Review of Government Electronic Business Policy to Encourage Growth of Nascent SMEs

24 Mr Zainal Sapari asked the Deputy Prime Minister and Minister for Finance (a) whether the Government Electronic Business (GeBIZ) policy can be reviewed so that nascent small and medium-sized enterprises can qualify as Expenditure and Policies Procurement Unit Suppliers, or Building and Construction Authority Suppliers, and thus have more opportunities for growth; and (b) whether alternative modes of assessing a company's financial strength can be adopted in place of the current practice where historical financial statements are used.

Mr Heng Swee Keat: Government agencies typically conduct procurement via Tenders or Quotations. Tenders are called for higher value procurement, while Quotations are for procurement below a certain monetary threshold.

Companies wishing to participate in government procurement by Tender may be required to qualify as Expenditure and Policies Procurement Unit Suppliers or Building and Construction Authority Suppliers with registration under the Government Registration Authority (GRA). GRA qualification is not necessary for Quotation level procurement.

Over 80% of all Government procurement opportunities are at Quotation-level and hence do not require GRA. This makes it easier for nascent Small and Medium Enterprises (SMEs) to participate in government procurement. Suppliers need only have a GeBIZ Trading Partner account to bid for Quotations and there are no financial pre-requisites to be a GeBIZ Trading Partner. The first user account is also free.

Earlier this year, we increased the upper limit of Quotations from $70,000 to $90,000, thus making even more procurement opportunities accessible to SMEs without GRA. This benefits the 12,000 existing suppliers who only participate in government quotations, as well as other new suppliers.

GRA is only required for some higher value procurement above $90,000 where Tenders are called, subject to the specific needs of the agency calling the Tender. Its primary objective is to provide assurance that a supplier has the capacity to deliver the goods or services that are paid for with public funds.

There are different levels of GRA depending on the value of the Tender. If a supplier wishes to participate in a higher value procurement, he may be expected to have a higher financial capacity to qualify for a higher level GRA.

To make GRA more accessible to SMEs, last year, we removed the requirement for companies with less than $5 million turnover to submit audited accounts when applying for non-construction related GRA. We now accept unaudited financial statements if the company’s Director certifies that their financial statements are accurate and true. About 3,900 GRA registered suppliers, or approximately 80%, have benefited from this.

Finally, the supplier’s financial standing is just part of the whole suite of factors taken into consideration during evaluation. Other factors such as the quality of the proposal in meeting the objective and requirements of the procurement, including innovative elements, capability of the supplier and price are all considered. In fact, over 80% of procurement contracts in the past two years were awarded to SMEs.

We will continue to review our policies and practices to ensure government procurement remains accessible to SMEs.