Economy Drive Achieved $736 Million in Savings in FY2004

1. Public agencies have actively participated in the Economy Drive (ED) movement, resulting in ED savings of $736 million in FY04 (i.e. from 1 Apr 2004 to 31 Mar 2005). This represents 2.3% of the total cash budget and is 7.1% higher than the savings of $687 million for FY03.

2. The results are very encouraging given that public agencies are already operating on a trimmer budget due to past ED efforts since the launch of ED in May 2003, and the permanent 2% cut in the budget caps of all ministries (except MINDEF) in FY04.

3. Public officers at all levels have suggested and implemented a wide range of ED initiatives. Some examples of ED initiatives in FY04 are as follows:

3.1 Demand Aggregation: Block Tender for Desktop Support and IT Infrastructure Management for 13 Government Agencies

Most government agencies have outsourced their desktop (i.e. PCs and notebooks) support and IT infrastructure management to IT vendors. This has been done by individual agencies procuring their own services. For most government agencies, the cost of desktop support and IT infrastructure management services represents a significant portion of their annual IT expenditure.

In April 04, the Ministry of Finance (MOF) and the Infocomm Development Authority (IDA) mooted the block tender concept. In essence, a block tender involves consolidating the requirements of multiple agencies, giving a firm volume commitment, with clearly defined work scope and service levels, to achieve greater cost savings. The block contract has achieved a total $6 million (or 46%) of cost savings in the public sector.

The following agencies located in close proximity with each other participated in the block tender to reap economies of scale:

a) Attorney-General's Chambers (AGC),
b) Ministry of Law (MLAW),
c) Intellectual Property Office of Singapore (IPOS),
d) Ministry of Information, Communications and The Arts (MICA),
e) Infocomm Development Authority of Singapore (IDA),
f) Ministry of Finance (MOF),
g) Accountant-General's Department (AGD),
h) Ministry of Trade and Industry (MTI),
i) Parliament, and
j) Prime Minister's Office (PMO), including Public Service Division (PSD), Elections Department (ED), Corrupt Practices Investigation Bureau (CPIB) and Civil Service College - Institute of Policy Development (CSC-IPD).

The block tender proves that demand aggregation across government agencies by awarding to a single service provider with standardised service levels and firm volume commitment can lead to significant cost savings through economies of scale.

When asked about the challenges faced when doing this tender, Mrs Tang-Kwong Yuk Wah, Director of Government Contracts and Commercialisation Office (GCCO), IDA said, "Coordinating the requirements of the participating agencies was quite a challenge. This tender required strong teamwork as well as the commitment to continuously innovate. We wanted to find new ways of doing things and at the same time, keep in line with procurement principles."

Contact:
Ms Serene Tan
Assistant Manager
Corporate and Marketing Communication Division
Infocomm Development Authority of Singapore
Tel: 6211-1168

3.2 Additional Information on Demand Aggregation and Reverse Auction

As part of ED, public sector agencies are aggregating their demand for common goods and services to get better value for money and reduce duplication in procurement effort. Demand aggregation is often combined with reverse auction. A reverse auction is an online bidding process where suppliers compete in real time to offer better prices. An open tender is first called to shortlist suppliers who can meet agencies' requirements to bid in a reverse auction. Reverse auction has been used together with demand aggregation for the service-wide procurement of electricity supply, fire fighting equipment, paper, personal computers, supply and maintenance of photocopiers, and courier services. Average price savings of about 9% was achieved.

3.3 Reviewing Requirements: Review of Singapore Police Force (SPF)'s Telecommunication Needs

Previously, a single handphone subscription plan was applied to all officers regardless of their operational requirements.

A study was conducted on the utilisation rate of the official handphones issued to operational officers in the course of work. Based on the analysis, the projectteam observed that ground officers who are actively engaged with the public in the course of their duty chalked up considerable airtime compared to the rest.

As a consequence, the project team proposed to subscribe handphone plans that allowed more

MINISTRY OF FINANCE