This article explores the legislation that governs procurement by the Singapore government and its agencies, and, explores situations where a tender award decision should or should not be challenged.
I. Legislation governing government procurement in Singapore
The relevant legislation which governs public procurement in Singapore is the Government Procurement Act (Cap. 120) (the “Act”). There are also three pieces of subsidiary legislation:
- The Government Procurement (Application) Order (the “GP Order”), which specifies the states, authorities and procurements relevant to the Act.
- The Government Procurement (Challenge Proceedings) Regulations (the “GP Regulations”), which state procedural matters in relation to proceedings where a tenderer may have brought against a contracting authority before a Government Procurement Adjudication Tribunal (a “Tribunal”).
- The Government Procurement Regulations 2014 (“GP Regulations”), which set out the types of procedure which may be used in the procurement process.
Next, there are also guidelines issued by the Ministry of Finance which set out the policies surrounding public procurement which may be useful for tenderers. These guidelines may be found at the Government Electronic Business portal (“GeBIZ”) at this link: https://www.gebiz.gov.sg/
II. Coverage of the relevant legislation
The Act applies to procurements of specific goods and services by specified contracting authorities. A list of designated contracting authorities is found in the Second Schedule of the GP Order. This list includes ministries, universities and other bodies. Private entities are generally not covered under the Act. The goods and services covered are then set out in the Third, Fourth and Fifth Schedule of the GP Order.
Under the GP Order, there are differing financial thresholds for determining whether a particular contract is covered by the Act.
The GP Order also prohibits contracting authorities from splitting up a procurement order into smaller ones to artificially avoid the Act's threshold for application.
III. Award procedure
In general, the entire procurement process involves the following steps:
- Evaluation and approval of award
- Contract management
Different procurement procedures apply depending on the size of a tender:
- Small Value Purchase (up to S$6,000 in estimated procurement value);
- Quotations (up to S$90,000); and,
- Tender (more than S$90,000).
Tenders themselves may be put out by different means:
- Open tendering which refers to a tendering process where all interested tenderers may submit a tender.
- Selective tendering which refers to a tendering process where only tenderers which meet a minimum requirement (for instance, licensed or accredited service providers) may submit a tender.
- Limited tendering which refers to a tendering process where only a few tenderers or one pre-identified tenderer is invited to submit a tender. Pre-qualified tenderers are generally renowned experts in their field or have impeccable track records in the provision of essential services.
In the evaluation stage, contracting authorities are responsible for making their own procurement decisions. Importantly, tender specifications given to tenderers should be looked at closely as these usually contain the evaluation criteria. The contracting authorities have a duty to the tenderers to abide by the following principles and the criteria laid out in the tender specifications.
All relevant procurement requirements as well as procedures and evaluation criteria relevant to the tendering and award process must be transparent and made known to tenderers. In particular, the GP Regulations require contracting authorities to publish prescribed information relating to the procurement in the government Gazette or GeBIZ.
The contracting authorities should consider other factors other than the proposed price of bids. Other factors may include the quality of the goods and services, timeliness in delivery, reliability and after-sales, service, etc.
- Open and Fair Competition
Contracting authorities should encourage an open and competitive environment for tenderers to give their best offers. There should not be any discrimination in favour of or against any tenderer.
- Financial strength
In practice, a tenderer whose overall financial strength is found to be inadequate may (i) not be eligible for the tender award, or (ii) be required to furnish additional security upon the award of the contract, if and when deemed necessary or fit by a contracting authority.
- Security from the parent company
In large infrastructure projects, it is not uncommon for the contracting authority to reserve the right to require the immediate, penultimate and/or ultimate holding company of the tenderer to submit a parent company guarantee as security for performance. The guarantee constitutes an undertaking to cover the strict performance of the contract, as a primary surety, to the authority.
Upon selecting a tenderer, the contracting authority will award the tender and begin the contract management stage where further details and on-the-ground project management issues may be negotiated and worked out. The conditions of contract are sometimes supplemented or amended to take into account practical implementation issues. In relation to the current pandemic, for instance, if COVID-19 creates a severe shortage of workmen or imported goods to be incorporated into a project, one assumes that some form of negotiation and give-and-take may be required on the conditions of contract to enable the project to proceed instead of a binary right-wrong approach.
IV. Challenging an award
A tenderer which has failed to win an award after much effort and time has been invested into the tendering process, may well be gravely disappointed and seek legal redress if they believe they have lost on unfair grounds or due to bias or discrimination.
