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Tuesday, August 14, 2012

Evidence that it's not about the rules (in Singapore and elsewhere)

Following on from the last post from Singapore, It's not about the rules:

More procurement lapses uncovered
Many of the procurement lapses by Government agencies were not because of a lack of knowledge of procedures. They were due "more to administrative expediency or preference for certain suppliers taking precedence over financial prudence", according to Auditor-General Lim Soo Ping.

He cited waiving competition on weak grounds, allowing price alterations by certain bidders and not evaluating bids in accordance with specified criteria as examples of such behaviour.

Taking issue with how the agencies treated the role of the approving authorities, Mr Lim observed "quite a number of instances" where the requisite approval of an approving authority was sought after contractual commitment had been made.

"An approving authority is a gatekeeper responsible for ensuring that the principles of open and fair competition, transparency and value for money are upheld. This is not a perfunctory role and must not be treated as such," he said. "On its part, the approving authority, when considering a recommendation ... should seek to be fully satisfied that those principles are upheld and ... should exercise a measure of scepticism in its scrutiny."

The AGO's report said that a number of Government departments had been grossly overcharged for projects, primarily as a result of the inappropriate use of term contracts.

The Singapore Prison Service's enhancement work to the prison cells was one such contract. The term contractor charged SPS 1.6 times the market price for stainless steel perforated sheets and 2.2 times the market price for polycarbonate sheets. This meant that the service could have been overcharged by about S$960,000, said the AGO.

The Health Ministry overpaid a contractor S$830,000 for the foundation work and basement construction of Khoo Teck Puat Hospital. The ministry informed the AGO that it would recover the overpayment from the contractor and would engage an external auditor to check for any similar overpayments.

The Singapore Police Force was overcharged by about S$73,000 as a term contractor overstated work quantities, charged based on incorrect rates, and had submitted invoices for work not carried out. It has implemented measures, such as improving its contract management practices, to prevent the recurrence of such lapses.

High rates of non-compliance with the specifications of street cleansing contracts, valued at S$166.37 million, managed by the National Environment Agency. AGO observed "substandard work" at 15 locations, while cleansing workers did not show up at 190 locations.

In September last year, following the previous Auditor-General's report, the MHA issued a circular to all its departments setting out the principles for the use of the term contracts.

"The circular also reminded Home Team departments that while departments may engage external project managers to manage projects carried out by contractors, responsibility and accountability cannot be outsourced. The final accountability still remains with the project officer in the department," the MHA said.

In its report, the AGO recommended that the Finance Ministry introduce procurement rules to prevent the inappropriate use of term contracts and to ensure that agencies are charged at fair market prices for items not priced in the term contract.

Mr Lim reiterated that procurement officers "should be well imbued with the principles of fairness, transparency, competition and value for money".

Said Mr Lim: "It is, therefore, important that training in procurement also incorporates the imparting of values expected of public officers as custodians and stewards of public moneys. This should be reinforced by the senior management of public sector agencies setting the right tone at the top on governance and financial control matters."

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