PUBLIC PRIVATE PARTNERSHIP SCHEME AND BEST SOURCING

PUBLIC PRIVATE PARTNERSHIP SCHEME AND BEST SOURCING: 2.

Mr Zaqy Mohamad asked the Prime Minister and Minister for Finance (a) how will the Government rate its Public Private Partnership Scheme and outsourcing projects to date; (b) what are the measures being used to measure the success of these initiatives; (c) which projects have provided good returns and which have notably fallen short of expectations beyond reasonable limits; and (d) are there any new models being considered for the near future.

The Minister of State for Finance (Mrs Lim Hwee Hua) (for the Prime Minister and Minister for Finance): Mr Speaker, Sir, the Public Private Partnership (PPP) and Best Sourcing efforts in the Government are progressing well.

Best Sourcing is really about finding more cost-effective alternative service providers for non-strategic functions so that the public service resources can be directed at core functions. It is not about cost cutting or outsourcing or cheap sourcing. Since April 2004, the public sector has market-tested about 230 or 18% of its non-strategic functions. 70% of these functions were subsequently outsourced with an aggregate contract value of about $1.8 billion, yielding an annual operational cost savings of at least $34 million. The success of these initiatives can be measured by the extent of market-testing and cost savings, whilst maintaining service or performance standards.

Outsourcing of car park management by HDB and URA is a good example. Through the Best Sourcing exercise, HDB and URA expect annual savings of 20%, or $4 million per year. Another recent example is the Ministry of Manpower’s award of a 3-year contract for the provision of integrated contact centre services (comprising a call centre, email handling and web services), which brought about significant improvements in the service levels.

Best Sourcing is a complex exercise and agencies have to move at a pace which allows for changes without affecting the quality of service to the public, and without creating unnecessary anxiety and uncertainty for their staff. Nonetheless, MOF will continue to encourage and help public agencies to undertake more Best Sourcing.

As for Public Private Partnership (PPP), we have only started them not too long ago. So far, four PPP deals have been awarded - two by PUB for water treatment, one by NEA for incineration and another by Singapore Customs for TradeExchange. The projects are not yet in full operation but we expect the benefits to be great as the PPP providers are able to optimise the whole lifecycle costing as it designs, builds, operates and maintains the facility. The public sector will then buy services from the provider, instead of directly owning and operating these assets.

Sir, we are working on more PPP deals. The Sports Hub by the Singapore Sports Council and the new ITE College West by ITE have just closed their tenders on 28th February 2007.

The public sector will consider the most appropriate method of procurement and will continue to explore new ways with the objective of always deriving the greatest value for money.

Mdm Halimah Yacob (Jurong): Mr Speaker, I would like to ask the Minister of State how does the Government ensure that the Best Sourcing does not become cheap sourcing. Are the contracts awarded to the lowest tender or is it based on outcome? For instance, is there any auditing for the Ministries to determine whether CPF is paid and labour laws are complied for workers so that it is not cheap sourcing?

Mrs Lim Hwee Hua: Sir, the Government would take all steps to ensure that in any Best Sourcing initiative, minimum standards will continue to apply, in terms of service delivery to the public, and that shall be the baseline. Therefore, it will not always be the cheapest tender, but it will be the cheapest subject to minimum standard being complied with. In some cases, the status quo is actually the Best Source, and it remains so. As regards the suppliers who are ultimately awarded, it is actually a slightly different issue. We would certainly expect the suppliers to comply with all the standard labour laws. And certainly, if the Member is aware of anyone who is not complying with them, the Member is welcome to direct this to the attention of the Ministry.

Mr Zaqy Mohamad (Hong Kah): What sort of changes in KPIs have the Government adopted or is considering adopting to take advantage of our Government sector flexibility and agility through these PPP's initiatives or even Best Sourcing initiatives?

Mrs Lim Hwee Hua: Sir, currently, the KPIs evolve over time and the KPIs would, in most cases, be the minimum standard that Ministries would have to deliver. Should the PPPs be successful, in terms of discovering greater technologies, then the KPIs would be amended accordingly.