Proposal to Review Public Sector’s Procurement Frameworks for Service Contracts to Support Sustainable Wage and Productivity Investments
Ministry of FinanceSpeakers
Summary
This question concerns Ms Yeo Wan Ling’s inquiry on whether public sector procurement frameworks prioritize non-price factors like Progressive Wage Model (PWM) compliance and outcome-based contracts to support sustainable wages. Senior Parliamentary Secretary Shawn Huang Wei Zhong replied that evaluations combine price and quality, requiring PWM certification for eligible sectors and promoting outcome-based contracts and technology adoption. He noted that multi-year contracts allow tenderers to account for annual wage and productivity adjustments in their pricing rather than using fixed prices. In response to clarifications, Senior Parliamentary Secretary Shawn Huang Wei Zhong stated that the Government monitors PWM status and reserves the right to terminate non-compliant contracts. He added that the Ministry of Finance reviews guidance as PWM requirements evolve to ensure procurement frameworks remain responsive to changes in wage negotiations.
Transcript
14 Ms Yeo Wan Ling asked the Prime Minister and Minister for Finance (a) whether the public sector’s procurement frameworks for service contracts such as catering will be reviewed to ensure other factors beyond price, which may include Progressive Wage Model compliance and service quality, are given meaningful weightage; and (b) whether public sector buyers will adopt outcome-based contracts with provisions for periodic price reviews and longer terms to support sustainable wage and productivity investments.
The Senior Parliamentary Secretary to the Minister for Finance (Mr Shawn Huang Wei Zhong) (for the Prime Minister and Minister for Finance): The Government uses a comprehensive set of criteria, combining price and quality considerations in procurement evaluations. For some sectors, eligible Government suppliers must have the Progressive Wage Mark (PWM) certification. Central guidance has been provided to all Government procuring entities to adopt outcome-based contracts where appropriate and feasible, and to consider the adoption of more productive technology. Examples of this are in the procurement of cleaning services and facilities management services.
For multi-year contracts, tenderers are typically able to submit prices for each contract year, rather than a single fixed price over the entire duration. This allows tenderers to account for wage adjustments and productivity investments over time in their pricing.
Mr Speaker: Ms Yeo.
Ms Yeo Wan Ling (Punggol): I thank the Senior Parliamentary Secretary. Could the Ministry give further clarifications on how it assesses PWM compliance in procurement processes, including whether firms have met, for example, training requirements for their workers under the PWM requirements?
And the other one too, is well, I know he has talked about how Government contracts allow for re-negotiations, but are there other ways to make the procurement framework more agile to accommodate such changes, especially when we are looking at different wage rungs and different types of negotiations that have been done by PWM over the years?
Mr Shawn Huang Wei Zhong: I thank the Member for the question. Contractors who are PW Mark eligible are required to obtain and maintain the PW Mark throughout the contract period. They are also required to notify the contracting authorities if there are any changes to their PW Mark status.
For Government agencies, we reserve the right to take necessary action if contractors fail to comply with the requirements, including the right to terminate the contract.
For multi-year contracts, I would like to emphasise again, contractors should account for the price increases when they tender. Where there are further updates to the PW Mark requirements, the Ministry of Finance will review our guidance to agencies accordingly, where necessary.