ST Marine has yet to start building the Police Coast Guard boats after tender was awarded – why?

Back in November 2018, a Singapore shipbuilding company ST Marine was awarded a S$316 million for the construction and maintenance of 12 boats for the Police Coast Guard. However, after half a year since the contract was awarded, ST Marine has yet to build the boats. The contract term was for the winning tender to commence with construction immediately therefore confirmed designs for the boats had to be ready at the point of tender.

When ST Marine was awarded the contract, we raised some questions about the company being part of a government contract. One of the questions we raised was about lapse in notice that was given after the contract was awarded to ST Marine. We noted that while the contract was awarded in July 2018, other bidders were only notified in November, well beyond the required 72 day notice period according to the Government Procurement Regulation 2014.

Why a company embroiled in a major corruption scandal was allowed to bid on government contracts

Another significant question we asked was why this private company was still allowed to bid on government contracts given that it was embroiled in one of Singapore’s largest corruption scandal less than 10 years ago.

Back in 2017, former ST Marine group financial controller Ong Teck Liam as well as six other former senior executives of the company were convicted for a 2014 corruption scandal for covering up and accepting bribes of up to at least S24.9 million between 2000 and 2011.

Note that according to the Defence Science & Technology Agency (DSTA) website, there are clear Defence Procurement guidelines which states that any company found guilty of corruption will be barred from obtained any new contracts or tenders from the government. ST Marine certainly fits the bill here as DSTA doesn’t differentiate between corruption involving government and non-government contracts

However, according to the Standing Committee on Disbarment (SCOD), chaired by the Deputy Secretary of Finance (or his deputy), corruption offences are investigated by the CPIB and any company convicted of corruption involving public tenders with the government will be debarred and disallowed from participating in any future bids. Notice the term “involving public tenders with the government”.

So because ST Marine’s scandal didn’t involve any government contracts, the CPIB didn’t see fit to recommend to the SCOD to debar ST Marine from bidding on government tenders.

This was repeated by Ms Rajah in Parliament who said that the process of debarment is an ‘administrative procedure by the government’ to protect the interest of the government as a service buyer against those who have caused direct harm or losses to the government.

She stressed, “There must be a nexus to government related contracts before debarment can be applied.”

Ms Rajah added that the CPIB investigations did not reveal any connection with a government agency or contract where corruption occurred. Therefore, the circumstances in which debarment can be recommended under the policy parameters did not arise.

She added, “In this case, the charges and convictions were against individuals involved, namely ST Marines former group financial controller and six other former senior execs. They were convicted in 2017 for offences committed in the period between 2000 and 2011, the most recent act being 8 years ago.”

Basically, ST Marine was allowed to keep bidding for government contracts because the corruption scandal did not involve any government contracts, did not cause any losses or damages to government agencies, and happened a long time ago.

We asked back then, why the double standard between public and private sector contracts when it comes to debarring a company from procuring government contracts? Wouldn’t the risk of future damages be more or less the same in both cases?

No progress, just conflict of interest?

Just recently, we reached out to Ministry of Home Affairs (MHA) to inquire on the progress of the shipbuilding contract but were met with silence.

On a separate but related note, MHA has also just awarded a new tender for the supervision and management of a shipbuilding project. This one was awarded to a company under ST Electronics – which in fact comes under the ST Engineering group of companies which happens to also own ST Marine.

We wrote to MHA to ask for confirmation that this new tender to oversee a shipbuilding project is in fact the same shipbuilding project that was awarded to ST Marine in November 2018. So far, no response has been issued by MHA.

Considering that the second tender was just awarded on 10 May 2019 and assuming that it is in fact the same project that ST Marine is working on, we also asked if ST Marine was asked to pay any liquidated damages given the supposed delay in construction of the vessels. This query was also met with silence.

On the issue of ST Marine, Second Finance Minister Ms Indranee Rajah who took questions on the issue in Parliament noted there was an error in the date of award of the tender to ST Marine. She said that the contract was actually awarded in 26 November 2018 and that a notice of award was published on the government’s procurement portal GeBiz the next day, 27 November 2018. She added, ““The date of award of tender was initially incorrectly shown as 27 July 2018 and this has been rectified.”

While that answers the question of the lapse in notification of award of the tender to ST Marine, it raises a separate question of why the supervising tender which was ultimately awarded to ST Electronics has options that seems to cater to the needs of ST Marine’s building processess?

The fact is, the second tender which was issued in October of 2018, before the shipbuilding tender was awarded to ST Marine, includes the option for the supervising company to select where the PC Class boats are to be built – China, Taiwan, Latvia, or Singapore. This seems to cater to the ST Marine specifically given that bidders on the shipbuilding tender all have their own shipyards, with the exception of ST Marine.

Again, we note that the supervising tender was issued before the shipbuilding tender was even awarded. So was the tender already internally decided before the official announcement in November 2018?

Should we receive any updates from the government on this matter, we will update this post.