Defence Procurement

Planning for defence acquisitions

MINDEF/SAF plans for defence acquisitions over multi and single year horizons, and ensures that the acquisition plans are aligned with our strategic outcomes. Structured processes and formal approving committees are in place to scrutinise the requirements and the acquisition costs. MINDEF/SAF also frequently updates the public and Parliament of our potential future purchases at the Committee of Supply and Singapore Armed Forces Day, as well as at other appropriate junctures.

The defence procurement processes

MINDEF/SAF has a robust and comprehensive procurement process, with strict procedures that ensure our procurement systems adhere to the highest and most rigorous standards. Credible defence journals such as Jane's Defence Weekly and Jane's Defence Industry have stated that MINDEF/SAF has a robust and comprehensive process for evaluating major military procurement targets, deemed to be one of the most demanding in Asia. The Financial Times also noted the "stringency and transparency" of our processes while the Aviation Week publication characterised Singapore as a "reference customer" and a "model of cost-effectiveness" to suppliers and buyers of defence equipment.¹

The Defence Science and Technology Agency (DSTA) is responsible for all aspects of the defence procurement process such as contract preparations, pricings and risks, identification of contractors, as well as the evaluation of tenders received, and the subsequent contract award.

Most of the procurement functions undertaken by DSTA involve implementing rigorous regulatory measures to ensure the efficiency and integrity of the process. All acquisitions have to undergo an approval of requirements process, with endorsement and approvals sought from the various committees, which are documented. There is also a segregation of duties for (a) approval of requirements and purchase and (b) verification of purchase.

Further upstream in the defence acquisition life cycle, MINDEF/SAF departments submit multi-year programmes, annual developmental plans and operating cost plans to the Defence Finance Organisation for endorsement, consult with the necessary departments on alignment with strategic objectives, financing and risk management, and seek the necessary approvals with senior management committees. Specific programmes with high costs and signature also go through ad hoc deliberations and approval throughout the year.

Major defence acquisitions are subject to an elaborate and sophisticated evaluation system based on the Analytic Hierarchy Process, that involves a comprehensive scoring and a robust technical assessment of performance, capability, growth potential, programme risks, and local industry involvement, among other criteria. All associated costs are weighed against the benefits to determine the proposal that offers the best benefits and value to MINDEF/SAF and Singapore.

This process has been studied by various militaries. The case study of the RSAF's Next Fighter Replacement Programme, for which the Boeing F-15SG fighter aircraft was selected in 2005 after seven years of stringent evaluation and a selection process that reviewed several other modern fighter aircrafts such as the Eurofighter Typoon and the Dassault Aviation's Rafale, is one such best practice studied by other militaries.

MINDEF/SAF also ensures accountability in the management of assets and defines the responsibilities for the detection, reporting, investigation and mitigation of asset losses.

Defence procurement oversight

The defence procurement regime of Singapore is subject to extensive regulatory policies and procedures which govern the Singapore Government's procurement. These are prescribed by the Government Instruction Manual on Procurement issued by Ministry of Finance, Singapore. These ensure that the expectations of the Singapore Government are met in a timely, adequate and cost-effective manner. MINDEF adopts three principles in all our defence procurement activities:

1. Open and transparent tendering system and approval process

MINDEF/SAF's default procurement approach is open sourcing. The Singapore Government also undertakes regular reviews to strengthen public sector procurement rules and capabilities.

A transparent and open defence procurement system gives assurance to all who respond to the Singapore Government's call for goods and services that their tender proposals would be evaluated fairly and on their merits.

In line with Singapore Government's procurement guidelines, MINDEF and its procurement entities adopt two main procurement methods² - the Invitation-to-Quote and Invitation-to-Tender. The competition through these two methods facilitates the Singapore Government's efforts to secure the best deal available in the open market.

The Singapore Government has taken major steps in recent years to strengthen public sector procurement rules and capabilities, such as the extension of the minimum opening period for suppliers to submit bids for quotations from four to seven working days, and the introduction of further checks to ensure single bids offer competitive terms.

Tenders are approved by a tender board of at least three officers while quotations are approved by an officer. All these officers must not be involved in the sourcing or evaluation process as part of the segregation of duties.

The approving authority of tenders and quotations considers the recommendation and justifications, and may seek clarifications from the evaluating officer(s) before accepting the recommendation.

