Town councils’ software statement: ‘Full of holes’?

I refer to the report “No basis to suggest AIM transaction improper to town councils, says Teo Ho Pin” (Channel NewsAsia, Jan 2).

According to the “statement by Teo Ho Pin on AIM transaction“, “Having each of the 14 individual
TCs hold the Intellectual Property (IP) rights to the software was cumbersome
and inefficient. The vendor would have to deal with all 14 TCs when reviewing or
revising the system. It would be better for the 14 TCs to consolidate their
software rights in a single party which would manage them on behalf of all the
TCs, and also source vendors to improve the system and address the
10. The TCs thus decided to call a tender to meet the following requirements:
a. To purchase the software developed in 2003, and lease it back to the TCs
for a monthly fee, until the software was changed;
b. To undertake to secure extensions of the NCS contract at no extra cost i.e.
take on the obligation to get an extension on the existing rates, until the
TCs obtained new or enhanced software. This was put in to protect the
financial position of the TCs”.

“Cumbersome and inefficient” to deal with 14 TCs?

If it is indeed “was cumbersome and inefficient”, why not have the software rights owned by say two town councils, an entity owned by the town councils or a public agency? By transferring it to a private company, puts the town councils and the residents at tremendous risk.

What if “Third, we were confident that AIM, backed by the PAP, would honour its commitments”, ended up with say the directors resigning to join another political party, and then in accordance with the contract terms, terminate most of the town councils because “existing TC- and town-boundaries” had changed as the GRC and SMC boundaries were changed for the 2011  general elections?

Wouldn’t this be a disaster for the efficient management of the town councils and their residents?

From public to private – Conflict of interest?

Moreover, there is the conflict of interest in transferring public property developed for the people and presumably with the town councils’ funds which belong to the people, to a private  company that reaks of being linked to a political party.

Cost to develop the software?

Also, the question as to how much it cost to develop the software remains unanswered.

Applying this logic of ” The vendor would have to deal with all 14 TCs”, wouldn’t it apply to other contracts and services as well that involve other vendors? Wouldn’t it simply be easier to have the vendor deal with just the town councils’ staff designated to handle this task. After all, they are all using the same system. So, does it make sense to say that the vendor would have to deal with 14 TCs?

Material changes?

As to “Should this change materially, the contractor could end up providing services to a TC which comprises a much larger area and more residents, but at the same price”, this is somewhat self-contradictory and thus irrelevant, because the price is already fixed in the contract.

Normally, I understand that contracts may have clauses to cater for variation due to material causes and changes, instead of just termination.

Also, since it is only the software rights, where is the logic that a “much larger area and more residents” will cost more to the holder of the software rights, since the costs of future maintenance is also guaranteed “from NCS beyond the original contract period, without any increase in prices”?

Much ado over so little?

As to “This meant that the TCs expected to gain a modest amount (about S$8,000) from the disposal of IP in the existing software”, can we have a break-down of how this figure was derived? All this complexity and so much work involved – just to save $8,000!

What is amazing is that the statement “Second, AIM was willing to undertake the risks of getting an extension of the NCS contract with no increase in rates. This was the most important consideration for us, as it protected the TCs from an increase in fees”, gives us a clearer picture as to why perhaps no one would tender under such terms?  How does a company guarantee that its sub-contractor (NCS) would not increase its fees in the future within the very short time frame of the tender period? Moreover, wouldn’t it have been better for the town councils to have negotiated the “no increase in fees” directly with NCS with whom they have been working for many years.

If AIM, a $2 company is unable to fulfill this contract term of “no increase in fees”, what can the town councils do? Sue a $2 company and then the $2 company sues NCS? Can the documents, meetings and process that enabled AIM to meet this unusual contract terms be made public?

30 months gone by – have open tender for new system?

Since “It was clear to me that the existing
computer software was already dated. The NCS contract would end by 31
October 2011 (if the one year extension option was exercised). However,
assessing new software and actually developing a replacement system that
would meet our new requirements would take time, maybe 18-24 months or even
longer. We thus needed to ensure that we could get a further extension (beyond
October 2011) from NCS, while working on redevelopment options”, and about 30 months have lapse since the award of the tender, can the progress of  “assessing new software and actually developing a replacement system” be made public?

Has an open tender been called for this “assessing new software and actually developing a replacement system”?

Sell and lease-back?

With regard to “We wanted to sell the IP rights in the old software because it had limited value and was depreciating quickly. Had we waited until the new system was in place, the IP to the superseded old software would have become completely valueless”, it would appear from what has been disclosed so far, that the town councils were already and will also pay NCS in the future for maintenance. So, why was there a need to pay “S$785 per month from November 2010 to October 2011” and another S$33,150 from November 2011 to April 2013, when it seems that there was no such “software rights lease” to pay at all in the past.

Why sell at $140,000 and then pay $165,030 ($785 x 12 months x 14 town councils + $33,150), when apparently there was actually no need to pay previously? Why didn’t the town councils just transfer the software rights to say two town councils, an entity owned by the town councils or a public agency for free, without the round-about way of getting paid through an open tender and then paying more out by way of a lease-back, and thus also avoid the conflict of interest altogether?

How much are the town councils paying to NCS for maintenance?

So many more questions?

