Extension of Loyang Bus Package Contract Versus Re-tendering
Ministry of TransportSpeakers
Summary
This question concerns the procurement rules, justifications, timeline, and fees regarding the extension of Go-Ahead Singapore’s Loyang bus package contract, raised by Ms Eileen Chong Pei Shan to the Minister for Transport. In response, Mr Jeffrey Siow explained that bus contract extensions are governed by Government procurement rules, require Land Transport Authority (LTA) Board approval, and account for factors such as tender spacing, depot relocations, and extenuating circumstances. The Loyang contract was initially extended to 2026 to avoid operators pricing in high risk premiums during COVID-19 market uncertainty, and extended again to 2030 to align with the relocation to the Lorong Halus bus depot and avert unnecessary relocation costs. Extensions are conditional on satisfactory operator performance, with terms and service standards renegotiated against prevailing benchmarks and operating costs. Finally, the specific extension fees cannot be disclosed because they are commercially sensitive.
Transcript
112 Ms Eileen Chong Pei Shan asked the Minister for Transport regarding Go-Ahead Singapore's contract for the Loyang bus package which provides a two-year extension option (a) what procurement rules govern extending contracts beyond contracted options; (b) on what basis was the contract extended from 2023 to 2026, and why it was not re-tendered then; (c) whether it has been extended again, until when; and (d) what is the fee for each extension.
Mr Jeffrey Siow: The extension of bus contracts is governed by Government procurement rules and must be approved by the Land Transport Authority (LTA) Board. There are many reasons why bus contracts are extended. This includes spacing out the number of tenders each year to ensure competitive bids; timing the tender with the relocation to new depots; and other extenuating circumstances, like the COVID-19 pandemic.
In 2022, LTA extended the Loyang bus package amidst significant COVID-19-related market uncertainty, as it could have resulted in operators pricing substantial risk premiums into their bids. Subsequently, developmental plans were finalised to relocate the Loyang bus package to the upcoming Lorong Halus bus depot in 2030. To avoid unnecessary relocation costs, LTA negotiated a further extension to 2030.
Extensions are only offered if the incumbent operator's performance is satisfactory. Terms are re-negotiated with the operator and take into account prevailing operating costs and service fee benchmarks from comparable bus package contracts. Service standards for bus services in the package are typically also reviewed. We are unable to disclose the extension fees as they are commercially sensitive.