Government Contracts Exceeding $10 Million Awarded to Lowest Bidder

Mr Yee Jenn Jong asked the Minister for National Development from 2012 to 2014 (a) what is the number and percentage of Government infrastructure projects procured that exceed the value of S$10 million that have been awarded to the lowest bidder; and (b) how many of these tenders have been awarded taking into consideration the productivity of building methods as a tender award criterion.

The Senior Minister of State for National Development (Mr Lee Yi Shyan) (for the Minister for National Development): Mdm Speaker, all Government projects which exceed the value of $10 million each are evaluated under the Price-Quality Method (PQM), where the productivity of building method would be taken into consideration for award. The Government awarded about $43.5 billion worth of construction projects between 2012 and 2014. About three-quarter of the 590 projects above $10 million during this period went to the lowest bidders.

Mr Yee Jenn Jong (Non-Constituency Member): I thank the Senior Minister of State for the reply. I have a few supplementary questions. One is on the viability of bids that are low. There have been some fairly prominent national infrastructure projects that have been stalled because the contractors may have gone bust. And some industry observers have called these "suicide" bids. So, is there any observation about the correlation between project failures or substantial delays due to low or unrealistic bids? Second, I would like to ask about the weightage that is allocated to productivity factored into the consideration for tender awards. The Senior Minister of State said that there are some considerations in terms of productivity. Generally, how much would this be factored in, like a certain percentage of the weightage, and how does it vary from project to project? And lastly, I would like to ask if the Ministry provides some sort of incentives for contractors to employ higher productivity methods for the public sector projects.

* *Mr Lee Yi Shyan: Madam, I thank the Member for his supplementary questions. Some of the stalled or delayed projects have high visibility obviously because of publicity. But, on the whole, if you look at the Government projects that have been given out, I think the projects that became non-viable because of financial difficulties or other reasons, remain quite low. For instance, LTA awarded in the last 10 years more than a thousand projects, but there were only three that stalled.

In terms of productivity weightage, under our Price Quality Method (PQM), it ranges from 80-20 to 60-40. So, in the straightforward projects where it is only construction, when the design is given, the weightage for quality and productivity is about 20%. In a design and build project, there is a lot more complication, then the quality weightage is higher at 40%.

As to further incentives to help the industry to upgrade, I think this is the emphasis of our work in the Ministry. In fact, I lead a Committee that studies ways where we can further enhance the programmes that BCA already has in helping companies to invest in automation equipment, in upgrading their workforce, and benchmarking themselves against the best practice in the industry, both domestically and internationally. Obviously, we are very interested in the subject and we want to achieve bigger improvements in the years to come.