies protected from discrimination when they use these mechanisms?
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The formal mechanism used by supplier companies to complain about perceived malpractice in procurement processes is stipulated in Minister of Defence Regulation No. 17/2014…
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Companies that wish to complain about a procurement process must submit a Refutation Guarantee totalling 2% (two thousandths) of the owner-estimated price (Harga Perkiraan…
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The case of the procurement of GCI radar by the Air Force in August 2016 shows that suppliers are not afraid to protest if…
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Article 19 of Minister of Defence Regulation No. 17/2014 defines the authority and obligations of the ULP and its head [1]. The Head of…
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Of the three procurement cases tainted by corruption and brought to trial, there is only one in which undue political influence was apparent: the…
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Throughout the current administration, there have been three procurement cases linked to corruption offences committed by military officers and brokers. All involved were brought…
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Offset Contracts
Q70
25/100
When negotiating offset contracts, does the government specifically address corruption risk by imposing anti-corruption due diligence on contractors and third parties?
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Offset is required in arms procurement from abroad, as stipulated in Law No. 16/2012 on Defence Industry [1]. It is further regulated through Government…
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There are no due diligence obligations for contractors/suppliers and third parties involved in offset contract negotiations. The Ministry of Defence focuses more on mitigating…
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Government Regulation No. 76/2014 does not provide a description of a cradle-to-grave procedure, focussing only on pre-implementation stages up to the contractual stage of…
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The government, in this case the Ministry of Defence and the Defence Industry Policy Committee, which is authorised for offset policy, does not publish…
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With regard to offset implementation, one interviewee [1] acknowledged that there are providers who refuse to report the progress of offset activity. In this…
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To date, only two offset contracts have been completed. There is no record of any violations committed in the current offset contract, either by…
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The basis for mandatory offset in the procurement of weapons equipment from abroad is Law No. 16/2012 [1]. Article 43 Paragraph (5) of this…
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Agents / Brokers
Q73
50/100
How strongly does the government control the company’s use of agents and intermediaries in the procurement cycle?
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Law No. 16/2012 attempted to prevent the intervention of brokers by regulating the process of direct procurement, in which only three parties may be…
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The existing legislation only stipulates six offences that, if committed by suppliers, are punishable by sanctions. These offences include influencing the procurement committee, conspiring…
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Financing Package
Q74
50/100
Are the principal aspects of the financing package surrounding major arms deals, (such as payment timelines, interest rates, commercial loans or export credit agreements) made publicly available prior to the signing of contracts?
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The financial aspect of arms procurement falls under the authority of the Ministry of Finance and the Ministry of National Development Planning (Bappenas), which…
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Seller Influence
Q75
NS/100
How common is it for defence acquisition decisions to be based on political influence by selling nations?
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This indicator is not assigned a score in the GDI. Indonesia adheres to a policy of diversifying procurement in order to minimise dependence on…
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This indicator is not assigned a score in the GDI. The main justification for procurement from abroad is the ‘Shopping List’ derived from the…
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This indicator is not assigned a score in the GDI. An arms embargo imposed between 1999 and 2005 left the nation and its armed…
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