Revamp of National Archives ran S$1.72 million over budget, Auditor-General flags lapses by NLB
SINGAPORE: The revamp of the National Archives of Singapore (NAS) building exceeded its approved budget by S$1.72 million, the Auditor-General's Office (AGO) said in its report released on Monday (Sep 7), flagging inadequate project management on the part of the National Library Board (NLB).
The National Archives of Singapore had previously undergone upgrading works for 18 months, and reopened in April last year.
Management of the project - which had an approved cost of S$20.53 million - was "inadequate on several fronts", said the AGO in its audit for the financial year 2019/2020.
It found a "lack of scrutiny" in the management of contract variations for the project, with lapses found for 42 out of 75 contract variations it test-checked under the construction contract for the revamp of the building.
Many in-principle approvals for contract variations - involving sums “as high as” S$0.37 million - were approved even without ballpark cost estimates, said the AGO.
"This meant that NLB had given approval for works to commence even though it did not know the magnitude of the costs involved," said the authority.
“Giving approval and making financial commitments without clarity on the costs involved meant that the project would run a high risk of project cost overrun," it added.
READ: Lapses in procurement, grants disbursements and IT systems in public agencies: Auditor-General's report
The project ended up exceeding its budget by S$1.72 million, or 8.4 per cent of the approved project cost.
In addition, NLB only sought approval from the approving authority to exceed the approved project cost five months after it became aware of the cost overrun, said the AGO.
“Seeking retrospective approval undermined the role of the approving authority and indicated a weakness in financial controls,” it said.
LAPSES IN PROCUREMENT
The AGO also highlighted lapses in procurement by the NLB more broadly, which it said could have affected the outcomes of some contracts awarded.
It found lapses in nine cases out of test checks of 29 NLB tenders and quotations, which were awarded between Apr 1, 2017 and Jun 30, 2019. The nine cases had an approved procurement value of S$19.39 million.
“The lapses included inadequate assessment of price reasonableness of single bids and not evaluating bid submissions in a fair manner,” said the report.
“As a result, there was inadequate assurance that NLB had adhered to the Government procurement principles of value for money, fairness and transparency.”
NLB had not evaluated bid submissions fairly in six of the nine cases, said the AGO, with the outcome of two awards placed in question with the lapses.
For example, NLB had not adequately verified if bidders complied with published tender or quotation requirements, with three awards given to bidders whose bids did not meet mandatory requirements.
The award outcome could have been different for one of these cases, which had an approved procurement value of S$0.39 million, had NLB evaluated the bids in accordance with the published requirements, said the AGO.
In another case, NLB used a different evaluation criteria than those published, which disqualified two out of four bidders who did not meet requirements that the board did not clearly indicate as mandatory.
“Had NLB not disqualified these two bidders, the outcome of the award could have been different,” said the AGO.
For some cases, the scoring matrix used to compute evaluation scores was only determined after the close of the tender or quotation, or with no evidence showing otherwise, said the authority.
“As the bids would have been known by then, NLB could be subject to allegations that the scoring matrix was designed to favour certain bidders,” said the AGO.
NLB also failed to adequately assess the price reasonableness of single bids in seven of the nine cases.
In several cases, NLB had concluded that a single bid was reasonable after comparing it against its own estimated procurement value, even though its estimated procurement value could not be substantiated with supporting documents, or was taken from budgetary quotes by the vendor later recommended for award of tender.
“Comparing the bid against the EPV (estimated procurement value) derived from the same bidder is effectively a self-to-self comparison,” said the AGO.
“In most of these cases, there was no evidence that the approving authority had questioned the inadequate assessment.”
For other cases, NLB had concluded that the price of the single bid was reasonable after comparing it with past tenders or quotations, but it did not take into account differences in scope and specifications.
The board also did not highlight these differences in the evaluation report for the approving authority to make an “informed decision”.
NLB TAKES AUDIT OBSERVATION “SERIOUSLY”
In a statement on Monday, NLB said that it takes the audit observations by the AGO “seriously”, citing measures it has taken to address the lapses.
Regarding the lapses in management of contract variations for the National Archives of Singapore project, NLB said that it had introduced the in-principle approval process in September 2018 to enable urgent variation works to be carried out "without undue delay".
These are subsequently formalised via requests for variation orders, and costs involved for each are independently reviewed by NLB-appointed consultants before any payment is made by NLB, it said.
After the completion of the revamp - and prior to the AGO's audit - NLB said it had conducted a "post-action review" to enhance its processes to ensure "timely and well-documented approval", including for urgent variation works.
"NLB will ensure continued compliance with these processes, and is implementing an online system to track contract variations and cost utilisation for projects in 2021."
As for the procurement lapses, NLB said it has “further enhanced the robustness” of its procurement evaluation process with immediate effect, especially for single bids and single qualifying bids received through open tenders and quotations to “ensure fair competition".
It said it would also continue to regularly review its internal processes and step up its conduct of procurement briefings and staff training.
In addition, NLB has implemented a "robotics process automation" system to “manage repetitive and manual tasks” to minimise human error, it said.
The board has also been aggregating demand in purchases of common categories of goods and services to achieve economies of scale and reap savings, where possible, it added.
“Moving forward, NLB will step up the use of analytical tools to parse procurement data to improve decision-making and strengthen procurement governance,” it said.