SINGAPORE, July 21 — Despite generally having in place proper protocols for Covid-19-related procurement and expenditure, the Auditor-General’s Office (AGO) found that the Health Promotion Board (HPB), Singapore Land Authority (SLA) and Ministry of Manpower (MOM) had areas where controls could have been improved.

These included lapses in the evaluation of contractors’ proposals and assessment of price reasonableness, and weaknesses in the payment processes, AGO said in a report released on Wednesday (July 20), where it does its yearly audit of the public sector.

The 109-page report, which covers the 2021 and 2022 financial year, was tabled in Parliament on Tuesday after being submitted to President Halimah Yacob on July 4.

For this financial year, AGO said that it had included a thematic audit focused on selected Covid-19-related procurement and expenditure managed by HPB, SLA and MOM.

This thematic audit is done as part of its usual audit of the public sector. It is an in-depth examination of a selected area of focus. For instance, it had done a thematic audit before on selected social grants managed by the Ministry of Health and the Ministry of Social and Family Development.

For the government ministry and agencies this round, AGO found that the three had incurred a total of S$1.51 billion (RM4.83 billion) on Covid-19 expenditure relating to manpower services, accommodation facilities and meal catering during the audit period from January 2020 to March last year.

As part of its audit, AGO test-checked samples — which covered 18 per cent of the total expenditure, or S$264.93 million — on contracts, payments and contract variations.

AGO said that it sought to assess whether processes and controls were in place across the following stages:

• Planning and establishing needs

• Procurement and contracting

• Managing contracts

Closure or renewal of contracts

It found that HPB, SLA and MOM "generally had in place processes and controls across the four stages of procurement and contract management”.

It also noted that they had implemented several "good practices to facilitate timely response to the emergency situation and to reduce costs for the Government”.

These included structured processes for managing conflict of interest, contractor debarment checks, periodic reviews of contracts in response to changing requirements and measures to reduce overall spending.

Areas for improvement

However, there were areas that can be improved.

For instance, it found that for SLA and MOM, there were lapses in the evaluation of their contractors’ proposals and assessment of price reasonableness when it came to the contracting for their respective Covid-19-related procurement.

Both had discrepancies and omissions in their submissions to the approving authority for contract awards.

In terms of payment controls, SLA and MOM had inadequate checks on the validity of payments, discrepancies in payment claims and a lack of supporting documents for payments.

For them and HPB, there was a need to improve on the documentation of assessments carried out, such as on price reasonableness, for proper governance and accountability.

AGO said that HPB, in particular, had many instances where documents relating to the evaluation and appointment of personnel conducting Covid-19 swabs — such as the assessment of suitability and contract offers or acceptances — could not be located for the audit.

HPB should also improve controls to "mitigate the risk of erroneous payments”, which included the timely deactivation of terminated personnel’s accounts in the payment system, it added.

Beyond these, AGO noted that there were "tell-tale signs that cast doubt on the authenticity” of some documents provided by a contractor to substantiate the price reasonableness for some of the required services.

For MOM, it found discrepancies in the extension of one of its contracts.

SLA and MOM have filed reports with the relevant authorities after the possible irregularities surfaced.

Learning points

The report said that the thematic audit offered three learning points for the public sector.

The first is that there is a need to establish a "reasonable level of governance and planning arrangements” for use in an emergency.

Such arrangements can be established during peacetime for activation during emergencies.

Areas where agencies would benefit from "greater central guidance”, it said, include evaluating contractors for goods or services acquired through emergency procurement, or determining the extent of documentation needed for key decisions and transactions.

Next, AGO said that central agencies may wish to consider how critical support functions such as procurement, finance and human resource can "be better organised” at either a whole-of-government or agency level and what detailed guidance to give to agencies in these areas.

And lastly, it stressed the need to maintain appropriate records and to document key decisions and transactions.

What the Ministry of Finance says

In response to the lapses flagged by AGO in the thematic audit and its related suggestions, the Ministry of Finance (MOF) said that it will "take on board the lessons learnt”.

The ministry also highlighted three actions that it will be undertaking.

The first is a review of its emergency procedures to provide better guidance to agencies in managing procurement, contracts and payments.

MOF expects this review to be completed by the end of the 2022 financial year.

Second, it said that the Public Service Division — as the central human resource agency — will improve its efforts in supporting frontline agencies during emergencies.

"This includes providing central guidance on the governance of human resource for frontline operations; and leading the coordination of surge manpower and human resource operations,” MOF added.

Finally, it will be issuing an advisory note to all public agencies to improve the adoption of good practices and to minimise financial risks during emergencies.

This will include better supervision and documentation of decisions, such as approvals and adjustments across the life cycle of a transaction.

What HPB, SLA and MOM say

HPB, SLA and MOM said in a joint-statement that they acknowledged the observations made by AGO.

They added that the Covid-19 pandemic was "unprecedented in the scale and speed of its spread” and they had to act decisively to protect Singaporeans.

This meant that they had to quickly pivot from "business-as-usual operations to crisis mode”, including taking on new and extra responsibilities in a highly uncertain operating environment.

For instance, MOM said that aside from containing the Covid-19 outbreak in the migrant worker dormitories and taking care of the residents’ well-being, it had to step up support for dormitory operations that were previously managed by the private sector.

As a result, the number of new contracts for goods and services that it had to procure within five months surged nearly 10-fold to 607, while the total value of these new contracts surged 13-fold to S$700 million.

As for HPB, it said that it took on the responsibility to oversee the delivery of Covid-19 tests nationally.

To do so, 5,100 swab personnel had to be hired and trained within three months — a workforce that represented more than six times HPB’s total pre-pandemic manpower strength.

SLA said that it had to quickly adapt to its added role of procuring, preparing, administering and managing premises to be used mainly as quarantine, isolation, recovery or temporary dormitory facilities for people affected by Covid-19.

As the number of Covid-19 cases rose rapidly, the stock of accommodation facilities needed increased in tandem and SLA had to react quickly within tight timelines.

All three entities said that they have since taken immediate steps to rectify the lapses highlighted by AGO and to prevent them from recurring.

As a means to improve controls over their respective procurement and contracting processes, the three said that they will improve their ability to manage a surge in the volume of procurement during emergencies, by reviewing their emergency procurement procedures.

"These will have strengthened controls and processes to cater for urgent operations, while adhering to the Government’s procurement principles,” they said in the statement.

To address HPB’s need to improve its documentation processes, the agency has now formalised the need for written agreements with all external partners as good practice, even in times of extreme urgency and for services provided at no charge.

MOM and SLA have identified officers to be trained in enhanced emergency procurement procedures to improve their ability to manage a surge in the volume of procurement during emergencies. — TODAY