When choosing a service provider, it often makes sense to go for the cheapest option.

But sometimes there are other factors in play besides price.

That was the key argument laid out by Senior Counsel Chelva Rajah during the sixth day of the landmark Aljunied-Hougang Town Council (AHTC) trial on Oct. 12.

Chelva, who is representing three Workers' Party MPs and two town councillors, cross-examined Goh Thien Phong, a partner in accounting firm PricewaterhouseCoopers (PwC).

Titan and J Keart

Goh went over two contracts that the town council had back in early 2015, when it was still managing Punggol East ward and was known as Aljunied-Hougang-Punggol East Town Council (AHPETC).

• Titan Facilities Management, dealing with building maintenance and cleaning.
• J Keart, providing fire protection services.

Both contracts expired on March 31, 2015.

According to Goh and PwC, AHPETC failed to exercise a renewal clause that would have extended the contracts, under the same terms.

By not taking this option, PwC alleges that the town council missed out on potential savings of about $700,000. Instead, they called for a fresh tender.

Email exchange shows that town council Chair was not given accurate information

However Rajah produced an email from Phillip Lim, who was then the contracts manager.

Lim sent this email to the tenders and contracts subcommittee of AHPETC on Dec. 3, 2014.

The email informed the subcommittee of the contracts that were about to expire. But it did not mention that they had a renewal option to extend the contracts.

Rajah cited another email, which was sent in reply to Phillip Lim by Sylvia Lim, who was then the Chairman of the town council.

She asked about the option to extend, saying:

"For the first two, is there an option to extend?"

Phillip Lim then replied, seemingly in error, that there was no option to extend the contracts. Sylvia Lim then gave the go-ahead to call a tender.

PwC not aware of the email at the time

In response to this revelation, Goh said that he was not aware of this email at the time when PwC was putting together its report.

Said Goh:

"When we talked to Phillip, that wasn’t the case. He gave us some other reasons why the contracts were not extended. This extension clause is quite common in most of the contracts for services provided to TCs. It’s unusual not to have such a clause."

Goh added that given the large amount in potential savings between extending the contract and calling for a new tender, the town council should have checked to see if that was an option.

Said Rajah:

"Even though the Chairman received the first email, she did ask the contracts manager to check is there an option to extend. She operated on the basis of this advice that she has received."

Goh repeated that he was not aware of the email at the time.

Rentokil or Pest-Pro

Rajah also disputed PwC's claim that the town council missed out on potential savings of $2,700 by awarding a contract for pest control services to Rentokil instead of Pest-Pro.

Although Pest-Pro's bid was lower than Rentokil, Rajah revealed that Rentokil had a more experienced team and it was qualified for the NEA's Rat Attack Programme, which would have entitled it to certain subsidies.

In comparison, Pest-Pro did not initially qualify for the subsidy.

These reasons, among others, were documented in the minutes of a tender committee meeting held prior to the contract tender.

When asked if he was aware of the minutes, Goh said:

"This wasn’t given to us during our work."

He added that the minutes of the meeting were not present in the tender evaluation report which PwC examined.

Email exchange shows that documents were sent to PwC

Rajah then revealed an email exchange between AHTC and PwC.

In Dec. 2016, a PwC staff asked AHTC for copies of certain documents, including the minutes of the tender committee meeting.

AHTC subsequently sent back some of the documents that were requested, including the minutes. Said Rajah:

"So you were provided with details of why the tender and contracts committee decided as it did. Weren’t you, Mr Goh?"

Goh replied:

"It seems that the email was sent to one of our staff, yes."

Goh later said that he accepted that the email was indeed sent to PwC, but the staff who received it was no longer with the company.

Tong Lee or Red-Power

Rajah also discussed the town council's decision to award a contract for the maintenance of transfer and booster pumps, roller shutters and the automatic refuse chute flushing system.

PwC claimed that AHPETC could have saved $26,000 if they awarded the contract to Tong Lee Engineering Works, instead of Red-Power Electrical Engineering.

But Rajah said that the town council had decided not to engage Tong Lee, as the company had verbally informed them that they were unable to extend their coverage to Punggol East due to a lack of resources.

To support this, Rajah produced an undated sticky note attached to an email, which read:

"(Town council staff) verbally contacted Tong Lee, but declined to take over due to insufficient resources."

When asked if he was aware of this, Goh replied:

"This wasn’t given to us when we were doing our work."

Goh maintained that PwC had requested for these supporting documents, but they were not given to the accounting firm.

When Rajah went on to elaborate how AHTC was informed by the managing agent that Tong Lee's performance was "unsatisfactory", such as allegedly failing to respond to AHTC's instructions, Goh replied that he was unaware of this.

The trial resumes on Monday, Oct. 15.

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Top image by Sulaiman Daud.

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