Review of Government Procurement Processes

Mr Zaqy Mohamad asked the Deputy Prime Minister and Minister for Finance (a) whether the Government's procurement processes need a further review following its recent review in which it is found that the processes are adequate; (b) whether the Ministry will consider making GeBIZ more accessible and transparent to the public so that interested vendors are always alerted to relevant opportunities and to avoid opportunities falling only to sole bidders; and (c) whether there are systems in place to alert relevant authorities on potential lapses in procurement procedures such as single-bid tenders or tenders that allow responses within a short time span.

Mr Png Eng Huat asked the Deputy Prime Minister and Minister for Finance in each of the years from 2010 to date (a) how many tenders in GeBIZ attracted only one bidder; (b) how many of such tenders were awarded subsequently; (c) what is the average tender period in days for these awarded tenders; and (d) what is the total value of these awarded tenders reported.

Mr Baey Yam Keng asked the Deputy Prime Minister and Minister for Finance what is the rationale behind the discrepancy in the Government's treatment of tenders where the Government may award a contract to a sole tenderer, but requires a second tender exercise when there is only one bidder for the rental of market stalls.

The Deputy Prime Minister and Minister for Finance (Mr Tharman Shanmugaratnam): Mr Speaker, may I have your permission to take Question Nos 3, 4 and 5 together?

Mr Speaker: Yes, please.

Mr Tharman Shanmugaratnam: Thank you. I thank Members for their questions on Government procurement practices. Members would have received the latest audit findings from the Auditor-General, several of which had to do with procurement lapses. We take these findings very seriously, and are addressing them systematically in Government so as to reduce the chances of recurrence.

Let me first put matters in perspective. Our system of public sector procurement is on the whole in good working order. The system is based on the principles of open and fair competition for public tenders, getting value for money, and an unequivocal stance against corruption or any other abuse of the trust placed in public officers.

Our procurement rules are sound, and we continue to review and improve on them. The rules are in line with standards in most other reputable jurisdictions. They put in place checks and balances without adding unnecessary layers of bureaucracy. The majority of public sector officers abide by the rules and live up to the conduct we expect of them as stewards of public funds. But in a system with 80,000 procurements each year, we will have lapses even as we strive to avoid them. We therefore place great importance on independent audits of public sector procurement, keeping open all channels for possible irregularities to be reported, and taking robust enforcement action when any wrong-doing is established.

It is therefore a whole system – not just the rules governing procurement, but honest officers who implement the rules, diligent supervisors, and regular audits. When questions are raised, we investigate promptly. Officials who are negligent are subject to disciplinary proceedings. Where corruption or fraud is suspected, an officer faces the full measure of the law. Everyone knows that, and it deters wrong-doing.

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The Government also acknowledges problems openly, even if it brings embarrassment to any of our agencies. It is how our system must continue to operate, so that its integrity is never in doubt. This is also why Singapore is widely recognised internationally as having a clean system of government that works.

Let me now go on to the rules. MOF regularly reviews the procurement rules. For example, in 2010, we took several important measures to reduce the risks of opportunities for procurement fraud. Our aim is to preserve fair competition and to reduce the risk of wrong-doings, but not to pile on rules that will hinder the vast majority of legitimate procurements and reduce public sector efficiency. Let me share how we intend to make further improvements, in the spirit of this approach.

Our procurement rules are calibrated to the value and risk of the purchase. The approval process is highly centralised for high-value projects. Projects above $80 million must be approved by the Development Planning Committee comprising three Cabinet Ministers, after rigorous scrutiny by the senior officials in the Ministry of Finance and the Ministry concerned, before tenders can be called. Roughly half of the total value of public sector procurements each year goes through this Development Planning Committee process. Further, for all procurements above $70,000, the award of the tender must be approved by a committee comprising at least three senior officers. These tenders with more stringent processes account for the bulk of the value − about 96% of the total value of Government procurements each year.

