Addressing Procurement Lapses

Date: 13 August 2012

To ask the Deputy Prime Minister and Minister for Finance:

what is the rationale behind the discrepancy in the Government's treatment of tenders where the Government may award a contract to a sole tenderer but requires a second tender exercise when there is only one bidder for the rental of market stalls.

To ask the Deputy Prime Minister and Minister for Finance: 

In each of the years from 2010 to date (a) how many tenders in GeBiz attracted only one bidder; (b) how many of such tenders were awarded subsequently; (c) what is the average tender period in days for these awarded tenders; and (d) what is the total value of these awarded tenders reported. 
 
To ask the Deputy Prime Minister and Minister for Finance:

(a) whether the Government's procurement processes need a further review following its recent review in which it is found that the processes are adequate; (b) whether the Ministry will consider making Gebiz more accessible and transparent to the public so that interested vendors are always alerted to relevant opportunities and to avoid opportunities falling only to sole bidders; and (c) whether there are systems in place to alert relevant authorities on potential lapses in procurement procedures such as single-bid tenders or tenders that allow responses within a short time span.

Reply by DPM and Finance Minister Tharman Shanmugaratnam:

1. I thank Members for their questions on Government procurement practices. Members would have received the latest audit findings from the Auditor-General, several of which had to do with procurement lapses. We take these findings very seriously, and are addressing them systematically in Government so as to reduce the chances of recurrence.

Upholding the Integrity of Public Sector Procurement

2. Let me first put matters in perspective. Our system of public sector procurement is on the whole in good working order.  The system is based on the principles of open and fair competition for public tenders, getting value for money, and an unequivocal stance against corruption or any other abuse of the trust placed in public officers. 

3. Our procurement rules are sound, and we continue to review and improve on them. The rules are in line with standards in most other reputable jurisdictions. They put in place checks and balances without adding unnecessary layers of bureaucracy.  The majority of public sector officers abide by the rules and live up to the conduct we expect of them as stewards of public funds. But in a system with 80,000 procurements each year, we will have lapses even as we strive to avoid them. We therefore place great importance on independent audits of public sector procurement, keeping open all channels for possible irregularities to be reported, and taking robust enforcement action when any wrong-doing is established.

4. It is therefore a whole system – not just the rules governing procurement, but honest officers who implement the rules, diligent supervisors, and regular audits. When questions are  raised, we investigate promptly.  Officials who are negligent are subject to disciplinary proceedings. Where corruption or fraud is suspected, an officer faces the full measure of the law. Everyone knows that, and it deters wrong-doing.

5. The Government also acknowledges problems openly, even if it brings embarrassment to any of our agencies.  It is how our system must continue to operate, so that its integrity is never in doubt. This is also why Singapore is widely recognised internationally as having a clean system of government that works.         

Procurement rules are sound, but can be improved

6. MOF regularly reviews the procurement rules. For example, in 2010, we took several measures to reduce risks of opportunities for procurement fraud. 

7. Our aim is to preserve fair competition, and to reduce the risk of wrong-doings, but not to pile on rules that will  hinder the vast majority of legitimate procurements and reduce public sector efficiency. Let me share how we intend to make further improvements, in the spirit of this approach.

Balancing Centralisation and Autonomy

8. Our procurement rules are calibrated to the value and risk of the purchase. The approval process is highly centralised for high-value projects. Projects above $80 million must be approved by the Development Planning Committee comprising three Cabinet Ministers, after rigorous scrutiny by the senior officials in MOF and the Ministry concerned, before tenders can be called. Roughly half of the total value of public sector procurements each year goes through this process. Further, for all procurements above $70,000, the award of the tender must be approved by a committee comprising at least three senior officers. These tenders with more stringent processes account for the bulk of the value -  about 96% of the total value of Government procurements each year.

9. Approval of lower-value procurements is typically decentralised for greater efficiency and responsiveness. Even so, the process is governed by a clear set of rules. Singapore is not unique in this – decentralised procurement is practised in most advanced countries with efficient procurement systems, such as Australia and the United Kingdom.

10. For common goods and services, some forms of centralised purchasing are in fact being practised today – we have over fifty bulk contracts which all Government agencies can tap on, covering items such as office equipment and professional services. In total, they amount to more than $4 billion in value. 

11. Where there are advantages in doing so, our Government agencies are taking steps to centralise procurement and pool expertise. For example, the Ministry of Home Affairs and the Singapore Sports Council have recently embarked on efforts to do so, bringing together procurement that is currently carried out by different departments within their respective agencies. Smaller ministries and agencies are also coming together to share procurement expertise and explore pooling within clusters.

12. However, we must strike a judicious balance. As the needs of public sector agencies have grown more complex and varied over time, it will be a bad idea to centralise all procurement.  We must allow our agencies to retain sufficient flexibility and autonomy to perform their roles effectively, but ensure that regular audits are undertaken to preserve the integrity of the system. 