There are some, albeit limited, avenues for challenging an award before the Government Procurement Adjudication Tribunal (Tribunal). A challenge by way of court proceedings is not allowed in Singapore.
A tenderer may challenge the award on grounds of the authority’s breach of duty which has resulted in loss or damage as a result of the breach. The onus of proving that the contracting authority is in breach of duty is on the unsuccessful tenderer.
Should tenderers wish to bring a challenge before the Tribunal, such tenderers must, within 15 days from the date on which the facts constituting the basis of the challenge first took place, initiate the challenge by lodging a notice of challenge with the Registrar and paying the Registrar the relevant fees. A copy of the notice of challenge must also be served on the relevant contracting authority.
Situations where a tenderer may initiate a challenge
A tenderer may wish to initiate a challenge if they have clear evidence that there has been discrimination against them in breach of the principles found in Regulation 4 of the GP Regulations. Regulation 4(1) explains that tenderers from a relevant state and local tenderers should not be treated less favourably from any other applicable tenderer.
Note that Regulation 4(2) excludes these principles from any imposition of customs duty, or any charge on or in connection with the import of goods, the method of levying such duty or charge, any act the performance of which is required by any written law relating to import of goods, and any act incidental to or consequential upon such requirement.
A tenderer may also initiate a challenge on the basis of non-compliance with the tendering process resulting in the failure of the award.
Situations where a tenderer should not initiate a challenge
A tenderer should not initiate a challenge when there is a lack of clear evidence that the tenderer has faced discrimination, or that there was no evidence of non-compliance with the tender process or tender requirements.
Generally, it would be difficult to show that a contracting authority has acted unfairly or did not comply with the tender process, particularly if the contracting authority has expressed that the tender will not be awarded on objective grounds such as lowest price only.
This finds expression in Regulation 29 of the GP Regulations, which grants the contracting authority wide discretion to give or reject an award. Regulation 29(3) gives the contracting authority leeway in awarding the tender based on price, or if price is not the sole criterion, its assessment of the "most advantageous" tender. Regulation 29(4) further allows the contracting authority to withhold an award of tender if it is of the opinion that it is not in the public interest to do so.
Mounting a challenge is particularly difficult if the contacting authority has specified a comprehensive evaluation criteria (e.g. evaluation using the Building & Construction Authority’s (BCA’s) Price-Quality Method (PQM). In the PQM, Tender Price and Non-Price Criteria are assigned weightings and translated into quantitative scores which are then totalled up to give a combined score during Tender Offer evaluation. The more transparent and detailed the criteria, the less the likelihood of the tenderer succeeding in a challenge.
At an evidential level, there will be great practical issues with gathering evidence necessary for a successful challenge unless the authority involved has blatantly disregarded the stipulated evaluation criteria or acted in a manifestly unfair manner (e.g. unequal dissemination of information regarding the bid to tenderers).
When a tenderer fails to be awarded, such tenderer may seek further inquiries under Regulation 32 of the GP Regulations. However, the authority has the discretion to not release such information if it falls under Regulation 32(2) and 33, when the release of the information would prejudice future tenders or undermine fair competition between tenderers, typically because such information is sensitive in the context of the tender process. These regulations certainly give a wide ambit as to whether a contracting authority may or may not provide reasons for rejecting a tenderer. Without such reasons, it would be hard for a tenderer to mount a challenge against the contracting authority.
Lastly, there is limited public information on the decision making process of the Tribunal as precedents of past Tribunal decisions are not available to public.
Emergency supply during COVID-19
The COVID-19 pandemic resulted in urgent demand for various supplies (in particular, food, PPE medical and healthcare products). A contracting authority may wish to purchase certain products and services as quickly as possible, but such authority still has to comply with the framework of public procurement law. The GP Act and the GP Regulations have not been amended to allow for deviations to Singapore's established procurement framework during a crisis. As such, any challenge by unsuccessful tenders in Singapore will likely follow the same considerations as set out above regardless of whether the tender was a planned one or issued to meet the urgent needs of the COVID-19 crisis.
Singapore’s government procurement framework is generally regarded as fair and well established. Although the disputes process concerning award challenges is not entirely ideal, challenges are rare. Tenderers who have failed in obtaining an award may seek to challenge the award before a Tribunal but must be prepared to substantiate their claims with cogent arguments and decisive evidence on the breach of duty by the contracting authorities.
This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. Please contact our lawyers if you have any specific queries.