Approval of lower value procurements is typically decentralised for greater efficiency and responsiveness. Even so, the process is governed by a clear set of rules. Singapore is not unique in this. Decentralised procurement is practised in most advanced countries with efficient procurement systems, such as Australia and the United Kingdom.

For common goods and services, some forms of centralised purchasing are, in fact, being practised today. We have over 50 bulk contracts which all Government agencies can tap on, covering items such as office equipment and professional services. In total, they amount to more than $4 billion in value, which is quite a substantial sum.

Where there are advantages in doing so, our Government agencies are taking steps to centralise procurement and pool the procurement expertise. For example, the Ministry of Home Affairs and the Singapore Sports Council have recently embarked on efforts to do so, bringing together procurement that is currently carried out by different departments within their respective agencies. Smaller Ministries and agencies are also coming together to share procurement expertise and explore pooling within clusters of similar agencies or agencies with similar needs.

However, we must strike a judicious balance. As the needs of public sector agencies have grown more complex and varied over time, it will be a bad idea to centralise all procurement. We must allow our agencies to retain sufficient flexibility and autonomy to perform their roles effectively, but ensure that regular audits are undertaken to preserve the integrity of the system.

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MOF will enhance the rules on the handling of single bids. Over the past three years, procurements that attracted single bidders accounted for about 2% of the total value of contracts awarded each year. Most of these procurements were quotations of below $70,000 in value each. A number of tenders above $70,000 in value also attracted single bids despite an average tender opening period of 20 days.

There are practical reasons why we should not prevent contracts from being awarded in such cases. But we will tighten approval procedures and ensure that quotations are kept open long enough to encourage potential suppliers to take part.

For procurements where only a single bid is received, MOF will require the officers responsible to provide additional justifications to the Approving Authority within each agency, setting out why they consider the single bid competitive or reflective of market prices, before a decision is made to award such a contract. Depending on the size of their procurements and the risks involved, individual agencies may decide on other enhancements to the approval process where there is a single bid.

We will also extend the minimum opening period for suppliers to submit bids for quotations – quotations are those contracts of between $3,000 and $70,000 in value; above $70,000, you would have to call a tender – from the current requirement of four working days to seven working days. This again is a matter of balance. We want to give suppliers a full chance to participate, but not extend the opening period for these lower value contracts to a point where it slows down the routine functioning of Government. Where there are exigencies which require a shorter opening period, the approval of a Director or equivalent officer may be sought.

For larger procurements, which are handled by tenders, the minimum opening period is already set at 14 calendar days, or 25 calendar days if the tender is covered under Singapore's international trade agreements. In practice, many tenders are open for longer than the minimum period. In fact, the average is at least a week longer than the minimum period.

Another area which we are reviewing concerns term contracts. These are contracts which run for a specified period of time. The Auditor-General has observed that some Government agencies have been overcharged by vendors for work items that have not been priced upfront in term contracts. MOF will be tightening the rules to require that agencies assure themselves that they are charged at fair market prices for items that are not priced in the term contracts.

Let me now turn to GeBIZ. All Government agencies are required to post their invitations to tender or quote on the Government Electronic Business portal, or GeBIZ. It is an accessible platform, and levels the playing field especially for smaller suppliers. To ensure transparency, Government agencies are also required to publish on GeBIZ the schedule of bids and notices of award after the tender or quotation has closed.

Anyone can search for business opportunities easily on GeBIZ. They do not need to register. It is an improvement from the past where suppliers had to search the newspapers − sometimes newspapers in different languages − to spot relevant opportunities. It is also easy for suppliers to register as GeBIZ Trading Partners. They get a free user account, which enables them to download quotation and tender documents, and submit their bids electronically.

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The GeBIZ system is not passive. GeBIZ Trading Partners can sign up to receive alerts on relevant business opportunities. Government agencies may also alert suppliers to opportunities posted openly on GeBIZ through the GeBIZ alert system, or through phone calls or by publicity on their own websites. This is to ensure that the contract receives sufficient attention from potential bidders, without compromising fairness and transparency.

