The Auditor-General Office (AGO) has released its auditing report on government ministries and statutory boards for the year 2020/2021 on Thursday (22 July) and has flagged a number of lapses concerning the Housing and Development Board (HDB).
The first lapse that it highlighted was on housing grants being distributed to ineligible applications. The report explained that CPF Housing Grants, which include Family Grant, Single Grant, Enhance CPF Housing Grant and Proximity Housing Grant, are distributed to eligible households for the purchase of HDB flats.
However, AGO conducted data analysis on resale applications with Family Grant and Single Grant from 1 April 2018 to 30 September 2020 and found out that 1,152 applicants “might not be eligible” for the grants.
“Of the 1,152 applicants, AGO test-checked 97 applicants and found that HDB had distributed Family Grants or Single Grants totalling (S$405,000) to 13 ineligible applicants (or 13.4 percent),” it said, adding that these applicants failed to meet the eligibility criteria such as non-ownership of private property and income ceiling.
To this, HDB said to AGO that it will “improve the controls over processing and assessments of CPF Housing Grants”.
It added that it will recover the grants given to the 13 ineligible applicants and take enforcement action against those who had suppressed material information.
Moving on, AGO also found lapses in price reasonableness of single bids. It explained that four limited tenders (procurement value amounting to S$18.47million) of the 13 limited tenders awarded from 1 April 2017 to 31 March 2020 were “inadequate”.
For the three limited tenders (procurement value totalling to S$16.3million) with similar scope of works and requirements, AGO detected that although HDB had compared the single bid received by each tender against its own estimates, but HDB failed to “take into account the volume of services which the tenderer was expected to handle”, which is an important factor that could affect tender pricing.
If that’s not all, no assessments were also done by HDB to determine any good reasons on why two of the single bids were priced much higher than the third bid.
“HDB explained its estimates were computed using another factor which would indirectly take into account the volume of services expected. HDB also informed AGO that there were limitations in trying to make detailed price comparisons between the single bids because of differences such as the operating environment for each tender,” the report stated.
As for the fourth limited tender, HDB issued one contractor a tender documents with details like as-built drawings and technical requirements for enhancement works to roof fixtures, and has also asked a second contractor to provide a quotation in order to get a comparison quote.
However, it failed to provide the second contractor with any written specifications on the requirement of enhanced works, resulting in “inadequate assurance” of price quoted by the second contractor, which is used to assess the reasonableness of the price given by the single bid.
To this, HDB noted that it could not give the written specifications due to “urgency of the works”.
“AGO recognised the operational constraints faced by HDB. Nevertheless, adequate assessment should be carried out to ensure that single bids received from limited tenders were reasonably priced. HDB should ensure a robust assessment of price reasonableness of single bids, based on like-for-like comparison, was conducted,” it said.
Irregularities in quotations
AGO test-check 194 quotations for 53 contract variations and one work order approved between July 2017 and November 2020, involving star items amounting to S$3.88 million under nine construction contracts.
Out of this, possible irregularities were noted in 40 quotations.
Star rate items refer to items where the rates are not listed in the contract.
HDB had appointed consultants to manage its construction contracts as well as to supervise contractors.
For contract variations and work orders involving star rate items, the consultants were supposed to assess the “price reasonableness” of the rates listed in the contractors’ invoices or quotations using different methods like verifying against one or more quotations from other sources, the report noted.
However, AGO checks found out that 40 quotations might have been “created or altered to give the impression that they were obtained from other suppliers and were reflective of fair market rates.”
AGO then recommended that HDB investigate this matter. To this, HDB said it has carried out an investigation and filed a police report, adding that it would improve its control over the management of star rate items.
Inadequate monitoring of car park operations
There are 2,048 residential car parks in Singapore that are being managed by HDB as at February this year, with 1,894 car parks using the Electronic Parking System (EPS).
Test checks of four HDB residential EPS car parks found that the monthly exception reports received by HDB were “inadequate” for monitoring car park operations, the report stated.
In fact, AGO had detected similar observations on inadequate monitoring of car park operations and enforcement by HDB five years ago.
HDB informed AGO that it would continue to explore the use of technology to improve its car park operations.
Unauthorised subletting tenanted commercial premises
The last lapse that AGO report highlighted is unauthorised subletting where HDB’s commercial premises might have been sublet to about 7,800 business entities without its approval. This risks unauthorised activities happening at HDB premises and financial loss due to under-collection of administrative fees.
“AGO’s test checks found that about 7,800 business entities had registered their addresses with the Accounting and Corporate Regulatory Authority using the address of HDB premises, even though these entities were neither HDB’s tenants nor sub-tenants. This could mean unauthorised subletting by tenants without HDB’s approval,” the report stated.
It added, “AGO’s site visits to 184 premises between December 2020 and April 2021 found 22 possible unauthorised sub-tenants at 20 premises. HDB followed up on these cases and informed AGO that it would advise the tenants to obtain HDB’s approval accordingly.”
HDB also informed AGO that it will remind tenants to not sub-tenants until it receives approval from HDB.
Additionally, HDB would also review and improve its inspection regime to better detect unauthorised subletting,” the report said.