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The curious case of the tender notice with no details

by Vinny G. -

On Wednesday 30 June 2010, The Straits Times published stories on China and Taiwan signing a trade pact; Japan going out of the World Cup in the second round, after losing to Paraguay 3-5 on penalties after a goalless draw; and the death of Nicolas Hayek, the father of Swatch watches.

Deep in the Classifieds section on page C20, it also published a tender notice by the People’s Action Party Town Councils for a project titled “CONTRACT FOR THE PURCHASE OF THE DEVELOPED APPLICATION SOFTWARE”, which is curious in many aspects.

What is the tender about?

First and foremost, the project description is ludicrously vague. What does “THE DEVELOPED APPLICATION SOFTWARE” refer to? What is the software and what does it do? How does the software work – standalone on a personal computer, or over a network? What platform does the software operate on, say Windows or Macintosh or even Linux? And again, and obviously most importantly, what is the software and what does it do?

And it only says “CONTRACT FOR THE PURCHASE” – but who is doing the purchasing? On the face of it, it almost sounds like the Town Councils were looking to buy some software to be developed for it, instead of looking to sell already-developed software.

The project description is also incomplete. It only talks about the “PURCHASE” of the software – but it turns out that the contract was not just for the Town Councils to sell the software, but also for a license-back by the purchaser to the Town Councils with continuing obligations to provide support and maintenance to the Town Councils.

The tender notice is so vague as to its subject matter, that one has to question its effectiveness in attracting bids. Companies that could have been well-placed to perform the contract and put in a competitive bid would probably not have been able to tell that this tender was suitable for them.

The absolute absence of information in the Town Councils’ tender notice is also striking when compared with the other three similar notices on this page, which contained enough detail for a reader to immediately understand what they were about. (These three notices were a call for expressions of interest for the supply of chemicals and chemical management services for a stream-water system in India with many paragraphs of details; a tender notice for the sale of a petrol station site at Punggol Road, on a 30-year lease with a site area of 1981.1 sq m and a maximum gross floor area of 990.55 sq m; and a call for expressions of interest for the operation and management of a company cafeteria, to provide three meals a day (with Western, chinese, Malay and Indian food) for seven days a week.)

 

(tender notice by PAP Town Councils outlined in red; the notices for the India project, the petrol station site and the company cafeteria outlined in green, purple and blue respectively)

Pay $214, to find out more

As if the lack of detail was not enough, the Town Councils imposed a $214 fee (inclusive of GST) for obtaining the tender documents. So not only was the notice absurdly lacking in detail, the PAP even expected potential tenderers to pay for the privilege of finding out just what this mysterious tender notice was about.

While it is not uncommon to charge a fee to obtain full tender documents (for instance, the HDB notice for the sale of the petrol station site included a $52.50 fee for this), the combination of the absence of information and the fee may well have deterred potential bidders from finding out more.

Based on press reports, five companies (including Action Information Management Pte Ltd) did pay the $214 fee. But one has to wonder just who the other four companies were, and how many more companies would have done so if the tender notice had contained more details.

 

Compliance with financial rules and best practices?

Dr. Teo Ho Pin, coordinating chairman for the PAP Town Councils, has emphatically asserted that the tender complied with the applicable rules. But it is questionable whether that is in fact correct.

Paragraph 74 of the Town Council Financial Rules (based on the latest version available on the database at agc.statute.gov.sg) prescribes the requirements for a tender called by a Town Council to procure goods and services. But the Rules seem to be silent on the process for disposing of Town Council assets that have not been written-off; the Rules require written-off assets to be disposed of by public auction or tender, but clearly the Town Council Management Software was still in use and valuable, and so would not have been written-off.

While the tender for the Town Council Management Software affair involved a sale of software, it also involved the procurement of subsequent services in the form of the license-back of the software and continuing maintenance and support. It is therefore reasonable to expect paragraph 74 of the Rules to apply.

But paragraph 74(5) requires the advertisement for a tender to contain “the minimum information necessary for the tenderers to know what stores, services or works are required, [and] the period of the contract”. Clearly, the tender notice published by the PAP Town Councils on 30 June 2010 did not satisfy either of those requirements.

Paragraph 74(6) also required the tender to be open for at least three weeks in this case, unless the Town Council chairman or his authorized officer approved a shorter period and the reasons for this are recorded and disclosed to the Town Council. The TCMS tender was open for only two weeks, and it is not yet apparent whether the necessary approvals were obtained and if so what the reasons were.

It is also not clear why the PAP Town Councils did not call for a fresh tender, when they received only one bid from a PAP-owned company. The Ministry of Finance’s website (see here) provides some guidance on what a government agency should do when it receives only one bid. Strictly speaking, the Town Councils are not government agencies and so are not bound by the MOF rules, but surely those rules represent best practices for custodians of public funds which Town Councils should follow.

The MOF starts by advising government agencies to take certain measures “to increase the likelihood that they will receive an adequate number of competitive bids” – something that the tender notice by the PAP Town Councils was manifestly inadequate for. One of the measures was to alert potential suppliers to the tender if necessary; it is not clear in this case whether the Town Councils had asked National Computer Systems, who had developed the TCMS in the first place, to tender for the project.

The MOF does recognize that if an agency has taken steps to ensure an adequate number of competitive bids, and that only one bid is received, then it has no obligation to reject it because the bid could be competitive. But the agency must still assess the reasonableness of the bid.

In particular, the MOF states: “When recommending the award of a quotation/tender based on a single bid, officers are required to justify to the Approving Authority why the single bid is considered competitive or reflective of fair market value. For example, they may have performed independent checks or consulted experienced buyers.” It is not clear at all whether the PAP Town Councils did any of this when they received only the single bid by AIM, or what were the justifications for believing AIM’s bid to be “competitive or reflective of fair market value”.

So many unanswered questions

There are clearly many questions that remain unanswered. Unfortunately, the PAP, through Dr. Teo’s exchanges with Ms. Sylvia Lim in recent days, seems bent on focusing the public attention on the statements of the Workers’ Party, instead of answering these important questions around the disposal of a public asset developed using public funds. This is misguided, and does not serve the public interest.

In any event, The Online Citizen has asked Dr. Teo for his responses to the following questions:

  1. Why was the project description so vague that it was impossible to ascertain what the subject-matter of the tender was?
  1. This tender was open for two weeks. What is the usual period for a tender of this nature?
  1. Is it normal practice for Town Councils to charge a fee for obtaining tender documents? If so, how is the rate determined?
  1. Apart from AIM, who else obtained a copy of the tender documents?
  1. Is the PAP going to publish a copy of the tender documents, in the interests of transparency and clearing the air? If not, why not?
  1. When only one proposal from AIM was received, did the Town Councils consider the option of calling for a fresh tender with more information in the notice? If the Town Councils did consider this, why did they not call a fresh tender?

As of press time, TOC has not yet received any answers from Dr. Teo.

The author is writing under a pseudonym for professional purposes.

TOC Edit, See TOC's editorial on this AIM case here