MOF will encourage agencies to proactively alert potential suppliers when procuring unusual or atypical products or services, in case these suppliers are not registered with GeBIZ or are not already receiving alerts. This is a good practice that we will encourage agencies to adopt.

The majority of the procurement-related lapses that have been pointed out by the Auditor-General were not due to a lack of rules. They were caused by public officers failing to follow existing procurement rules and principles. MOF has sent a strong message to all Permanent Secretaries and heads of Government agencies emphasising public officers' accountability for the use of public funds. The core of a clean and functioning procurement system lies in active oversight and supervision within each Ministry and agency. Supervisors and Approving Authorities must be conscientious in asking questions.

MOF has developed checklists to guide officers on what to look out for when giving approvals at various stages of the procurement process. Officers who do a good job in safeguarding the integrity of procurements should also be recognised for their contributions to this important function.

However, there will still be no substitute for robust audit and enforcement. The Auditor-General's Office, which is an independent body under the Constitution, as well as auditors within our agencies, provides critical checks in our system. Government agencies must follow up with independent and thorough investigations into all suspected irregularities arising from these audits. They should also act on any credible information received from the public, or from public officers themselves.

Where officers have been lax in implementing procurement rules, we will take disciplinary actions. In fact, for each of the cases raised by the Auditor-General in his latest Report, further investigations have been conducted or are being conducted by our agencies, and officers who have been found negligent have been reprimanded or warned.

As I emphasised earlier, we have also consistently sought to enforce the law through the Courts when officers are suspected of legal offences, such as fraud. Their position or rank does not matter. We will continue to enforce both our rules and the laws vigorously, so as to uphold public confidence in the integrity of the Government procurement system, and trust in the Public Service as an institution.

Mr Cedric Foo Chee Keng (Pioneer): Sir, I serve on the Public Accounts Committee and I am very heartened to hear the Deputy Prime Minister setting the tone from the top: that he and his Government intend to keep Singapore corruption-free − this is something which separates us from many parts of the world.

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However, I would like to ask the Deputy Prime Minister whether or not he thinks that competency in procurement procedures is lacking in the Civil Service and, if so, does it make sense to create a career track primarily for procurement officers who can be posted to various Ministries, by having a definitive track to develop and to institutionalise procurement expertise within the Civil Service.

Mr Tharman Shanmugaratnam: I thank Mr Cedric Foo for his question and suggestion. Firstly, yes, competency has been a problem. Part of the problem has been a tendency sometimes to delegate procurement to a very junior level, which should not be the case, and not to adequately supervise the process from start to end. And we are correcting that. By and large, the system is functioning well. The majority of officers and their supervisors are doing a good job, but there are more lapses than we think acceptable. We face rotation of procurement officers and natural attrition as well, and we are going to improve the system. Firstly, by having more training, better checklists for every officer to follow. Secondly, we are looking into the suggestion which Mr Cedric Foo has mentioned, which is a career track for procurement officers. This is an important function in Government, critical to confidence in the system as a whole, and it deserves some specialisation.

Mr Zaqy Mohamad: I thank the Deputy Prime Minister for the comprehensive reply to my parliamentary question (PQ) and for assuring the public that we are constantly reviewing the procurement policies in order to retain public trust. I have two supplementary questions.

Firstly, how do we ensure that there is a fine line between the tightening of our procurement policies as well as going after officers with regard to not making it too difficult for businesses to continue to provide services to the Government?

Secondly, the concern is whether this could lead to more bureaucracy that would impede the productivity of our officers. Also, in relation to these policy improvements, would the Ministry involve consultation with the business community to allay some of these concerns, whether it is cosy relationship with incumbents, or closed tenders and so forth.

