Authenticity of Quotations for Star Rate Items in Development Project under State Courts

Mr Murali Pillai asked the Minister for Law in relation to the concerns expressed in the Auditor-General’s Office (AGO) report for the financial year 2022/2023 about the authenticity of quotations provided for star rate items in a development project under the State Courts (a) whether the quotations have been provided by the contractor or sub-contractors of the project; and (b) whether there has been any proactive review of this matter following a similar observation made in AGO’s report last year and, if not, why not.

Based on information provided by the State Courts on the abovementioned project, the quotations for star rate items in relation to the State Courts Towers development project were provided by sub-contractors to the project consultant of the project in accordance with the contract requirements. In this regard, the project consultant would refer to four quotations – three quotations obtained by the sub-contractor and one quotation obtained independently by the project consultant. The quotations were assessed by the project consultant and thereafter used to price the star rate item. As the Auditor-General’s Office (AGO) had expressed concerns over the authenticity of the quotations received by the project consultant, the AGO recommended that the State Courts carry out internal investigations. The State Courts lodged a Police report as there may be a potential conflict of interest should investigations disclose any criminal offence(s) and the case comes before the Courts. As Police investigations are ongoing to determine if there was any wrongdoing, it would not be appropriate for the State Courts to comment further.

The Courts have informed that processes were put in place in accordance with the principles in the Government Instruction Manual, with clearly segregated duties and independent layers of safeguards and validation checks performed by various parties, including the project consultant, superintending officer, the independent project manager and State Courts officers, to ensure that star rates used for variations were reflective of fair market prices. Specifically, the project consultant was primarily responsible for assessing the cost reasonableness of star rates independently by obtaining one or more quotation(s) from other sources to assess the sub-contractor’s quotations. The superintending officer from the project consultant was responsible for confirming the star rates and had certified the amount due to the contractor for the variation. The independent project manager was responsible for verifying that the requested sum for these star rates was in order before recommending to the State Courts to proceed with payment. In the design and development of its contract management process, the State Courts were cognisant of past AGO findings relating to star rate items concerning other public sector agencies and had, therefore, put in place the segregation of roles and independent checks before payment was made.

The goods and services that were the subject of this observation were delivered. The State Courts have been conducting engagement sessions with its officers to share best practices on internal controls as well as lessons learnt from AGO audits and AGO’s Annual Report. The State Courts also regularly briefs its consultants and contractors of ongoing development projects to reiterate and remind them to adhere to the requirements for submission of documents for star rate items.

In addition to its existing controls, the State Courts also consulted the Ministry of Finance (MOF) on additional measures that could be put in place to strengthen the management of star rate items. MOF recently shared a good practice guide that was issued in July 2021 containing tips on detecting irregular and fraudulent quotations. The State Courts have shared MOF’s guide with its officers and incorporated these additional good practices into its processes.