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Linked firms vying for same public contracts
BUSINESSES with directorship or ownership links to each other are submitting bids for the same government contracts.
This has raised questions by some on whether such links should face more scrutiny under the government's procurement process for goods and services process.
The Ministry of Finance however, says procurement rules allow for this, so long as there is no collusion or tender "rigging".
It said: "In an open competitive environment, the participation of two or more companies with common directors or owners is allowed as long as it does not prevent any other company from submitting a bid."
The ministry's spokesman added that if there was a suspicion of collusion or bid rigging, regardless of whether there are common directors or owners, it will prompt further investigations.
Data by Handshakes - a portal that generates interactive network maps of people and entities - shows four cases of certain tenderers for the same jobs being connected to one another by common directors - past or present - and/or shareholders plus other links such as a common company secretary and in one case, registered address.
The cases involved services procured by the Land Transport Authority (LTA), Ministry of Education (two contracts) and Nanyang Polytechnic between last November and August this year for contracts worth some S$16,000 to S$2.9 million.
Handshakes' analysis, provided to The Business Times, was based on information on GeBiz, the government's e-procurement portal, and the Accounting and Corporate Regulatory Authority (ACRA).
In response to BT's queries, the MOF spokesman said: "Companies are considered as distinct suppliers even if they share common directors or owners, as long as they are recognised as separate legal entities."
These suppliers will be evaluated based on their own merits against the evaluation criteria, it added.
While the bulk of government procurement activities in Singapore is decentralised to individual ministries, statutory boards and departments, the MOF has issued central procurement guidelines for all to follow.
Still, some opine that it may be worth a rethink, to discourage private sector players from trying to get several bites at a contract.
"It would be appropriate for the government to consider reviewing the present rules to prevent 'gaming'," said Robson Lee, a Singapore-based partner of US law firm Gibson Dunn when asked to comment on the findings.
"Any regulatory change to prevent 'gaming' will reinforce public confidence in the tender process," he said.
In the case of the LTA tender for the supply and installation of new system furniture which closed last December, the job was awarded to C&R Interiors Pte Ltd which had submitted a S$2.91 million bid.
While the winner had no links with other bidders, Handshakes' network map indicates common connections between three out of 12 companies that tendered for the job.
Two tenderers - Vanguard Interiors and Vcop - have two common directors, company secretary and a common shareholder cum director. One director and shareholder from another tenderer D'Doubles was a past director in Vcop between 2005-2010 and still remains a shareholder in Vcop.
These three firms had submitted bids for the LTA job ranging from S$2.66 million to S$3.5 million.
"LTA evaluates all contracts in a stringent manner. This includes carrying out checks on company profile and their shareholder information," said an LTA spokesman in response to queries.
In addition, it will carry out checks to confirm the independence of the bidders for tenders where directors or shareholders are participating in multiple bids for the same project.
"The LTA tender evaluation committee will also seek clarification from the tenderers to confirm the involvement of these directors or shareholders in the respective tender bids.
Where necessary, we will request the tenderer to provide an undertaking to ensure that there is no conflict of interest due to such common directorship," the LTA spokesperson elaborated.
The other instance involved a procurement exercise by the Ministry of Education for the design, supply and installation and maintenance services of a cabinet with built-in tropical fish aquarium that closed on July 19 this year and was awarded to Urbanseas for S$16,000.
Urbanseas and another supplier Iwarna Aquafarm which had submitted a quote at S$19,348 share a common director and shareholder, according to information from Handshakes.
When queried, an MOE spokesman replied: "MOE takes guidance from the Government Procurement policy framework. We assess all companies on the same criteria. We will evaluate the offer from each participating company based on compliance with tender requirements, the participating company's financial capability, and merits."
One observer remarked: "These bids by connected parties reflects market forces simply reacting to our procurement system. Or it could just be the private sector being clever about things. I believe it could warrant a closer look at the rules to ensure prudent management of public funds."
The Handshakes analytical tool is produced by DC Frontiers, in which Singapore Press Holdings made a S$2 million investment in 2015.