With regard to procurement, in the past, I was told that they used to have a test on the Instruction Manuals (IM) for Civil Service officers. This is a common practice in the private sector, with compliance tests being done among officers in the private sector. I am wondering whether the Ministry would consider doing that in the Civil Service. So, a compliance test for the IM or procurement policies.

Mr Tharman Shanmugaratnam: Firstly, I agree fully with Mr Zaqy Mohamad. As I emphasised in my earlier reply, we have to find the right balance. We cannot pile on rules and think that by piling rules we can prevent fraud. People will get around rules if they want to. We need a strong audit function, and we need to show through our actions that we take every irregularity seriously, and disciplinary or legal proceedings are initiated in every case of irregularity.

We do have to shift the balance in certain categories of bids, and especially, as I mentioned, for smaller value quotations. We do think that a longer opening period will encourage fair competition and it will encourage agencies and their officers to plan better in advance for needs – do not issue a procurement at the last minute and limit the opening period. So it requires a little more planning in advance, rather than more layers of bureaucracy. We do require that when you have consultation with potential suppliers – the rules already require – that these be open and transparent. Agencies should not have consultations with a few selected bidders who may then get unintended advantage. This is an extremely important principle. There will be a need for what we call "Request for Information". Often, the agency or the officers are not sufficiently familiar with the technicalities of the product or service, and it is extremely useful to get information from potential suppliers. But that should be an open process, open to anyone to attend. So it is an example of how we are trying to find a balance, maintain open and fair competition, checks and balances in the system, but avoid adding on more layers of bureaucracy that can slow things down, particularly for small value transactions which are quite important to the regular functioning of Government.

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As far as how we compare with the private sector, we did a thorough review of this a year and a half ago, after the SLA case. We found that, actually, the public sector procurement practices and procedures were certainly no inferior, and are, in fact, in general, more stringent than what the private sector practises. They also easily pass muster as far as international comparison is concerned.

Mr Baey Yam Keng (Tampines): Sir, while it is not Government procurement per se , I would like the Deputy Prime Minister's response to my parliamentary question (PQ) about the second tender exercise where there was only one bidder for rental of market stalls –whether that is a standard practice that is applied across the board for all other rental, leasing or purchase opportunities offered by the Government.

Mr Tharman Shanmugaratnam: Let me explain the case which Mr Baey Yam Keng has raised. This concerns market stalls which, under previous rules – in fact, for a long period of time, you could not award what we call a revenue procurement where you are not actually selling a service by the Government but you are awarding the right to operate. You cannot give an award if a reserve rent was not met by the bidder. That was a long-standing practice.

Sometime early this year, in March, NEA changed the rules because it was trying to maximise utilisation of rentals of market stalls and it wanted to allow for bids that reflected fair market value, even if they were below our reserve rent. What they did was to allow for any number of bids to come in, but where it was a single bid, they required a second tender to establish fair market value. And that process has been quite useful, because we found often that in the second tender, the prices varied quite a bit, compared to the first tender. So, it is not a requirement that there be more than one bid. In fact, very often, in the second tender, you still get only one bid. But it is a check on the system because we had done away with the reserve rent. The principles are basically the same. Whether it is a procurement tender or revenue tender, agencies can award contracts to single bids if they are satisfied that it is at fair market value.

Mr Gerald Giam Yean Song (Non-Constituency Member): Mr Speaker, I am glad the Government is committed to keeping open the channels for irregularities to be reported. My question is: are all officers aware of these channels, and how can they be assured of protection from victimisation as whistleblowers?

Mr Tharman Shanmugaratnam: We have made clear these channels in the public service. An officer can report to the Permanent Secretary, the Head of the Civil Service, and can make a report to the Public Service Commission, which is an independent body under the Constitution. All effort will be taken to protect the identity of the person to the extent that is feasible and permissible under the law. So, we are quite serious about this. And we do get feedback from public officers. Quite apart from the public at large, we do get feedback from public officers that is very useful and is taken very seriously.

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