Review of Procurement Process Vulnerabilities Involving Irregular Quotations and Measures to Recover Overpayments

66 Mr Gerald Giam Yean Song asked the Coordinating Minister for Public Services and Minister for Defence (a) what is the total number of procurement contracts issued by the Ministry found to have irregular or non-authentic quotations in each year over the past five years; (b) what specific vulnerabilities in the current procurement system allowed these irregularities to occur; and (c) what measures are being taken to recover any overpayments made.

Mr Chan Chun Sing: The Ministry of Defence's (MINDEF's) procurements are subject to a systematic process of independent audits. These audits are conducted both internally by MINDEF's Internal Audit Department and externally by the Auditor-General's Office (AGO).

The audits conducted by MINDEF identified irregularities in 45 cases. To put this in perspective, there were more than 400,000 contracts over the past five years. These irregularities are similar to those found in the 20 identified in the Auditor-General's Report. Altogether, the audits by MINDEF and AGO identified 65 cases with these irregularities.

MINDEF regularly reviews and strengthens our procurement processes, including taking immediate measures to address any audit findings identified internally by MINDEF as well as by AGO. Specific to the irregularities found in the 65 procurement cases, MINDEF has taken efforts in three areas.

First, to better detect possible irregularities, we have expanded the pool of vendors used for quotation assessments so that we can compare across a larger number of vendors and better discern irregularities. To aid in these efforts, we are also developing AI-enabled and digital tools to enhance and automate the detection of anomalies. Finally, as an additional safeguard, we have implemented additional checks on quotations for high-usage and high-value items.

Second, once a possible irregularity is detected, MINDEF will promptly conduct an independent validation of the quoted prices. This includes obtaining fresh quotations from other vendors or benchmarking the quoted prices against historical procurement data and prevailing market prices. This serves to verify if the prices quoted are reasonable and MINDEF has obtained fair market value.

Third, we will be enhancing training for our procurement practitioners, so that they are better equipped to identify possible irregularities and take appropriate follow-up actions. For instance, we have implemented regular training sessions to build their competencies in this area. We will also strengthen knowledge-sharing across MINDEF, such as through procurement workshops and seminars, where past audit observations and lessons learnt are shared to reinforce best practices in procurement.

MINDEF takes these procurement irregularities seriously. When such irregularities are found, MINDEF will take all necessary follow-up actions, including recovering any overpayment and pursuing the appropriate contractual, disciplinary or legal actions where warranted.