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Auditor-General's Report identifies lapses in Gardens By The Bay contract controls

Jurong Town Council's development of the International Cruise Terminal and two overseas National Population and Talent Division events were also flagged for laxity in control over contract variations.

SINGAPORE: The development of two major projects - Gardens By The Bay and the International Cruise Terminal - came under the scrutiny of the Auditor-General for lapses in the control of contract variation works, when there are changes to contracts due to unforeseen circumstances.

"Public sector entities are expected to carry out reasonable checks on the prices of goods and services and obtain approval before awarding the contract variations," the Auditor-General's Office said in the report, released on Wednesday (Jul 15). "This is to ensure that the Government procurement principles of value for money and open and fair competition are adhered to."

It added that obtaining retrospective approvals for variations weakens the controls put in place to ensure that variations are properly justified, and that the approving authority has adequate insight of project costs.


"The Auditor-General's Office's test-checks revealed a general lack of documentation, failure to obtain approval and laxity in control over contract variations by NParks in managing the development of the Gardens By The Bay project", which has an estimated total contract value of S$1.06 billion, the AGO said.

"Consequently, there was no assurance that NParks had not spent more funds than necessary."

One consultant was allowed to commence services before approval was obtained to call a tender in which only that consultant was invited to bid, for a project with a contract value of S$2.37 million, said the AGO. "By doing so, NParks had prematurely communicated to the consultant that it had intended to award the contract to the consultant."

NParks said it did so as it faced a tight timeline, and acknowledged that it should have highlighted to relevant authorities that more time was needed, and called an open tender instead.

The AGO also found that three consultancy services contracts with an estimated total value of S$20.77 million was awarded via waiver of competition, but without compelling reasons. Again, the tight timeline was cited, though no evidence was found to show this.

The AGO also took issue with the weak controls over contract variations in the Gardens By The Bay project.

In 43 instances, the AGO found that only a single quote was received for various projects, but there was no documentary evidence of the assessment of whether the quotes were reasonable. In 45 cases, approval were obtained only after the work had been carried out or completed. And in 12 instances, no evidence was found of approval for variation work even though payment had been made.

NParks said that these variations were mainly "specialist sub-consultancy studies" which had to be carried out due to the complexity of the project; to minimise such future occurrences, NParks said it would incorporate such studies in the main tenders instead. It has also implemented a computerised contract variation system to better track approvals of such contracts.


In its audit of the construction and consultancy services contracts for the International Cruise Terminal undertaken by JTC - worth a total of S$510.18 million - the AGO found that approvals of 87.1 per cent of variations were not obtained from the relevant authority before works were carried out, while payment on the variations were S$340,000 higher than those based on contractual rates. 

"Obtaining retrospective approvals for variations weakens the controls put in place to ensure that variations are properly justified," the AGO said. "These controls are essential to ensure that the approving authority has adequate oversight of project costs."

JTC also did not carry out assessments on whether fees were reasonable before engaging consultants to provide new services, the AGO said. JTC said it had obtained in-principle approvals for urgent variations, but these were not documented.


In reviewing the procurement of event managements services for two overseas events held in 2013 and 2014, with a total original value of S$6.79 million, the AGO found the the National Population and Talent Division (NPTD) had not checked that the prices of goods and services, totalling S$1.51 million, procured by its vendors on its behalf were reasonable.

A similar observation had been made in the AGO report for FY2011/12, upon which the NPTD had said it would carry out cost comparisons for future events. "The current failure to carry out reasonableness checks ... is thus a recurring lapse," said the AGO.

The AGO also found that prior approval was not obtained for all variation works totalling S$1.47 million - a 60.7 per cent over the original contract value - for the 2013 event. The NPTD said it would review and improve the management of its contract variation processes.