The Auditor-General report for 2020 is out.
You can go through the very long report here, with a summary of the findings to be published later in the day.
One of the audit observations by the Auditor-General’s Office for the 2019/20 financial year was in the area of procurement and contract management.
Lapses have been found in the procurement and contract management at the Government Technology Agency, the Jurong Town Corporation (JTC), the National Library Board (NLB) and PUB.
According to AGO, the weaknesses observed in the management of contract variations included:
"- Approvals not obtained before carrying out variation works. In some cases, approvals were sought after works had commenced or after works had already been completed.
- No approvals sought for substantial increase in variation costs over earlier approved variation costs.
- Wrong rates applied in the valuation of cost deductions.
- Not deducting costs for works not done."
AGO noted NLB's case in particular.
The report classified the management of contract variations and overall project management for the revamp of the National Archives of Singapore building as being "weak".
AGO pointed out that in-principle approvals were sought for variations with no "compelling reasons", and IPA requests were approved even without "ballpark cost estimates".
IPAs were sought for 36 variations without compelling reasons. AGO noted that IPA's should be used as "an exception instead of the norm".
AGO also pointed out that works commenced for 17 of the 36 variations, eight days to about two months after the IPAs were obtained, indicating "there was no urgency for the works".
All this led to the overrun of the project costs.
The project eventually exceeded the approved cost by S$1.72 million, about 8.4 per cent of the approved project cost of S$20.53 million.
"Public officers who are appointed as approving authorities for procurement and contracts should take their role seriously. They should scrutinise requests, raise questions and exercise due diligence as approving authorities."
NLB also only sought approval from its approving authority for exceeding approved project cost, five months after it was aware of the cost overrun.
AGO said "seeking retrospective approval undermined the role of the approving authority and indicated a weakness in financial controls".
In response to the AGO findings, NLB released a statement.
Firstly, NLB agreed that it is important to put in place measures to address the lapses flagged by the AGO.
According to NLB, it introduced the IPA process in September 2018 to carry out urgent variation works "without undue delay".
NLB also said the IPA's are independently reviewed by consultants.
"These IPAs are subsequently formalised via Requests for Variation Order, and the cost involved for each IPA is independently reviewed by NLB-appointed consultants, before any payment is made by NLB."
NLB said it will be taking measures to tighten the approval and tracking of variation works:
"All urgent works requiring IPA should be substantiated with reasons.
Consultant’s ballpark estimate for each variation work should be stated when seeking IPA.
Formal approval for variations should be obtained within six weeks after IPA.
The balance in the contingency sum should be stated when seeking IPA."
NLB said it will be implementing an online system to track contract variations and cost utilisation for projects in 2021.
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