How SAF keeps costs down - Leasing Out The catch : Be ready for instant recall of trucks

About 100 five-tonne lorries sitting idle in Singapore Armed Forces (SAF) camps are to be leased out this year. But when they are recalled for SAF use, they must be made available immediately.

This is a new twist to the Defence Ministry's drive to farm out logistics support and training to civilian contractors.

The SAF acquired these trucks in 2001 to replace the smaller three-tonners. The trucks are covered up and underutilised, but in high readiness for emergencies, said Mr Lee Yeaw Lip, a deputy director with Mindef's defence technology and resources office.

Mindef is also looking at having outsiders manage supplies such as tyres and medicines, rather than maintain its own, to save on warehousing costs and avoid having to dump supplies past their use-by dates.

Also, rather than buy and maintain new SAF training assets, Mindef may invite companies to own and manage such assets on a long-term contract. The companies can lease out excess capacity.

Two years ago, SembCorp Logistics designed and built the Army Logistics Base in Choa Chu Kang, and operates it on a 15 year contract.

Mindef's outsourcing practices were highlighted as a key cost-saving measure by Defence Minister Teo Chee Hean during last month's Budget debate, at a time when all other ministries have had their budgets cut by 2 per cent.

Outsourcing accounts for about 10 per cent of annual defence spending, or more than $800 million. Aircraft maintenance (more than $100 million) and food catering (close to $100 million) are the largest contracts. More than 100 companies handle most of the SAF's logistics support.

Mindef's Mr Lee said there are measures to ensure this doesn't jeopardise its operations.

Where its in-house expertise has been reduced, it identifies reliable contractors for long-term contracts to minimise disruption. 

This has required units to adapt. The air force and army no longer have cooks, as Singapore Food Industries and NTUC FoodFare cater all meals. The navy still has its own cooks on ships at sea.

So, in Timor Leste, SAF peacekeepers relied on combat rations, the Australian and New Zealand forces there, and a local contractor, for their food.

In emergencies, however, contractors must provide for a surge in demand and be able to pull in people and equipment from their commercial operations. There are contingency plans if they cannot cope.

They must also support overseas deployments. When the SAF sent a C-130 aircraft to the Gulf for two months, Singapore Technologies Aerospace technicians went along to service the plane. Outsourcing saves the SAF millions of dollars a year, improves efficiency and frees scarce servicemen for critical jobs.

Turning over SAF cookhouses to contractors freed up more than 750 soldiers. Outsourcing aircraft maintenance, from frontline work to depot overhauls in the 1990s, freed up about 1,600 air force personnel.

Contracting out naval training in navigation and weaponry, among other areas, two years ago has freed instructors to teach new combat systems and prepare for the manning of the new stealth frigates.

Military contractors say the long-term contracts let them build expertise and are a steady income source.

Mr T.S. Pay, a director of transport company Peck Tiong Choon which provides excavators and dump trucks for SAF exercises, said in Mandarin: 'If you work with Mindef, you don't have to be afraid you won't get paid. With construction firms, you may not get paid if they go under judicial management.'

However, he said: 'The tender is very competitive and this pushes down prices.

This article was first published on April 23, 2004.
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