Government contracts involving Statutory Boards' subsidiaries

Date: 12 August 2013

Parliamentary Question by Mr Yee Jenn Jong:

To ask the Deputy Prime Minister and Minister for Finance (a) what is the current number of subsidiaries set up by all statutory boards; (b) how many such subsidiaries have been appointed as vendors for Government contracts in the past five years; (c) how many of these contracts are for the statutory boards that own the subsidiaries; and (d) what are the steps taken to ensure that contracts awarded to such subsidiaries are fair and unbiased.

Reply by DPM and Finance Minister Tharman Shanmugaratnam:

1. There are currently 105 subsidiaries set up by our statutory boards (SBs) and Ministries. The majority of these subsidiaries are set up to perform functions to safeguard vital security interests or serve other needs, such as in education, healthcare, R&D and the arts, that are not adequately provided by the private sector. Some examples of these subsidiaries include government restructured hospitals and research institutions under A*STAR, DSO National Laboratories, The National Art Gallery Singapore and The Esplanade Company Ltd. Several subsidiaries, like the National University of Singapore and Nanyang Technological University, were former Statutory Boards which were corporatized to give them greater operational autonomy, and are now corporatised entities under the Ministry of Education.

2. The Government is fully aware that even where it needs to be involved in business, it should not hinder the growth of the domestic private sector or create market inefficiencies. In general, these subsidiaries are expected to be divested once they no longer meet the objectives for which they were set up.

3. Our procurement regime requires all government agencies to adhere to procurement rules and processes, which include ensuring a level playing field for all companies bidding for Government tenders, regardless of their ownership status. All tenders have to be evaluated and awarded on the basis of the best Value-For-Money offer. Any non-compliance with these requirements or unfair treatment would be improper, as in the cases highlighted by the Auditor-General in his report this year.

4. In the last 5 years, 0.8% of public sector tenders have been awarded to these subsidiaries. Of this 0.8%, less than one fifth of the contracts were awarded to subsidiaries by their parent SB or Ministry. A substantial majority of the contracts awarded were for research and development services, and prototype studies, provided by the universities or research institutes.