In 2015, the town council run by the Workers' Party (WP) chose to include Punggol East in an existing contract it had with the firm Red-Power after the single-seat constituency's contract with another vendor expired.
Audit firm PwC later pointed out that the former Aljunied-Hougang-Punggol East Town Council (AHPETC) could have saved nearly $26,000 for a year if it selected Tong Lee Engineering Works to do booster pump, refuse chute and roller-shutter maintenance.
Yesterday, defence lawyer Chelva Rajah said Tong Lee verbally told AHPETC it did not have sufficient resources to take on Punggol East, and that this was reflected in a note by an AHPETC staff member which was attached to an e-mail.
The town council's tenders and contracts committee later decided to terminate Tong Lee's services because it was not up to standard, the Senior Counsel said on Day 6 of the multimillion-dollar civil lawsuit involving three WP MPs. In citing this example, Mr Rajah sought to illustrate that AHPETC had reasons for choosing higher-priced contractors when running the single-seat Punggol East constituency from 2013 to 2015.
But PwC partner Goh Thien Phong, whose firm looked into the financial management of Punggol East by AHPETC, said these justifications were not captured in the tender evaluation reports. His team was also not provided with supporting documents during its audit.
The Pasir Ris-Punggol Town Council (PRPTC) in 2016 appointed PwC to review past payments made by Aljunied-Hougang Town Council (AHTC) in relation to Punggol East, which the People's Action Party wrested back in the 2015 General Election.
PRPTC, which oversees Punggol East, is suing eight defendants - including three WP MPs and two town councillors - over alleged losses suffered when the constituency was run by AHPETC.
As to why AHPETC chose Rentokil over Pest-Pro for its pest control services, Mr Rajah said Rentokil was more familiar with the National Environment Agency's "Rat Attack" programme, and had a more qualified team. In its report, PwC had said that AHPETC could have saved $2,700 in a year by going with Pest-Pro.
These considerations, among others, were captured in the minutes of a meeting the town council had and were provided to a PwC staff member, said Mr Rajah, who is representing the WP MPs and town councillors.
Mr Goh said he accepted there was such an e-mail sent, but the employee in question had left the company.
Separately, Mr Rajah said that then chairman for AHPETC Sylvia Lim and the tender committee had also checked into whether contracts for two incumbent vendors could be extended, but Ms Lim was wrongly advised by her contracts manager that they could not be.
They checked not once, but twice, Mr Rajah said.
Mr Goh said an extension clause is common for most service contracts with town councils. "One will exercise more caution to look at the existing contracts," he said.
Another issue brought up yesterday was why PwC had suggested Punggol East was entitled to a share of any surpluses, even if any alleged improper payments took place before the ward fell under AHTC.
Mr Goh said that if AHTC had indeed depleted any reserves, what Punggol East would have received when it joined the town council would be affected.
Mr Rajah said that was a matter between Punggol East and the town council, and not the town councillors themselves.