STRENGTHENING OVERSIGHT OF PROJECT CONSULTANTS ASSESSING COST REASONABLENESS OF CONTRACT VARIATIONS

The Auditor-General’s Office (“AGO”) issued its report in July 2022. With respect to the Ministry of Home Affairs, it found possible irregularities in quotation of star rate items totalling $3.14 million or 34% of the star rate items that it checked.

What are star rate items? These are items for which rates are not listed in the contract. This gives rise to concerns of cost reasonableness of these items which are procured using public funds.

I therefore filed a question with the Minister for Home Affairs asking what steps his Ministry will put in place to address the problem identified by AGO.

In his reply, the Minister stated that his Ministry has reminded its officers managing construction projects to comply with the IM on Procurement. His Ministry has conducted engagement sessions with Home Team Departments to share best practices. He also mentioned that his Ministry is using technology to pick up anomalies.

I agree that these steps do go a long way to address AGO’s concerns. In my own view, with the experience gained by the Ministry and whole of government in development projects, there should be an ability to set out upfront in the tender documents, a list of the items which may conceivably be purchased during the development projects and get the companies participating in the tender process to provide quotes. This may be a better way to ensure cost reasonableness. My PQ and the Minister’s response may be accessed below.

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Mr Murali Pillai asked the Minister for Home Affairs on the Auditor-General’s Office (AGO) Report for the financial year 2021/22 regarding star rate items’ cost reasonableness of contract variations and quotations authenticity for two development projects under MHA (a) whether any additional steps were implemented following AGO’s similar finding in relation to HDB for the previous financial year and, if not, why not; and (b) what further steps will be taken to strengthen the oversight of its project consultants in charge of assessing cost reasonableness of these contract variations.

Mr K Shanmugam: The two MHA development projects audited by AGO commenced construction in FY2015 and FY2016 and obtained their Temporary Occupation Permits (TOP) in FY2018 and FY2020, respectively. They were completed prior to the issuance of AGO’s findings on HDB in 2021.

MHA has reminded officers managing construction projects to adopt the good practices in Appendix S8–6 of the IM on Procurement. We have been conducting engagement sessions with Home Team Departments (HTDs) to share best practices such as lessons from the AGO’s audits and BCA’s Good Practice Guide.

There are several layers of safeguards. At the same time, Member must note that there are a very substantial number of projects every year. While every effort is taken, human error (and sometimes bad conduct) cannot be completely eliminated. We are using technology increasingly to pick up anomalies, and are reminding officers of the processes. We will continue to do so.