BUILDING AND CIVIL ENGINEERING CONTRACTS OF HDB (Number awarded)

Dr Teo Ho Pin asked the Minister for National Development (a) how many building and civil engineering contracts of the Housing and Development Board were awarded to the lowest tenderers between 1997 and 1999; (b) how many of these contractors have gone into liquidation; and (c) what measures are taken to ensure that contracts are awarded to suitable contractors.

The Senior Parliamentary Secretary to the Minister for National Development (Assoc. Prof. Koo Tsai Kee) (for the Minister for National Development): Mr Speaker, Sir, between 1997 and 1999, HDB awarded a total of 483 building and civil engineering contracts. About 98% or 473 contracts were awarded to the lowest tenderers. The other 10 contracts were awarded to the effective lowest tenderers under a scheme called the "Preferential Margin Scheme for Construction Quality". Under this preferential scheme, a premium (up to a maximum of 5%) was given to contractors with good track records to discount their tender sums to make their tender positions more advantageous.

Among the 473 contracts awarded to the lowest tenderers, two contractors went into liquidation before completing their contracts. HDB has recommended to Ministry of Finance's Standing Committee on Debarment (SCOD) to debar the two contractors.

Sir, all Government procurement agencies, including HDB, are bound by the Government's Instruction Manual 3, Part B, to award contracts to tenderers who submit the lowest offer that complies substantially with the contract requirements. However, only suitable contractors who are registered in the appropriate Work Head and Financial Grade under the Building and Construction Authority's Contractor Registration System and who have not been debarred from tendering by Ministry of Finance's Standing Committee on Debarment (SCOD) are allowed to tender for HDB's building and civil engineering contracts. In addition, contractors who performed poorly in current contracts will not be awarded new Government contracts.

Dr Teo Ho Pin (Sembawang): Sir, may I ask the Senior Parliamentary Secretary how does the HDB ensure that the quality of flats is not affected if a contract is novated to another contractor due to liquidation of the original contractor?

Assoc. Prof. Koo Tsai Kee: Sir, in the case of liquidation, it is a very unfortunate case. The HDB has a close monitoring system to monitor the progress of construction works on site. So HDB can pick up signs. For example, when a contractor is slow in completing the work according to schedule, then HDB picks up one sign. At some point, the HDB will talk to the contractor. And the contractor, at some point, might also be willing to novate his contract to another contractor. In such cases, the contractor who novates his contract over to another contractor will be debarred from HDB's future contracts. So the HDB contractor who tendered the lowest sum must make sure that he can complete the project. Otherwise, he will be penalised from tendering future contracts. And HDB, being the bigger developer in town, is a very important customer to all contractors.