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100 over irregularities and lapses reported by AGO

By Terry Xu

In a 63 page report that was signed on 1st July 2013 and submitted to the President of Republic of Singapore by the Auditor-General’s Office (AGO)  and presented to parliament on 15th July. Over 100 irregularities and lapses were reported by the AGO on various ministries and statutory boards.

From the report we should say that AGO ought to be applauded for their great service to the general public, with a good showing of its integrity and living up to its core values, one of which being “We carry out our work with the highest standard of fairness and objectivity in the eyes of the public.”

Out of the 100 over irregularities and recommendations, what stood out from the rest was the construction project of Campus for Research Excellence and Technological Enterprise (CREATE).

It states,

A. Weak Grounds for Waiving Competition

AGO found that a contract for project management services (contract value of $2.25 million) was awarded via waiver of competition to a vendor without reasonable grounds. NRF had selected the vendor based mainly on a recommendation. There was no evidence that the vendor was the only company which could provide such services. NRF was unable to provide AGO with documentary evidence that NRF had conducted an independent assessment on the reasonableness of the sole quote received. NRF had breached Government procurement principles of transparency and open and fair competition. There was also no assurance that value for money

Furthermore, NRF had allowed the vendor to commence work more than two months before obtaining the requisite approvals for waiver of competition and award of the contract. This had the effect of circumventing the approving authorities’ gatekeeper role in ensuring that Government procurement principles were upheld.

So basically the contract for the project management was given to the vendor without the tender process based solely on recommendation.

Sounds familiar?

This bears striking resemblances to FMSS Saga with the Aljunied Hougang Punggol East Town Council (AHPETC) when they awarded the estate management contract to FM Solutions and Services Pte Ltd (FMSS) without tender for 1 year and subsequently a 3 year contract with tender when they won as the sole bidder for the tender. Workers’ Party was questioned relentlessly in Parliament and was thrown in the limelight in the Main Stream Media for their “lack of integrity”.

So with this finding, will anyone be subjected to the same level of treatment as what the Workers’ Party received? Or would it be just a simple lesson learnt and let us move on?

By the way, the vendor in question seems to be Jurong Consultants Pte Ltd (as shown in the BCA award nominees in 2011),  which is a subsidiary under JTC Corporation. (link)


B. Excessive Honorarium Amount for Design Consultancy Tender

For the tender for design consultancy services (total contract value of $25.00 million), AGO observed that NRF had paid approximately $467,000 as honorariums to three unsuccessful tenderers for their efforts in submitting concept design proposals. The amount of honorariums paid was three times the amount derived based on the compensation framework provided in the Government Instruction Manuals.

Why pay three times for the concept design proposal? And the sum goes up to be close to half a million dollars! hindsight? And which are the three companies who were paid three times of what they should receive based on the compensation framework?

C. Scoring Method Used for Evaluation Not Disclosed in Tender Documents

For the tender for building works construction (contract value of $283.36 million), AGO observed that the scoring methods used for evaluating the qualitative criteria were not established upfront and made known to the tenderers. This was not in line with Government procurement principle of transparency. As there was no evidence that the scoring methods used were established prior to the tender closing date, NRF could also face difficulties in protecting itself against allegations of manipulation of scoring methods to favour certain tenderers after the details of the bids were known.

This reminds me of Gebiz, where you set certain specifications for the vendor to meet which results in instances that allow preferred vendors to have slight advantages over the others.

D. Contract Variation Instructions Issued Without Appropriate Approval

AGO test-checked 149 variation instructions issued to the contractor for building works construction and found 108 instances (72.5 per cent) amounting to $5.99 million, where there was no evidence that appropriate approval had been obtained. In another 17 instances (amounting to $330,900), AGO observed that retrospective approvals were obtained 29 to 260 days after variation instructions were issued.

NRF had not complied with the Government Instruction Manuals as well as its internal procedures which required approvals to be obtained before variation instructions could be issued. This undermined the role of the approving authority and bypassed the controls to ensure that variations were properly justified before they could be implemented.

So what this means is that out of the 149 variation instructions (which probably refers to changes to the scope or character of the works) that is issued, 108 instances were not given approval before carrying out the instructions. And out of this 149 instructions, 17 instances only had their approval obtained  1 month to 9 months after the variation instructions were issued.  

E. Late Payments and No Payment Responses Provided

The Building and Construction Industry Security of Payment Act (Cap. 30B, 2006 Revised Edition) stipulated the time frame for making payment and requirements for payment response to a payment claim.  The Act was passed to address cash flow problems faced by the construction industry by upholding the rights of parties to seek progress payments for work done and goods supplied.

For the contract for building works construction and another contract for foundation works (total contract value of $295.72 million), AGO found 32 instances of late payment to contractors (totalling $254.04 million). In six instances (totalling $26.09 million), the delays ranged from 33 to 174 days.

For the three consultancy services contracts (total contract value of $27.25 million), AGO observed that NRF did not provide payment responses to the consultants’ payment claims (totalling $24.56 million).

With such a large sum of money owning for such a long period of time, it is a wonder how the companies managed to keep afloat. But if I were in the position of the companies, I would surely dare not offend the pay master especially if I look forward to future projects with them.

So with all these irregularities, will there be any investigation conducted  on whether if there had been any conflict of interest? Bearing in mind Or public scrutiny from the press coverage?

And this is why, people say when your house is made of glass, don’t go around throwing stones. You never know when the stones come hitting back.

On a side note, would our esteemed president, Dr Tony Tan having received the report, come out to give us any of his comments since he promised to look after the public interest? But chances are, we might have to wait till the next full moon just like when Singapore was covered in haze.

And on a side side note, Dr Tony Tan took the position of the Chairman of NRF since the Foundation’s inception in January 2006 till 31st August 2011 where Dr Tan resigned from NRF  to be sworn in as President of Singapore on 1 September 2011.

If you have any knowledge of similar irregularities brought out in the report on practices that may point to non-compliance with financial and procurement rules, wastage and extravagance, and suspected misappropriation, fraud or corruption, feel free to drop a submission via the addresses indicated at this link. (Whistle-blower is not required to state his/her name  )

The report which is now available to the general public can be downloaded from the AGO’s website. (link)
or you can also read the PDF file below,

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