Auditor-General's Office points out 'lapses' in MCI's WOG creative tender

Singapore's Auditor-General's Office (AGO) has called out the whole of government tender on creative services for communications campaign for the Ministry of Communications and Information (MCI) for having 'lapses'. According to its annual audit of government accounts for the financial year 2021-2022, AGO said there was a lack of clarity on units of measurement for tenderers to submit bids; inadequate evaluation of tender; and approval for contract variation was not obtained from the appropriate authority.

At the same time, AGO found that MCI did not monitor the spread of awards to vendors under the creative services tender. MCI launched its creative WOG tender last April and added 108 agencies to its roster earlier this year.

According to AGO, MCI, as the sector lead, did not monitor the spread of contracts awarded to vendors under the WOG tender. As at 31 December 2021, the top vendor (by procurement value) was awarded SG$124.06 million (38%) of the total procurement of SG$322.74 million under the WOG tender contract agreement. The next two highest vendors were awarded contracts totalling SG$22.90 million (7%) and SG$20.04 million (6%) respectively.

For the top six public sector agencies (by procurement value) which tapped on the WOG creative tender, AGO noted that this same top vendor in the panel accounted for 14% to 95% of the awards made by these agencies.

One of MCI's objectives for the WOG creative tender was to establish an expanded list of quality vendors to cater for the varying needs and budgets across different public sector agencies. Therefore, it is important to have a good spread of business opportunities to encourage vendors to bid for future tenders. This in turn will ensure that public sector agencies can continue to enjoy competitive prices in the long run.

MCI said that the higher proportion of awards to certain vendors reflected the public sector agencies' assessment that those vendors presented the best value proposition for their needs.

The high consumption of services from certain vendors also corresponded with the positive feedback from the public sector agencies on the ability of those vendors to perform and deliver the required services. According to the audit report, MCI did not observe any irregularities or wrongdoings based on the feedback from public sector agencies.

MCI consulted the Ministry of Finance (MOF) on concentration risk. MOF's view is that the inclusion of multiple vendors in demand aggregation contracts is to cater to the wide variety of needs that public sector agencies might have. If the high concentration of awards to a particular vendor on the panel is a result of the vendor being able to provide goods/services at a suitable pricing that best meets public sector agencies' needs, this is not a negative outcome.

Nonetheless, MCI agreed that it was important to have a good spread of business opportunities in the creative services industry and to build up the experience and expertise of more industry players in government communications. MCI said that it had facilitated this by sharing all vendors' information, such as their portfolios and contacts, with public sector agencies.

MCI had also included a pitching fee line item in the WOG creative tender, which provided for a public sector agency to invite one or more vendors to pitch their proposals for the agency's project if desired. According to the audit report, that enabled public sector agencies to try out different vendors and assess who is most suitable for their project. MCI would look into how future tenders could be structured to build up players in the creative services industry.

MOF has also informed AGO that it agreed that it would be useful for sector leads to monitor procurements made under their period contracts and would include this as a good practice.

Lack of clarity on units of measurements

According to AGO's test checks, MCI's invitation to tender did not state the unit of measurement for the service items, such as concept development, manpower services such as "account executive" and "account director", listed in Section A of the price schedule. MCI informed AGO that the units of measurement for concept development and the manpower services in Section A were "per concept" and "per person respectively".

However, AGO's test checks of purchase orders issued under the WOG tenders, by various public sector agencies, found that the units of measurement used by some vendors for the service items in Section A of the price schedule were "per lot" or "per man-hour" instead of "per concept" or "per person" as intended by MCI.

The audit report stated that MCI informed AGO that the format of the price schedule for Section A was based on MCI's market study on how vendors quoted their customers for campaign conceptualisation and execution. MCI recognised that there would be different interpretations of the units of measurement when agencies tapped on the creative tender. "MCI would ensure clearer communication on the units of measurement for sure tenders in future," the report said.

Inadequate evaluation of tender

AGO's test checks also found that the rates submitted by tenderers for the same service items in Section A of the price schedule varied significantly. The highest rates were 43 to 92 times the lowest rates for some service items.

For example, AGO noted that a tenderer submitted a bid of SG$900 for a service item while another tenderer submitted a bid of SG$82,000 (or 92 times) for the same service item. However, during the tender evaluation, AGO said MCI did not follow up with the tenerers to ascertain whether they had quoted on a like-for-like basis, and proceeded to award the items and appoint the tenderers to the panel.

"As public sector agencies would rely on the rates awarded by MCI for procurement under the creative tender, AGO said it is important to ensure that rates are evaluated on a like-for-like basis before award," AGO said. MCI has since informed AGO that it would ensure that future tender bids were evaluated on a like-for-like basis.

Approval for contract variation not obtained from the appropriate authority

MCI's WOG creative tender was SG$174 million for a period of three years. A contract variation was subsequently made to extend the contract for six months.

The total procurement made under the creative tender as at 31 December last year was SG$322.74 million, nearly twice the approved procurement value of SG$174 million.

AGO's checks found that approval was not obtained from the appropriate authority for the contract variation. AGO noted that MCI did not estimate the increase in approved procurement value arising from the contract variation to determine the appropriate approving authority for the contract variation.

Instead, MCI obtained approval from an officer who can only approve contract variations which did not involve an increase in approved procurement value. MCI explained that part of the increase in approved procurement value was due to the surge in communications campaigns such as the Merdeka Generation Package (2019 to 2020) and COVID-19-related communications (2020 to 2021) on vaccination, jobs and opportunities, and safe management measures, which could not have been accounted for when the WOG tender was initiated in 2018.

According to AGO, MCI agreed that it should have taken into account the increase in approved procurement value in determining the approving authority for the contract variation. MCI also informed AGO that it would update its standard operating procedures to make this clearer.

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