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by Danielle Goh
WHAT did you make of the PwC report on the finances of the Workers Party (WP) town council while it had charge of Punggol East? Did it look like same-old, same-old? Poor PwC. Its limelight had been stolen by KPMG, which released its report on the whole town council administration and finances in October last year.
PwC was put in charge of auditing the Punggol East single-seat ward which was incorporated into the Aljunied-Hougang town council after the by-election in May 2013.
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The WP had a short two years running the ward before it reverted to Peoples Action Party control in the last general election. According to the auditors, there was plenty of foot-dragging and procrastination on the part of WP, hence, the lateness of the 94 page report, which was peppered with phrases like no documentation and unsatisfactory overall.
But the report is interesting for some insights into how a handover of town councils is done. The WP took over Hougang in 1991 and Aljunied in 2011. The Punggol East handover meant that both sides would have some experience to fall back on. Clearly, the WP operates a new broom sweeps clean strategy when it came into power, turfing out vendors even though their contracts had yet to expire. That, of course, is the town councils prerogative. The question is whether the change led to better services or lower costs.
The chief beneficiary appears to be FMSS, the incumbent managing agent for Aljunied and Hougang, which went on to manage Punggol East. It charged a rate that is 17 per cent higher than the old vendor CPG, which had yet to finish its contract.
According to the PwC, the WP said that the managing agent contract went to FMSS because CPG wanted to terminate the arrangement. PwC said CPG could have been made to stay.
The PwC report had an interesting list of companies which seemed to have done well bidding for work in the WPs Punggol East ward. According to the auditors, they won contracts even though they charged higher rates than competitors, or because there were no other bidders, or were simply handed the job.
Heres what the auditors said about the way they were hired.
1. Rentokil Initial Singapore, which does inspection and extermination of termites, bees nests, rodents and other pests
Rentokil was awarded the contract from Sept 1, 2013 to Aug 31 last year. It was not the lowest bidder, and received 71.8 per cent on the Price Quality Method (PQM) score, falling behind Pest-Pro Management, which achieved 90 per cent on the PQM score. The PQM score measures the price and quality of a tender, and is the method of choice to help the G with its selection of contractors for the town council.
The Tender Evaluation Report submitted by the Aljunied-Hougang Punggol East Town Council (AHPETC) did not explain why it awarded the tender to Rentokil.
In our view, neither the circumstances and reasons for not accepting the lowest tender in this case were fully justified, nor the reasons for not doing so properly recorded, PwC said.
Rentokil was paid $10,385.42 in total. If the contract was awarded to Pest-Pro, the lowest bidder, it would have saved $2,700.21.
2. Red-Power Electrical Engineering, which maintains booster pumps, automatic refuse chute flushing system and roller shutters
Red-Power was hired for work in the Hougang and Aljunied estates in 2012, before the town council absorbed Punggol East in 2013. It was the sole bidder then. Instead of calling for a new tender for Punggol East or extending existing contracts with incumbent vendors, WP handed the work to Red-Power. The WP town council said the work went to Red-Power so that it would have greater leverage when the main contract for the whole AHPETC ran out. PwC, however, noted that when compared to other vendors who do the same kind of work, Red-Power was expensive. One comparison showed that its rate was higher by 775 per cent.
If the town council had chosen to extend the contracts of existing contractors by 12 months, it would have saved $25,920.
Exercising [such] options would have allowed the Town Council to enjoy the significantly lower rates for a further year, while, at the same time, providing the Town Council with the additional time required to call for a second tender, said the PwC.
3. Neela Electrical System, which maintains the electrically operated roller shutter doors at bin compounds and centralised refuse chute chambers
Neela was the sole bidder for a tender for the work in Punggol East. It was given the job although its rates were 10 per cent higher than what other vendors charged and Neela itself had acknowledged to the town council during an interview that it had no experience in such repair and maintenance work.
The Finance Department of AHPETC was unable to provide the necessary payment documents and information to verify the work done by Neela, which was paid $27,545.65 in total.
4. Titan Facilities Management, which does conservancy and cleaning works
Titan was hired by the old PAP town council. When WP took over Punggol East, AHPETC could have extended Titans contract term by an additional 12 months. It did not do so but chose to call a new tender. While Titan had the lowest tender price of three bidders, it was charging 67 per cent more than before. If its contract had simply been extended for 12 months, the town council could have saved $423,147.
5. J. Keart Alliances, which maintains the fire protection systems including standby generator sets
Like Titans contract, the AHPETC could have extended J. Kearts contract for another 12 months for the same rates.
Instead, the AHPETC called for a new tender for this too. J Keart won but with a new rate that amounted to a 400 per cent rise of rates for the weekly maintenance of generator sets, and a 2,567 per cent increase for the annual maintenance of fire extinguishers. If J Keart had stayed on, PwC estimated that the town council could have saved $27, 249.20 from April 1, 2015 to March last year.
Now that the town council is back in PAPs hands, we wonder if it also adopted a new broom sweeps clean approach. We asked and we are waiting for an answer.
PS. The PAP town council has declined to comment.
Featured image from TMG file.
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Danielle Goh – The Middle Ground
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