Auditor-General flags procurement lapses in public sector

SINGAPORE - Some companies could have enjoyed an unfair advantage in tendering for public sector contracts because of the failure of certain public bodies to follow procurement policies, according to the Auditor-General's latest annual report.

Among the largest tenders in which the bidding process was deemed unfair was a $19.14 million project by Republic Polytechnic to develop an integrated academic system. After the deadline, it allowed one vendor to submit a revised proposal.

It was a substantial change from the original tender, but the fact was not disclosed to the tender-approving authority and the company got the contract.

Auditor-General Willie Tan noted that the polytechnic did not consider re-calling the tender or inviting other shortlisted tenderers to submit revised bids, though this is required under government rules.

Such procurement lapses - which took up a significant portion of the 63-page report for the financial year starting in 2012 - happened despite efforts to tighten the rules in the last few years.

Without open and fair competition, Mr Tan said, there would be no assurance that public sector bodies could secure competitive prices for goods and services.

In another case, the Media Development Authority negotiated with a vendor for a revised proposal to organise the $4.57 million Film Festival.

The vendor's earlier bid was the highest among three bidders.

It then submitted a new bid, which became the lowest, after the closing date for the tender. It was awarded the contract.

One case involved a $283.36 million tender for building works by the National Research Foundation where the scoring method used was not established upfront and made known to tenderers.

Another example involved irregularities in a Ngee Ann Polytechnic tender that could have reduced its chances of getting a more competitive price.

The $528,120 tender was for the supply and managing of graduation gowns to the polytechnic's Consumer Cooperative Society. The society's key positions of president, chairman and directors are held by senior polytechnic staff.

The Auditor-General reiterated that public sector entities should ensure that transactions with related parties "are at arm's length and be seen to be so", as public funds are involved.

Four other areas where public sector bodies could devote more attention and improve internal controls were also highlighted.

These were the monitoring of contractors' performance, oversight of projects managed by external consultants, management of stocks and stores, and management of computer access controls.

For instance, inspections of 41 chalets under the Public Service Division showed certain areas were not properly maintained.

These chalets, rented to civil servants for recreation, were to be maintained by a contractor for four years, beginning from 2010, in a contract worth $13.07 million. Checks found that furniture was dirty or damaged, there were insect hives, and electrical sockets were exposed.

Holland-Bukit Timah GRC MP Liang Eng Hwa, deputy chairman of the Government Parliamentary Committee for Finance, Trade and Industry, called for more vigilance and the setting aside of more resources to ensure contractors deliver work to the promised standard.

This, he said, is even more important amid the tight labour market and many public sector projects involving contractors.

The Auditor-General also singled out Muis for "laxity in monitoring and collection of debts".

As of July 2012, it had $24.68 million in debts owed. The money - which comes from the community - was mostly loans and advances to mosques, madrasahs and Muis' subsidiaries.

All in, the report cited lapses in eight ministries and 11 statutory boards. These include the Urban Redevelopment Authority, Ministry of Defence and Singapore Civil Defence Force.

The lapses, however, do not necessarily reflect the organisation's general state of administration, the report said, but "serve as pointers to areas where improvements should be made in the accounting, use and management of public funds and resources".

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