'Stringent controls' for Mindef contracts

The Ministry of Defence said yesterday that it has a "stringent system of controls" allowing it to review contracts of firms providing "sensitive" defence services when they change ownership.

Further, only contracts for "non-sensitive goods and services" will be put up for open tender.

The statement comes as Chinese conglomerate HNA Holding Group closes in on a takeover of the Singapore-listed logistics provider CWT Limited, which provides maintenance services to Singapore Armed Forces (SAF) vehicles.

HNA will be convening a general meeting on Thursday to seek shareholder approval for its $1.4 billion privatisation offer for CWT Limited.

CWT handles both military and commercially available support vehicles, although "the platforms and equipment CWT currently handles are non-sensitive in nature" and "do not contain sensitive military technology", the ministry said in a statement yesterday.

These include military vehicles such as tonners and Land Rovers, as well as support vehicles and equipment such as tractors, cranes, forklifts and portable generators.

"In addition, SAF has stringent security measures in place to ensure that only security-cleared CWT personnel can work in permitted workshops within SAF camps/bases to maintain these vehicles and equipment," said the statement.

Mindef uses commercial contracts for a wide range of goods and services, but "only contracts for non-sensitive goods and services will be put up for open tender with the objective of getting the best value for the defence dollar".

For contracts involving "sensitive" goods and services, the ministry said it has "a stringent system of controls in place to safeguard its operational and security interests".

Current contracts carry conditions which allow Mindef to review them whenever firms undergo changes in ownership. The review process "entails examining any potential changes in management structure and processes, to determine if there are any security concerns or impact to the existing contracts".

The statement also said that all Mindef contracts contain minimum performance standards. Checks are imposed to ensure that these standards are met, with measures in place to take action against those who fail to meet their contractual obligations.

In April, HNA, via wholly owned subsidiary HNA Belt and Road Investments (Singapore), launched a general offer for CWT at $2.33 a share for the logistics group, valuing its 600.3 million shares outstanding at some $1.4 billion in total.

CWT was incorporated in 1970 as a private arm of the Port of Singapore Authority (now PSA Corp) to provide warehousing and container trucking services. It was listed on the SGX in 1993.

A version of this article appeared in the print edition of The Straits Times on September 05, 2017, with the headline ''Stringent controls' for Mindef contracts'. Print Edition | Subscribe