An award notice with the name of the supplier awarded the contract, as well as the contract sum awarded, will be published on GeBIZ. Some tenders may require suppliers to be registered as Government Suppliers, which is a process to assess the suppliers' financial capacity and other capabilities to undertake Government contracts.

For more information, please refer to the Guide for Suppliers published by the Ministry of Finance.

2. Systematic and legally-binding contracting procedures

Upon the conclusion of the acquisition exercise, the procurement contract awarded is governed by the private law of obligations³ (i.e. that of contract and of sale) which is no different from an ordinary commercial sales transaction.

Companies awarded the contracts are required to fulfil the contractual obligations laid out under the Government Contracts Act⁴.

The Act further provides that the Singapore Government would not be bound by a contract which does not conform to these obligations.

3. Elaborate scheme of checks and balances

MINDEF/SAF has in place a robust system of checks and balances to prevent corruption and procurement malpractices. They are as follows:

1. Companies are to adhere to the terms and conditions laid out under the Competition Act (Cap 50B) that guards against collusive bidding, abuse of position and other anti-competitive conduct. The Competition Commission set up under the auspices of the Act has actively promoted whistle-blowing and acted against companies found to have exhibited collusive conduct. Companies employed by MINDEF/SAF are subject to a code of ethics. Contractors are subject to a standard Conditions of Tender (COT). The COT contains instructions to tenderers on the tender and the structure of the tender proposals for submission. DSTA conducts briefings to these contractors to inform them on the necessary security undertakings and conditions under the COT. Contractors also need to have the valid registration, licenses and financial standing to obtain the necessary Government Registration that is managed by MOF. Sanctions will be taken against contractors found guilty of corruption, and they will also be liable for debarment and court prosecution.

2. Corrective measures and severe punishments are enacted against defence procurement officers found involved in corruption and are deemed to have breached confidentiality. Officers who have access to classified information are subject to the Official Secrets Act (Cap 213) and the Sedition Act (Cap 290) which safeguard against the potential for classified information in evaluating tenders to be revealed to potential suppliers, to avoid the possibility of suppliers "gaming the system". In addition, the application of confidentiality applies equally to government bodies, its employees and agents under the Statutory Bodies and Government Companies (Protection of Secrecy) Act (Cap 319).

3. Officers involved in the procurement process are also periodically rotated and subjected to period of mandatory leave to allow a covering officer to take over the procurement process (which reinforces the system of checks) and also regular security vetting. The vetting process would include checks with credit bureaus and on assets held by the officers and their family members to identify any unexplained wealth. For more details, please click here.

4. Independent audits on our defence procurement processes are also conducted regularly by internal and external agencies. For more details, please click here.

Click here for more information on Doing Business with MINDEF
Click here for more information on the Defence Procurement process.
Click here for more information on GeBIZ.

¹ "Defence Top Guns vie for Singapore Contract" by Peter Spiegel, Financial Times, Sep 2003. With reference to the RSAF's short-listing of contenders for the Next Generation Fighter Replacement Programme, the Financial Times noted Singapore was one of only a handful of countries that carry weight because of "the stringency and transparency of their procurement process". Similarly, Aviation Week (in an article dated 19 Jan 2004 on Fighter Makers Reassess Options) noted that "Singapore's military is widely regarded as a model of cost-effectiveness, with arms purchase decisions that are generally seen as transparent and well-considered".

² A Tender is a method that is adopted to invite interested suppliers to submit bids and proposals for an intended procurement of goods or services with estimated value of more than $70,000, excluding prevailing GST. A Quotation is a method that is adopted to invite interested suppliers to submit bids and proposals for an intended procurement of goods or services with estimated value of between $5,000 and $70,000, excluding prevailing GST.

³ The private law of obligations in Singapore is fundamentally contract-based. Contracting is an important aspect of the procurement process in that it facilitates acquisition planning, secures the purchasing authority's expectations, and assists in setting out obligations for the supplier or service provider to adhere to.

⁴ For a written procurement contract made in Singapore for the Government, it would have to "be made in the name of the Government and signed by a Minister or by any public officer duly authorised in writing by the Minister for Finance, either specially in any particular case, or generally for all contracts below a certain value in his Ministry or department".