Published June 25, 2009

How a barred contractor got Mindef work

Bidder stayed under the radar by posing as sub-contractor

By CHUANG PECK MING
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(SINGAPORE) What do you do if you are a contractor banned from tendering for government projects? You bid as a sub-contractor.

That's what one corrupt contractor did recently when he bid for a Ministry of Defence (Mindef) contract. And he got away with it.

Mindef's procurement agent, the Defence Science and Technology Agency (DSTA), did not check the debarment status of sub-contractors - and was not required to under Government Instruction Manuals (IMs), Mindef's Permanent Secretary said when asked to explain by Parliament's Public Accounts Committee (PAC).

The Permanent Secretary said DSTA would amend its vetting procedures accordingly if the IMs were amended. The Ministry of Finance has since made the IMs more specific to prohibit banned contractors from taking up government projects as main contractors or sub-contractors.

This and other lapses in government ministries are revealed in the PAC's third report, released yesterday.

Among other things, the committee's second report, in May last year, revealed that some dead Singaporeans continued to receive money from the Ministry of Health. The report found the ministry made $178,150 of over-payments to people who had died in the 2006/07 financial year.



The latest report by the eight-member PAC, which is headed by Member of Parliament Cedric Foo, reveals not only government procurement issues, but also property management lapses, administrative delays and other oversights.

The PAC found the National Heritage Board (NHB) awarded $26 million of construction work on the exhibition galleries at the National Museum without a competitive bid.

'This did not ensure transparency, fairness and value for money in the procurement,' the report says. And NHB's reasons for its action 'do not stand up to scrutiny'.

NHB said an open tender for the work would have delayed completion of the museum. It also said a tender would have been hard to manage because the galleries required complex system integration work; the works to be constructed were 'creative works of art'; the number of specialist exhibition contractors with a relevant track record was limited; and it had done the same in 2002 for the Asian Civilisations Museum.

NHB also said the price quoted by the exhibition designer for the work was found by a 'third party' project management consultant to be acceptable because it was within NHB's budget.

But the PAC report says this does not necessarily mean the price was fair and competitive. It also says the 'third party' had a conflict of interest 'as it was offered by NHB a contract to provide project management services for the construction work'.

The report says the Ministry of Information, Communications and the Arts (MICA) has since enhanced its project management system to ensure transparency, fairness and value for money - and has put in place 'multi-tier oversight structures' for major projects.

The report also views as 'serious breaches' of government procurement principles two instances in which DSTA allowed suppliers to vary terms after the close of tenders.

Other lapses revealed in the report include:

# Under-utilisation of state properties;
# Government chalets left idle for more than 14 years;
# Five cases of long-outstanding rental arrears on state properties;
# An extended delay of liquidation by the Insolvency & Public Trustee's Office.