Fair Treatment of Subcontractors in Government Projects
Ministry of National DevelopmentSpeakers
Summary
This question concerns measures to ensure stringent tender evaluations and fair treatment of subcontractors in government projects following payment issues at Changi Airport Terminal 4. MP Chong Kee Hiong inquired about procurement and protection measures, prompting Second Minister for National Development Mr Desmond Lee to clarify that the Changi Airport Group is a corporatised entity. The Minister highlighted the Building and Construction Industry Security of Payments Act as a mechanism for fast adjudication of payment disputes to protect subcontractors. Furthermore, he noted that government tenders require contractors to meet the BCA's Contractor Registration System criteria regarding financial capacity and performance. These stringent qualifying requirements minimize the possibility of contractors bidding for projects beyond their capabilities.
Transcript
7 Mr Chong Kee Hiong asked the Minister for National Development in view of the problems faced by some subcontractors in the construction of Changi Airport Terminal 4 in collecting payment for work done and in order to minimise recurrences of similar incidents in future Government projects, what measures are taken to ensure (i) the stringent evaluation of tenders and subsequent awards; and (ii) the fair treatment and protection of subcontractors.
The Second Minister for National Development (Mr Desmond Lee) (for the Minister for National Development): Madam, the construction of Changi Airport Terminal 4 is undertaken by the Changi Airport Group (CAG), which is a corporatised entity, and thus not subject to Government procurement rules.
The rights and obligations of subcontractors, which are generally engaged directly by the main contractors, are governed by their respective contractual provisions. To protect subcontractors, the Government has put in place the Building and Construction Industry Security of Payments Act (SOPA). The SOPA improves cash-flow in the construction industry by providing fast and low-cost adjudication to resolve payment disputes.
For Government construction projects, there are additionally stringent procurement systems in place for the evaluation and award of tenders. For example, all contractors are required to meet the strict qualifying criteria under BCA's Contractor Registration System before they can tender for Government construction projects. The requirements include financial capacity, track record and other performance-related criteria. This minimises the possibility of contractors bidding for projects beyond their capabilities.