Public Sector Procurement Guidelines for Defective Products Supplied

Dr Tan Wu Meng asked the Minister for Finance whether the public sector's procurement guidelines include "lemon" provisions for full replacement, rather than repair, in the event of significant defects being found in a significant proportion of supplied products.

The standard terms and conditions used in Government contracts for goods provide safeguards against "lemons". In particular, the supplier is required to completely repair goods that are found on delivery to be damaged, defective or in any way inferior to approved samples, or not in accordance with the contract. Further, in the event of significant defects, the supplier has to fully replace the goods. All repair and replacement costs, including the cost of returning the defective goods, are borne entirely by the supplier.

Typically, payment is only made after the goods have been delivered in good condition to the Government. In addition, it is the norm for Government contracts to include warranty clauses which require the supplier to repair or replace faulty goods during the warranty period even after payment has been made.