New Rules on Handling of Single Bids

13. MOF will enhance the rules on handling of single bids. Over the past three years, procurements that attracted single bidders accounted for about 2% of the total value of contracts awarded each year. Most of these procurements were quotations of below $70,000 in value each.  A number of tenders above $70,000 in value also attracted single bids despite an average tender opening period of 20 days.
 
14. There are practical reasons why we should not prevent contracts from being awarded in such cases. But we will tighten approval procedures and ensure that quotations are kept open long enough to encourage potential suppliers to take part.   

15. For procurements where only a single bid is received, MOF will require the officers responsible to provide additional justifications to the Approving Authority within each agency, setting out why they consider the single bid competitive or reflective of market prices, before a decision is made to award the contract. Depending on size of their procurements and the risks involved, individual agencies may decide on other enhancements to the approval process where there is a single bid.

Longer Opening Period for Quotations

16. We will also extend the minimum opening period for suppliers to submit bids for quotations (i.e. for government contracts of between $3,000 and $70,000 in value), from the current requirement of four working days to seven working days.  This again is a matter of balance - we want to give suppliers  a full chance to participate, but not extend the opening period for these lower value contracts to a point where it slows down the routine functioning of Government.  Where there are exigencies which require a shorter opening period, the approval of a Director (or equivalent) may be sought.

17. For larger procurements, which are handled by tenders, the minimum opening period is already set at 14 calendar days (or 25 calendar days if the tender is covered under Singapore’s international trade agreements).    In practice, many tenders are open for longer than the minimum period.

Avoiding Excessive Charges in Term Contracts

18. Another area which we are reviewing concerns term contracts (i.e. contracts that run for a specified period of time). The Auditor-General has observed that some Government agencies have been overcharged by vendors for work items that have not been priced upfront in term contracts. MOF will be tightening the rules to require that agencies assure themselves that they are charged at fair market prices for items that are not priced in term contracts.

GeBIZ is Accessible and Transparent

19. All government agencies are required to post their invitations to tender and quote on the Government Electronic Business portal, or GeBIZ.  It is an accessible platform, and levels the playing field for smaller suppliers especially. To ensure transparency, Government agencies are also required to publish on GeBIZ the schedule of bids and notices of award after the tender or quotation has closed.

20. Anyone can search for business opportunities easily on GeBIZ. They need not register. It is an improvement from the past where suppliers had to search the newspapers to spot relevant opportunities. It is also easy for suppliers to register as GeBIZ Trading Partners. They get a free user account, which enables them to download quotation and tender documents, and submit their bids electronically. 

21. The GeBIZ system is not passive. GeBIZ Trading Partners can sign up to receive alerts on relevant business opportunities. Government agencies may also alert suppliers to opportunities posted openly on GeBIZ through the GeBIZ alert system, or through phone calls or publicity on their own websites. This is to ensure that the contract receives sufficient attention from potential bidders, without compromising fairness and transparency.

22. MOF will encourage agencies to proactively alert potential suppliers when procuring unusual or atypical products or services, in case these suppliers are not registered with GeBIZ or are not already receiving alerts.

Accountability and Vigilant Supervision are Critical

23. The majority of the procurement-related lapses that have been pointed out by the Auditor-General were not due to a lack of rules. They were caused by public officers failing to follow existing procurement rules and principles. 

24. MOF has sent a strong message to all Permanent Secretaries and heads of Government agencies emphasising public officers’ accountability for the use of public funds. The core of a clean and functioning procurement system lies in active oversight and supervision within each Ministry and agency.  Supervisors and Approving Authorities must be conscientious in asking questions.    

25. MOF has developed checklists to guide officers on what to look out for when giving approvals at the various stages of the procurement process. Officers who do a good job in safeguarding the integrity of procurements should also be recognised for their contributions to this important function.

No Substitute for Robust Audit and Enforcement

26. However, there will still be no substitute for robust audit and enforcement.

27. The Auditor-General’s Office, which is an independent body under the Constitution, as well as auditors within our agencies, provides critical checks in our system. Government agencies must follow up with independent and thorough investigations into all suspected irregularities arising from these audits. They should also act on any credible information received from the public, or from public officers themselves. 

28. Where officers have been lax in implementing procurement rules, we will take disciplinary actions. In fact, for each of the cases raised by the Auditor-General in his latest Report, further investigations have been conducted by our agencies, and officers who have been found negligent  have been reprimanded or warned.

29. As I emphasised earlier, we have also consistently sought to enforce the law through the Courts when officers are suspected of legal offences such as fraud.  Their position or rank does not matter. We will continue to enforce both our rules and the laws vigorously, so as to uphold public confidence in the integrity of the Government procurement system, and trust in the Public Service as an institution.