Government procurement lapses

A quick look at how is Government procurement is supposed to work and what seems to have gone wrong.

What is the issue about?

It started with some expensive bicycles. Government procurement procedures first gained attention when the National Parks Board (NParks) bought 26 Brompton foldable bicycles at $2,200 each. A Lianhe Zaobao report on the purchase in June led many to question both the need for such expensive bikes and the manner in which they were purchased.

Speculation online about improper processes gained traction after an internal review led to the suspension of NParks assistant director Bernard Lim. The case was referred to the Corrupt Practices Investigation Bureau (CPIB).

These processes came under further scrutiny after an Auditor-General’s report released on Aug 13 found the alleged procurement lapse at NParks was not an isolated incident. It highlighted 12 different instances of procurement lapses spread across several ministries and statutory boards.

There were three main types of lapses. The first was waiving competition on weak grounds, a situation where procurement officers did not put up open tenders without good reason. The second was to allow price alterations to certain bidders after the close of the tender. The third was to split purchases into several batches. This would mean each batch was below the $70,000 threshold that would trigger a need for an open tender.

Why does it matter?

In a year that already features incidents like the sex-for-contracts case involving former Central Narcotics Bureau director Ng Boon Gay and ex-Singapore Civil Defence Force chief Peter Lim, the lapses can give the impression government procurements are not as above-board as previously thought.

The reputation of the civil service is at stake here and the public will be watching very closely to see if further procurement problems crop up. Some may argue that a lot of the lapses occurred not because of any ill-intent but for the sake of expediency. Yet, it is a difficult to argue that those in charge of spending public funds should have the power to break rules that are inconvenient to follow.

Some facts and Figures:

Deputy Prime Minister Tharman Shanmugaratnam said on Aug 12 that the Government is working to improve their procurement processes through constant fine-tuning of rules, training of officers and prompt action when there are irregularities. These are the existing guidelines regulating how these processes should take place.

There are three types of tenders in Singapore, with rules governing which type can be used for which purchase. The three types are the Open Tender, Selective Tender and Limited Tender.

  • Open Tender

All government purchases with an estimated value of above $70,000 must adopt tendering procedures. Under an Open Tender, all suppliers may participate by responding to Tender Notices.
An Open or Selective Tender will be called unless the circumstances allow for a Limited Tender to be called.

  • Selective Tenders

For a Selective Tender to be used, a qualification of interested suppliers, based on their capabilities, is carried out first so as to exclude suppliers who do not meet the minimum requirements. Suppliers qualified in this process are then invited to submit tenders.

  • Limited Tenders

In a Limited Tendering procedure, tenders are invited from only a few suppliers, or from one pre-identified supplier. Some instances where a Limited Tender may be used are when no responsive tender is received from an earlier Open or Selective Tender, when it concerns national security, or when it is not feasible/practical to call for open tenders e.g. because of intellectual property rights or for works of art.

What's Next:

On the day the Auditor-General's report was released Deputy Prime Minister Tharman Shanmugaratnam addressed the issue in Parliament. While he noted that the system as a whole was in good working order, he said that the Finance Ministry has sent a strong message to all permanent secretaries and heads of government agencies emphasising that public officers are accountable for the use of public funds.

He also announced some changes to tighten procurement processes.

Among them:

  • The extension of the bidding period from four to seven days is for contracts of between $3,000 and $70,000.
  • When only one bid is received, the Finance Ministry will now require officers to give additional justifications to the approving authority in each agency, on why they think the bid is competitive or reflects market prices.

Moving ahead, Mr Tharman said the Government is reviewing the rules for contracts of a specific period. The Auditor-General’s report had noted that some agencies were overcharged by vendors for work that was not priced upfront in these term contracts. He also said the Government will look at creating a separate career track for government procurement officers to improve the purchasing process.\