Committee of Supply debate: Ministry of Finance

SMEs to get more chances to participate in govt projects

Small and medium-sized enterprises (SMEs) will get more opportunities to take part in government projects, said Second Minister for Finance Lawrence Wong yesterday during the debate on the Ministry of Finance's budget.

Several MPs had expressed concerns that government projects are often too large for SMEs, and small firms without a track record might not get a chance to take part.

More than 80 per cent of government contracts - comprising about half the total value of government contracts - go to SMEs each year, said Mr Wong.

More than 40 per cent of all contracts was won by companies with revenue of less than $10 million. Of these, almost half were won by micro-enterprises with revenue of less than $1 million.

More will be done to support businesses through government procurement, the minister said.

  • 40% MORE THAN THIS PERCENTAGE OF ALL CONTRACTS WAS WON BY COMPANIES WITH REVENUE OF LESS THAN $10 MILLION

First, government agencies are using crowdsourcing - partnering businesses, the community and individuals - to come up with innovative solutions, he noted. Second, government agencies will continue to ensure that tenders are appropriately sized to give SMEs a chance to compete for them, said Mr Wong.

About 90 per cent of tenders called by government agencies each year are below $100,000 in value, he said. There were more than 30,000 of such contracts last year. Only about 5 per cent of contracts are above $1 million.

For larger projects , the Government may call separate tenders for different parts, giving smaller companies an opportunity to participate, Mr Wong said.

For example, the construction of a single MRT line is often carried out in many parts. Separate tenders may be called for individual MRT stations or MRT stations with connecting tunnels.

The minister said the Government will also help SMEs without track records take part in government procurement. A programme called Partnerships for Capability Transformation through Government Lead Demand, or Gov-PACT, for instance, provides grants to SMEs and start-ups to undertake innovative projects initiated by public agencies.

The Government will also put in place measures to safeguard the basic employment rights of outsourced workers under government contracts, and build up procurement capabilities, he said.

"We have started the work to build up capabilities to enable government agencies to be smarter buyers and we will continue to do so," said Mr Wong.

"This includes understanding the industry and technology well, so that we can stay on top of what the suppliers are doing and ensure that tender specifications are well crafted. These capabilities can help to minimise the likelihood of being locked in to certain vendors, especially to incumbent suppliers."

A version of this article appeared in the print edition of The Straits Times on March 08, 2017, with the headline 'SMEs to get more chances to participate in govt projects'. Print Edition | Subscribe