Subcontractors in Public Procurement: An Analysis of Potential Risks and Fraud Factors in Procurement Practices in Indonesia
DOI:
https://doi.org/10.46799/ijssr.v6i1.1355Keywords:
Public procurement, subcontracting, corruption, fictitious subcontractors, fraud, LKPP Regulation No. 12/2021, cashflow fraud theory, don’t care theory, breach of contractAbstract
Government procurement of goods and services (pengadaan barang dan jasa or PBJ) constitutes a strategic sector while simultaneously being one of the most vulnerable to corruption. Monitoring data from ICW in 2023 recorded 791 corruption cases, causing state losses amounting to IDR 28.4 trillion, with the most dominant modus operandi being fictitious projects and falsified accountability reports. One critical loophole lies in the subcontracting mechanism, which is frequently misused through the inclusion of fictitious subcontractors. This research employs a normative juridical method using a statutory approach and case study analysis. The analysis focuses on the Decision of the High Court of Bandung No. 5/Pid.Sus-TPK/2024/PT BDG (Amarta Karya case) and the Decision of the Central Jakarta District Court No. 59/Pid.Sus-TPK/2020/PN.Jkt.Pst in conjunction with the Supreme Court Decision No. 944 K/Pid.Sus/2022 (Waskita Karya case), in connection with LKPP Regulation No. 12 of 2021, the theory of cashflow fraud in contractual chains, and the “don’t care” theory in contractual relations. The findings demonstrate that subcontract fraud arises due to weak factual verification, lengthy contractual chains that enable fictitious invoices, and the limited authority of the Budget User (PA) in supervising subcontractors. Subcontract fraud is not only categorized as a criminal act of corruption but may also be qualified as a breach of contract (wanprestasi) under civil law.
References
Adekoya, A. A. (2024). Public procurement in local government: A tool for good governance, value creation, and sustainable development. [Publisher not specified].
Aure, B., Lædre, O., & Lohne, J. (2020). Experiences from allowing maximum two contract tiers in the vertical supply chain. In Proceedings of the 28th Annual Conference of the International Group for Lean Construction (IGLC 28) (pp. 601–612). https://doi.org/10.24928/2020/0123
Cahyani, E. (2022). Pencegahan tindak pidana korupsi pengadaan barang dan jasa pemerintah. Indonesian Journal of Criminal Law and Criminology (IJCLC), 3(2). https://doi.org/10.18196/ijclc.v3i2.15527
Fazekas, M., & Blum, J. R. (2021). Improving public procurement outcomes. Policy Research Working Paper, 2(4), 2–3.
Koeswayo, P. S., Handoyo, S., & Hasyir, A. D. (2024). Investigating the relationship between public governance and the corruption perception index. Cogent Social Sciences, 10(1), 2342513. https://doi.org/10.1080/23311886.2024.2342513
Levi, M. (2016). The phantom capitalists: The organization and control of long-firm fraud. Routledge.
Lohne, J., & Drevland, F. (2024). Crime in the architecture, engineering and construction (AEC) industry—The role of subcontractors. Buildings, 14(11). https://doi.org/10.3390/buildings14113352
Magakwe, J. (2023). Curbing corruption in public procurement through effective public procurement policy in the public sector: A case study of the Western Cape Province (Master’s thesis). University of South Africa.
Mahardhika, V. (2021). Pertanggungjawaban pidana pejabat pembuat komitmen sebagai upaya pencegahan korupsi pengadaan barang/jasa pemerintah. Jurnal Hukum Samudra Keadilan, 16(1), 140–155. https://doi.org/10.33059/jhsk.v16i1.2636
Miru, G. V., Nirahua, S. E. M., & Wadjo, H. Z. (2023). Pertanggungjawaban pidana terhadap jabatan dalam tindak pidana korupsi pengadaan barang dan jasa. PATTIMURA Legal Journal, 2(2). https://doi.org/10.47268/pela.v2i2.8602
Nasution, R. P. (2020). Proyek fiktif sebagai modus korupsi di Indonesia. TAQNIN: Jurnal Syariah dan Hukum, 2(2). https://doi.org/10.30821/taqnin.v2i02.8438
Ngovi, K. (2019). Ethics and fraud in procurement among private and public organizations in Kenya (Master’s thesis). University of Nairobi.
Nicolazzo, G., Paternoster, C., Cascone, G., & Ventre, L. (2024). Handbook on new forms of, and risk factors for, high-level transnational schemes: Key results of the KLEPTOTRACE project about the strengthening of EU asset recovery and sanction tracing against high-level transnational corruption. [Publisher not specified].
Puspita, A. C., & Gultom, Y. M. L. (2024). The effect of e-procurement policy on corruption in government procurement: Evidence from Indonesia. International Journal of Public Administration, 47(2). https://doi.org/10.1080/01900692.2022.2093900
Rendon, J. M., & Rendon, R. G. (2016). Procurement fraud in the US Department of Defense: Implications for contracting processes and internal controls. Managerial Auditing Journal, 31(6–7), 748–767. https://doi.org/10.1108/MAJ-10-2015-1267
Ross, I. (2015). Exposing fraud: Skills, process and practicalities. John Wiley & Sons.
Sukarmi, & Dewantara, R. (2024). Potential vulnerability to corruption in government procurement: Prospects for fair competition. Jurnal Persaingan Usaha, 5(1), 71–76.
Syamsuddin, A. R. (2020). Pembuktian penyalahgunaan wewenang dalam perkara tindak pidana korupsi pengadaan barang dan jasa. Jambura Law Review, 2(2), 161–181. https://doi.org/10.33756/jlr.v2i2.5942
Widjaja, G. (2025). Transparency in government procurement of goods and services: Challenges and solutions. International Journal of Society Reviews (INJOSER), 3(6), 1101–1109.
Yustiarini, D., & Soemardi, B. W. (2020). A review of corruption in public procurement in Indonesia. IOP Conference Series: Materials Science and Engineering, 849(1), 012013. https://doi.org/10.1088/1757-899X/849/1/012013
Zamroni, M. (2019). Accountability in government contracts: A measure of performance from the commitment-making officials? Hasanuddin Law Review, 5(2). https://doi.org/10.20956/halrev.v5i2.1074
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Talitha Atha Shakira, Irsyaf Marsal
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International. that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