Can all the documents between the town councils and AIM be made public? Was the $33,150 part of the tender? Was it even in the tender specifications in the first place? Why not make public the $214 tender document? Also, questions about why the tender advertisement looks like a purchase rather than a sale with hardly any details and “not to accept the lowest or any tender” (shouldn’t it be the highest for a sale) remain unanswered.

In respect of “In 2010, the NCS contract was going to expire. The TCs got together and jointly appointed Deloitte and Touche Enterprise Risk Services Pte Ltd (“D&T”) to advise on the review of the computer system for all the TCs. Several meetings were held with D&T”, how much was paid to D&T and can the documents advising the controversial course of action taken by the town councils, which is now at issue, be made public?

Was a open tender called to select D&T?

Also, can the minutes of meetings, the process of how and who made the decisions at issue now, be made public?

I find it rather strange that instead of a statement by the PAP town councils like in their previous two statements, it  now appears to be a personal statement from Teo Ho Pin signing off as Co-ordinating Chairman, 14 PAP Town Councils. What has all the other MPs and committee members of the town councils got to say about this continuing saga?

Did they or did they not know about all the above, and were they and are they now in concurrence with Teo Ho Pin’s statement.

Considering all of the above, the ending sentence of the statement – “There is thus no basis to suggest that the AIM transaction did not serve the public interest, or was disadvantageous to residents in the TCs”, may arguably the greatest understatement of the century in the history of Singapore!

Leong Sze Hian

12 Responses to “Town councils’ software statement: ‘Full of holes’?”

  1. […] the end it’s all bad for Singapore. Propriety and legality aside, and ignoring all the outstanding questions, the termination of AHTC by AIM was clearly political (the termination clause was ridiculous and […]

  2. sgcynic

    “The PAP declined to comment on the number of companies it owns.

    A check with the Workers’ Party, the Reform Party, the Singapore Democratic Party, the National Solidarity Party and the Singapore People’s Party showed that none of them own any companies.”

  3. sgcynic

    I think to summarise what Teo Ho Pin intended to say but could not: We managed to save the Town Councils $8,000 by doing round tripping instead of $140,000 by doing nothing.

  4. 6y588

    “This is reasonable as the contractor has agreed to provide services on the basis of the existing TC- and town-boundaries, and priced this assumption into the tender. Should this change materially, the contractor could end up providing services to a TC which comprises a much larger area and more residents, but at the same price.”

    Let’s assume that this is true, and that the cost of providing services increases if the existing TC- and town-boundaries increase. On this cost basis, it is thus reasonable for AIM to terminate the contract as its cost has increased.

    By the above reasonable assumption, shouldn’t the contractor on the same cost basis, be charging it’s monthly services based on the size of the TC- and town-boundaries, instead of a flat rate. By charging a flat rate for all TCs, isn’t AIM losing out on the bigger TCs by not charging more?

    Let’s say THP states that the monthly flat rate is calculated based on an average profit, such that AIM will make a higher profit on the smaller TCs, and lower profit (or even a loss) on the bigger TCs.

    By the above average profit assumption, then if one TC increases in size, it also means that another TC decreases in size ( after all the size of boundary must change for at least TWO adjacent TCs). Hence, AIM’s average profit does not change, and there is no reasonable basis to terminate any TC for a material change in the TC- and town-boundaries increase.

  5. […] the end it’s all bad for Singapore. Propriety and legality aside, and ignoring all the outstanding questions, the termination of AHTC by AIM was clearly political (the termination clause was ridiculous and […]

  6. […] – life one degree north, one-o-three degrees east: My Conscience Is Bugging Me – Majulah!: PAP Town Councils – AIM controversy. – Signs of Struggle: Dirty politics, dirty governance – Molly Meek: Town Councils AIM – Leong Sze Hian: Town councils’ software statement: ‘Full of holes’? […]

  7. Alan

    Looks like they are finding a lot of excuses to bluff their way through.

    Remember LKY’s infamous threat for the Aljunied voters to repent if they voted for the opposition, so may we ask whether this episode of terminating the software for Aljunied TC not a consequence of LKY’s veiled threat to the voters?

    If CSJ ever threaten any voters in any constituency, do you think our PAP Govt will ever let him go scot-free ? So why LKY can threaten the voters with immunity from any action really makes a mockery of our Rule of Law, isn’t it ?

  8. Patrick Dji

    1.If a boundary change means more people,then will some areas not get smaller?
    2.How did a $2 Company raise $140,000 to buy the software? Which bank lent them such money,did the Directors give personal guarantees?

  9. Tabplay

    Not very far-fetched Ive gotta say. Too quiet even after the name PAP is been mentioned .

  10. […] to Uncle Leong, we netizens know that the PAP’s latest statement on AIM is “[f]ull of holes”. Problem is: Do the offliners who rely on the local media know of Uncle Leong’s analysis? […]

  11. […] how come Uncle Leong  ( is able to pick so many “holes” in the […]

  12. […] to Uncle Leong, we netizens know that the PAP’s latest statement on AIM is “[f]ull of holes”. Problem is: Do the offliners who rely on the local media know of Uncle Leong’s analysis? (BTW, […]

Leave a Reply

Your email address will not be published.

Copyright © 2011 All Rights Reserved