19 July 2013

Lapses In Procurement

We were recently reminded that Aljunied-Hougang Town Council ("AHTC") had appointed FM Solutions and Services Pte Ltd ("FMSS"), a company owned and run by close The Workers’ Party supporters, to manage AHTC in 2011, without tender and at a much higher price than the prevailing rate.
AHTC's explanation was that it appointed FMSS as its managing agent ("MA") for a period of one year from 15 July 2011 because it was directed to take over the management of the TC by 1 August 2011 and it had agreed to release Aljunied TC's incumbent MA from its contractual obligations.  Given the tight deadline and not wanting to disrupt TC services, AHTC decided not to call a tender for MA services for the transition period and instead engaged a qualified service provider who could commence work immediately.[2][3]

If AHTC had failed in its procurement of MA services in 2011, it was not alone.  The Auditor-General's report for FY2012/13 revealed lapses in the Government's procurement.[4]
Weak Grounds for Waiving Competition
A $2.25 million contract for project management was awarded by way of waiver of competition without reasonable grounds.

NRF selected the vendor based mainly on a recommendation.

There was no evidence that the vendor was the only company which could provide such services.  There was no evidence that NRF had conducted an independent assessment of the reasonableness of the sole quotation received.

NRF had breached Government procurement principles of transparency and open and fair competition.  There was no assurance that value for money was received.

NRF allowed the vendor to commence work more than two months before obtaining the requisite approvals for waiver of competition and award of contract.
Excessive Honorarium
NRF paid approximately $467,000 as honorariums to three unsuccessful tenderers for their efforts in submitting concept design proposals for design consultancy services (valued at $25 million).  These were three times the amount based on the Government's compensation framework.
Scoring Method for Evaluation of Tenders Not Disclosed in Tender Documents
The scoring methods for evaluating the qualitative criteria for building works construction (valued at $283 million) were not established upfront and made known to tenderers.  NRF could have faced difficulties in protecting itself against allegations of manipulation of scoring methods to favour certain tenderers.


Inadequate Oversight
MINDEF tasked SAFRA to enhance existing fitness centres in HDB estates.
Tenders were called four months before project requirements were approved. The specifications did not meet MINDEF's requirements.
Instead of calling tenders again, SAFRA engaged in ad hoc clarifications from tenderers.  It did not compare the quotations on a like-for-like basis.  It gave its in-principle approval whilst still clarifying the requirements.  The process did not give the assurance that SAFRA was able to secure competitive prices.
SAFRA allowed the contractor to increase the prices of some works arising from new requirements.   There was no evidence that these prices had been assessed for reasonableness or had been approved by the relevant committee.

The number of fitness corners enhanced exceeded MINDEF's approved requirement by 58 sites at an additional cost of $2.03 million, although it was within the approved budget for the 108 sites.


Lapses in Procurement
The procurement of security services costing $427,886 at an overseas mission was not carried out in a fair manner to allow companies to compete on a level playing field.
Two companies were invited in writing on two different days to quote, and the third was invited orally.
Different requirements were given to the companies and no closing date was specified for the submission of quotations.
The third company, which was eventually awarded the contract, was allowed to re-submit its quotation for services which it had originally omitted. 
Lapses in Tender Evaluation
SCDF called two tenders in October 2010 and July 2011 for additions and alterations works to fire stations.  The tenders, valued at $2.75 million, were awarded to a tenderer which did not meet a critical criterion requiring it to submit audited financial statements for the past three years for SCDF's assessment of its creditworthiness and financial solvency.

In one tender, the tenderer submitted unaudited financial statements for one year only.

In the second tender, the tenderer submitted the latest financial statements only, which its auditor had qualified in that the completeness and accuracy of the tenderer's financial statements were in doubt.

Nevertheless, the tender evaluation committee concluded that the tenderer had met the critical evaluation criteria.

1. PRIME MINISTER'S OFFICE Statement from the Prime Minister's Office on Aljunied-Hougang-Punggol East Town Council Hawker Centre Cleaning Incident 12 Jul 2013.

2. ALJUNIED-HOUGANG TOWN COUNCIL Media Statement on Appointment of Managing Agent 5 Aug 2011.
3. The Workers' Party captured Aljunied GRC in General Election 2011 and proceeded to merge it with Hougang constituency to form Aljunied-Hougang TC.  Aljunied-Hougang-Punggol East TC was formed when The Workers' Party captured Punggol East constituency in a 2013 by-election and merged it with AHTC.

4. AUDITOR-GENERAL Report of the Auditor-General for the Financial Year 2012/13.

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