Parliamentary Replies

Date: 14 September 2009

Question No. 25 for Written Answer (by Mdm Halimah Yacob, MP for Jurong GRC):

To ask the Minister for Finance (a) whether the public sector is required to award contracts to the lowest tender when outsourcing its activities; and (b) how does it ensure that contractors who tender cheaply do not exploit their workers.

Reply by Finance Minister Tharman Shanmugaratnam:

Value for Money (VFM), and not cost alone, is the key consideration for Best Sourcing, as it is for Government procurement in general. Public agencies will evaluate the bids received taking into account not only the price, but also other factors such as compliance with all requirements in the tender specifications and the quality of goods and services. Therefore, the offer that gives us the most Value for Money service is accepted, and not necessarily the lowest bidder.

At the national level, the Government together with the unions and employers had in March 2008 issued the Tripartite Advisory on Responsible Outsourcing Practices. Service buyers including public sector agencies which have adopted the Advisory would require their service contractors to comply with employment laws so that their workers' statutory employment benefits are not compromised. These public sector agencies would therefore consider not just tender price, but also the contractors' compliance with employment laws, when awarding a tender such as checks on their financial standing and track records.

This is to safeguard against contractors who quote very low prices but might not be able to fulfill their employment obligations, including prompt payment of salary and CPF as well as other benefits under the laws. This could also result in workers' poor work performance and adversely affect the service standards.