LKPP Tightens Sanctions Against Business Actors Providing Goods and Services

The National Public Procurement Agency (“LKPP”) is revising LKPP Regulation No. 4 of 2021 on the Development of Business Actors in Government Procurement of Goods and Services. The revised regulation will set out more detailed mechanisms and criteria for imposing sanctions on business actors that commit violations in government procurement.

“Detailed rules on the imposition of sanctions against business actors that commit violations will be set out in LKPP Regulation 4/2021, which is currently under revision,” said Ilvia Restu Utami, Policy Analyst at LKPP’s Directorate of Public Procurement Strategy and Policy.

The violations subject to sanctions will include lending or allowing the use of another party’s business credentials or legal identity (pinjam bendera), suspected bid rigging, unauthorized assignment or subcontracting of work, document falsification, and breach of contract. Violations of operational obligations will also be covered by these provisions.

According to Ilvia, the sanctions to be stipulated in the revised LKPP Regulation will include blacklisting, contract termination, a “poor” performance rating for suppliers in the Electronic Procurement System (Sistem Pengadaan Secara Elektronik/SPSE), and the postponement of mobilization or work commencement.

In addition to governing sanctions, the revision of LKPP Regulation 4/2021 will also serve as a technical guideline for the supplier performance assessment mechanism. The regulation will cover the calculation and determination of supplier performance ratings, ranging from “very good,” “good,” and “adequate” to “poor.”