Calling of Restricted Tenders by Government Agencies

Mr Yee Jenn Jong asked the Deputy Prime Minister and Minister for Finance in light of the recent Co-Innovation Partnership tender by HDB for next-generation roofing systems which is restricted to participation by only local companies (a) what are the circumstances under which a tender can be excluded from WTO-GPA/FTA restrictions; (b) what are the factors which Government agencies consider prior to calling for such restricted tenders; and (c) how many such restricted tenders have been called in the past five years and for which industry segments.

Singapore is a signatory to the World Trade Organisation's Agreement on Government Procurement (WTO-GPA) and various Free Trade Agreements. Our obligations under these Agreements are legislated in Singapore's Government Procurement Act and its relevant subsidiary legislations12.

A procurement is deemed as a "covered procurement", which is subject to these Agreements, if it meets the following three criteria:

(a) the procuring entity is listed as covered by the Agreements;

(b) the value of the purchase exceeds the threshold value stated in the Agreements; and

(c) the type of procurement is listed as covered by the Agreements.

A covered procurement must be conducted in accordance with the Government Procurement Act and Regulations. This includes allowing for free competition between foreign or domestic suppliers.

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The Government's policy, in general, is to procure through open tenders, whether or not the procurement is covered by international agreements. Over the past five years, about 80% of all the awarded tenders were conducted via open procurement process. Procurements can only be conducted via limited tender if they are among specified permitted scenarios [Please refer to Annex A below] or are not covered by our Free Trade Agreements and the WTO-GPA. Limited tenders are not confined to any industries in particular.

The recent tender by HDB cited by Mr Yee was a research and development (R&D) project. The project, which was aligned with the objective of the Public-Private Co-Innovation Partnership programme, aimed to establish collaborative research with a local company on innovative roofing systems for future public housing. As with the practice in most countries, procurement of R&D is not covered by our international obligations and HDB’s tender was not a contravention.

*ANNEX A

Extract from the Government Procurement Regulations, section 25

Division 3 – Procurement by Limited Tendering

When limited tendering may be used

25. – (1) A contracting authority may use limited tendering for procurement in the following circumstances:

(a) when the open procedure or selective procedure was used but no tender was received;

(b) when the tenders received under the open procedure or selective procedure –

(i) are collusive;

(ii) are not in compliance with the essential requirements specified in the contract documents; or

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(iii) were submitted by suppliers who failed to comply with the conditions for participation in the tendering procedure;

(c) when, for technical reasons, or for reasons connected with the protection of exclusive rights, or by reason of being a work of art, the goods or service to be procured can only be supplied by a particular supplier;

(d) when (but only if it is strictly necessary), for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the goods or service cannot be obtained in time by means of the open procedure or the selective procedure;

(e) when the goods to be procured are required by the contracting authority as a parts replacement for, or addition to, existing goods or installation, and when to obtain the goods from a person other than the person who supplied the existing goods will result in the contracting authority obtaining goods not meeting its requirements of interchangeability with the existing goods or installation;

(f) when the service to be procured is an extension of an existing service, and when to obtain the service from a person other than the person who performed the existing service will result in the contracting authority obtaining a service not meeting its requirements of interchangeability with existing goods, installation or service;

(g) when the goods or service to be procured are a prototype, or a first product or service, which is to be manufactured or performed, at the contracting authority’s request, in pursuance of a contract for research, experiment, study or original development;

(h) when the services to be procured are construction services:

(i) which were not included in an earlier contract for construction services (referred to in this sub-paragraph as the initial contract);

(ii) which were within the objectives of the initial contract;

(iii) which have, through unforeseeable circumstances, become necessary for completing the construction services under the initial contract;

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(iv) which are difficult to separate from the construction services under the initial contract for technical or economic reasons;

(v) which will, if separated from the construction services under the initial contract, cause significant inconvenience to the contracting authority;

(vi) which have to be awarded to the contractor of the initial contract for the reasons set out in sub-paragraphs (i) to (v); and

(vii) the total value of which does not exceed 50% of the value of the construction services under the initial contract;

(i) when the services to be procured are construction services (referred to in this sub-paragraph as the new services) which consist of the repetition of similar construction services which conform to a basic project for which a contract (referred to in this sub-paragraph as the initial contract) had earlier been awarded using the open procedure or selective procedure, and when the contracting authority had indicated in the Invitation to Participate for the initial contract that limited tendering may be used in awarding a contract for the new services;

(j) when the goods to be procured are goods on a commodity market;

(k) when the procurement concerned is subject to exceptionally advantageous conditions which will only apply for a very short period, including any disposal of a non-routine nature by a person who is not normally a supplier and the disposal of assets of any business in liquidation or receivership;

(l) when the contract is to be awarded to the winner of a design contest, being a contest:

(i) organised in a manner which is consistent with the principles of national treatment and non-discrimination, especially with regard to the publication, in a manner similar to that of the Invitation to Participate, of an invitation to suitably qualified suppliers to participate in the contest;

(ii) which is judged by an independent panel of judges; and

(iii) which is organised with a view to awarding the contract to the winner.*

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