The National Arts Council (NAC) has come out to explain the high S$410,000 consultant fee paid for the construction of the S$470,000 centralised rubbish bin in the Civic District.
This is after coming under intense fire the past several days from a scrutinising public since the release of the Auditor-General’s Office report on July 26, 2016:
"AGO also found that NAC had paid a consultancy fee of $0.41 million for the construction of a bin centre costing $0.47 million. There was inadequate assessment on the reasonableness of the exceptionally high consultancy fee, at 87.2 per cent of the cost of construction."
So, once and for all, this article will serve to highlight the two major lapses that contributed to the NAC and S$880,000 parting ways.
1. The assumption that it was a complex project.
The NAC said building the bin centre was a complex project.
Or rather, it assumed it would have been a complex project.
The NAC, which comes under the Ministry of Culture, Community and Youth (MCCY), did not decide whether consultancy fees were reasonable by looking at the quoted fee as a proportion of the project's construction cost.
The AGO report said that it compared the quoted fee against fees for other complex projects instead.
This was the reason it was not clear that the consultancy fee was exceptionally high -- because the consultant fee was not taken apart as one component.
2. There was no separate tender called for this bin project.
The report also said NAC had directly engaged the Victoria Theatre and Victoria Concert Hall consultants to provide these additional consultancy services.
It did not call for a separate tender -- which was a fundamental mistake as there is no drive towards value-seeking.
NAC said this was because the consultants, who have not been named, were selected based on an open tender for the project as a whole.
NAC said that in future it would decide whether consultancy fees were reasonable by looking at the quoted fee as a proportion of the project's construction cost.
It had not used this method for the bin centre when seeking approval for funds to pay the consultancy fee.