SINGAPORE - Both price and quality, and not just price alone, will determine how government contracts are awarded in future, Senior Minister of State for Trade and Industry Chee Hong Tat said on Thursday afternoon (Sept 27).
This will allow businesses to adopt a longer-term perspective and invest in building capability, build their track records and win overseas contracts on top of local ones.
Government bodies, too, will maximise their value for money, said Mr Chee, who was speaking at the Singapore Business Federation's (SBF) Family Business Forum at Mandarin Oriental hotel.
The changes to government procurement practices are among "a set of collaterals" developed by the Trade and Industry Ministry and the Ministry of Finance.
They were first announced by Education Minister Ong Ye Kung at a business summit earlier this month. Mr Ong had led the review when he was the minister in charge of public service innovation.
The price-quality method has been widely used by government agencies for some years already, particularly in the IT and construction industries. Now, it will be the main option that they will use to evaluate tenders.
Mr Chee, who is also Senior Minister of State for Education, said the review is meant to benefit small and medium-sized enterprises (SMEs) which take on government projects through enterprise and innovation. More than 80 per cent of government contracts go to SMEs today.
Said Mr Chee: "Businesses will benefit from this change because they will not compete on price alone, which may lead to a race to the bottom."
Besides the price-quality method, some types of projects will use a sandbox procurement approach, he said.
Government agencies handling these projects will be able to experiment with different procurement approaches as long as they adhere to key procurement principles, said Mr Chee, and the results of these sandbox trials can be shared across the public service, serving as "catalysts for changing existing rules and processes".
Suitable projects may also use a new tender approach, in which the government agency reveals its budget for the project, he said.
Mr Chee acknowledged that some agencies may not be comfortable with such an approach as it goes against tradition, but it could help bidders focus on what they can offer within the budget cap.
In addition, government agencies will offer longer contracts where possible, thus avoiding the need for repetitive tenders and creating a longer runway for companies to invest and improve on their products and services.
Thursday's event also saw the launch of SBF's young business leaders network, a private-sector community for business leaders under 45 years old. Through this network, these leaders can connect with each other, work with global young entrepreneur organisations and grow the local business community.