MHA, MCI found lacking in assessing contracts and tenders; SkillsFuture agency overpaid about S$4.22m in grants: AGO audit

SINGAPORE — In a tender it had called for creative services to execute communication campaigns, the Ministry of Communications and Information (MCI) received widely differing bids for the same service. For example, one bidder submitted a bid of S$900 for a service item, while another charged $82,800 for the same item.

However, during the tender evaluation, MCI did not follow up with the tender bidders to ascertain whether they had quoted on a like-for-like basis. It went ahead to award the items and appoint the bidders to a panel of vendors. 

These were among the findings released on Wednesday (July 20) by the Auditor-General's Office (AGO) in its annual audit of government agencies.

AGO also found similar lapses within the Ministry of Home Affairs (MHA) and the SkillsFuture Singapore Agency (SSG), a statutory board under the Ministry of Education (MOE). 

Its report noted that for MCI, the rates submitted by tender bidders for the same service "varied significantly", with the highest rates being 43 to 92 times the lowest rates for some service items. 

"As public sector agencies would rely on the rates awarded by MCI for procurement under the Whole-of-Government Period Contract and Framework Agreement, it is important to ensure that rates are evaluated on a like-for-like basis before award," the report stated. 

This agreement above aims to help public sector agencies such as MCI in their procurement of communications campaign services from an appointed panel of vendors at pre-determined prices. 

"MCI informed AGO that it would ensure that future tender bids were evaluated on a like-for-like basis," the report added. 

MCI also did not monitor the spread of contracts awarded to vendors under the agreement.

As of Dec 31 last year, the top vendor by procurement value was awarded S$124.06 million — or 38 per cent of the total procurement of S$332.74 million under the agreement.

The next two highest vendors were awarded contracts totalling 7 per cent and 6 per cent of the total procurement respectively. 

AGO noted that one of MCI's objectives for the agreement was to establish an expanded list of vendors to cater to the varying needs and budgets across different public sector agencies and it would therefore be "important to have a good spread of business opportunities to bid for future tenders". 

"This in turn will ensure that public sector agencies can continue to enjoy competitive prices in the long run." 

MCI had consulted the Ministry of Finance (MOF) on the concentration risk, and "MOF's view is that the inclusion of multiple vendors in demand aggregation contracts is to cater to the wide variety of needs that public sector agencies may have". 

MOF said: "If the high concentration of awards to a particular vendor on the panel is a result of the vendor being able to provide goods or services at a suitable pricing that best meet public sector agencies' needs, this is not a negative outcome."

However, MCI has agreed that it was important to have a good spread of business opportunities in the creative services industry and to build up the experience and expertise of more industry players in government communications. 

TODAY has reached out to MCI regarding these lapses. 

LAPSES BY THE MINISTRY OF HOME AFFAIRS 

MHA had appointed contractors for construction contracts under two development projects and engaged consultants to manage the main construction contracts on its behalf.

However, the audit found lapses in the form of inadequate assessment of the cost reasonableness for "star rate items". These were items for which rates were not listed in the contract. 

Of the 199 star rate items, all but one were not assessed based on independent sources, contrary to the stipulated guidelines on how such items are quoted. 

AGO also found lapses in the valuations of contract variations, where variation works were not properly valued. There were possible irregularities as well in the quotations given by contractors for 531 out of 752 star rate items. 

MHA said that it will continue to improve in these areas and will put in place extra measures to ensure that contracted building works are carried out in accordance with contractual requirements and prevailing regulations.

It added that its consultants had "generally adhered to contractual conditions" when administering the contracts, but "had not abided by the recommended good practice of obtaining an independent comparison quotation" in addition to the quotations received for the star rate items.

"MHA has since informed all consultants of the required guidelines and procedures for assessing and documenting variations or deviations from the guidelines," it said. 

It also said that it takes a "serious view" of possible irregularities in the quotations for star rate items, and police reports were filed immediately after the observations were surfaced by AGO.

LAPSES BY SKILLSFUTURE SINGAPORE 

In managing grants, SSG has overpaid recipients an estimated S$4.22 million.

There was inadequate monitoring and there were lapses in checking for grant eligibility, with money disbursed to individuals and companies that were not allowed to get funding, for example. 

SSG was also lax in enforcing the outstanding Skills Development Levy collections from employers, with the estimated outstanding levy owed for the period between 2015 and 2020 being S$43 million as at April this year.

The is a compulsory levy that employers have to pay for all their employees working in Singapore.

The Central Provident Board collects the levy on behalf of SSG, which is tasked to help Singaporeans learn new skills and is in charge of skills development funds. The levy collected is channelled to the skills development funds.

SSG was found to be tardy in its enforcement actions and did not put in enough effort to audit employers who potentially owed significant amounts of the levy.

The agency said that it will take more preventive measures to avoid future lapses. For example, it will reduce reliance on manual processing and make better use of government data rather than declarations to determine grant eligibility.

It acknowledged that a more effective system is needed to follow up on variances between its estimates of the levy due and what companies pay, “and more needs to be done to reconcile the remaining gap". 

Most companies already comply with the requirement to pay the levy, it said, and it will put in place processes such as more timely payment reminders for employers, to help ensure that all employers pay accurately and promptly.