AIM SAGA – Response to Dr Teo

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[h=2]AIM SAGA – Response to Dr Teo[/h]

January 4th, 2013 |

Author: Joli

The latest statement by Dr Teo Ho Pin, Coordinating Chairman of 14 PAP Town Councils, leaves much to be desired.

The whole purpose of the statement should be to clarify the issue of AIM-gate: About PAP TCs selling a self-owned computer software to a $2 company owned by PAP and criticisms that by the sale the TCs failed to serve the interest of the public who paid for the software because the terms of the sale seriously affected the continuity of Town Council operations.

Instead of being single-minded to give clarifications to assuage the disquiet that has been revealed in the media, Dr Teo saw it fit to find fault with the assertions of Ms Sylvia Lim of the Aljunied-Hougang Town Council (AHTC) when there was none:

Dr Teo said: “Ms Lim had made various assertions in her statement. However, her statement was made without citing the relevant facts. I now make this further statement to set out fully the relevant facts.”

What are “the relevant facts” that Dr Teo expected Ms Lim to cite when “the relevant facts” were all the while in the possession of Dr Teo which he now “set out fully” but belatedly, only after he could not anymore ignore the incessant loud calls by the public through the media to come clean? It would be different if Dr Teo had said about Ms Lim’s statement in this way, “However, her statement was made without having the relevant facts.”
Dr Teo is subtly suggesting that he should take some credit for rendering his “further statement to set out fully the relevant facts.” In fact, credit should be given to Ms Lim for surfacing the issue of AIM-gate so that the public knows better whether AHTC should be blamed for its performance in the collection of S&CC arrears or the PAP TCs should be held responsible for selling off the TC software to a $2 PAP company whereby AHTC’s operation was placed at the mercy of the company which had the right to deny AHTC the use of the software.

Dr Teo said: “D&T also raised with the TCs the option of having a third party own the computer system, including the software, instead, with the TCs paying a service fee for regular maintenance. This structure was not uncommon.”

Dr Teo also said this about the software sale: “This meant that the TCs expected to gain a modest amount (about S$8,000) from the disposal of IP in the existing software.”

The option suggested by Deloitte & Touche was for a third party to own the computer system including the software. The tender put up by the PAP TCs was “CONTRACT FOR THE PURCHASE OF THE DEVELOPED APPLICATION SOFTWARE.” The proposal by D&T was worlds apart from the project of the PAP TCs to sell off the application software which it owned because the proposal by D&T involved the whole of a computer system that would require sophisticated expertise to manage and maintain. In contrast, the application software is just a piece of software that could be replicated across the TCs as was allowed by the NCS contract and technically supported by NCS. To say the least, it was a very foolish act for the very important operational software owned by the PAP TCs to be sold off to a $2 company whereby the TCs were put at risk of a severe breakdown in operation should the $2 company suddenly fail – even “TOO BIG TO FAIL” giant companies have been seen in recent years to sink to their knees with ease!

It is very puzzling that the Coordinating Chairman of the PAP TCs could have sanctioned the tolerance of such a huge risk to the existing (and continuity of) TC operations all for the sake of a modest $8000 gain. Divide the $8000 by the 14 TCs and divide by the number of TC households served by the critical software, and it is super-abundantly clear that the public would, for a few peanuts that the TCs hunger after, not be prepared to face the potential annoyance should a breakdown of TC service occur because the critical operational software is no longer in the hands of the TCs. Why, why … was the PAP prepared to risk the political cost for a few peanuts?

D&T is a very reputable company. Its advice to the TCs is not at fault. What is problematic is that, by what Dr Teo said, the TCs did not seem to abide closely by the suggestions of the consultant. Therefore, the problems with regards to the transaction with AIM should be borne squarely by the TCs.

Dr Teo said: “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 deficiencies.”

As the Coordinating Chairman, could he not have rallied all the TCs under his care to collaborate for efficiency with a point man (an IT talent within the 14 TCs) to be the liaison person to communicate IT needs with NCS regarding the existing system and with other potential IT experts regarding review and revision of the system? Mr Teo himself as Coordinating Chairman can play an oversight role with the help of internally available assistants with expertise on tender and contract matters. By appointing a $2 PAP-owned company, even if there is no political conflict of interest, it is still the same situation of a single company (AIM) having to deal with all 14 TCs to understand their IT needs, concerns and wishes when reviewing or revising the system, and then deal with an external vendor on IP rights. Is it not more cumbersome and inefficient with AIM forming an extra external tier to conduct TC’s IT personnel’s communication with the actual IT supply source?

Dr Teo said: “Since winning the tender, AIM has negotiated two extensions of the NCS contract until April 2013, at no increase in rates. The first extension was from November 2011 to October 2012, and the second from November 2012 to April 2013. The TCs received a substantial benefit in terms of getting the extensions from NCS beyond the original contract period, without any increase in prices.”

Dr Teo also said: “We entered into the transaction with AIM with the objective of benefitting the TCs. Over the last two years, the intended benefits have been realised. 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.”

Of the intended benefits, I see the $8000 peanuts (modest $8000 gain) that supposedly could not have been obtained without AIM. As regards the other purported advantages, could they not have been attained (and bettered) without the critical disadvantages and risk (highlighted by many in the media) by the intervention of AIM, the $2 company?

THIS IS IMPORTANT: TC negotiators with their professionalism in serving the needs of the TC households will most likely have the motivation to get the finest terms and conditions from the actual IT supply vendor (without the extra admin red-tape and cost layer of another in-between vendor, AIM, which has its own business interest), INCLUDING a provision in the purchasing contract that the residents under all TCs will not be arbitrarily denied use of the application system if there are legitimate changes to the composition of any TC. This would be serving the interest of the public.
By his statement that there is “no basis to suggest that the AIM transaction did not serve the public interest,” I feel that Dr Teo has very much the public interest in mind. If the TCs entering into the transaction with AIM is to serve public interest, and AIM shares this altruism whereby it enters into the transaction with the TCs with clear sense that profit was not its motive, then I would pose this question to Dr Teo and the directors of AIM:
Going forward, will the TCs and AIM jointly be willing to revert ownership of existing application software to the TCs without compromising public interest? If not, will AIM help the TCs to negotiate the finest terms and conditions that provide for 100% assurance of continuity of TC operation regardless of legitimate changes to the TC composition?

I don’t agree with posters in TRE that CPIB should step in, because I don’t see any sign of corruption in the sense that the CPIB should bother the PM or the President to grant the go-ahead. CPIB is busy enough with a lot on its plate. However, with regards to honest or questionable lapses in procedures, would it be relevant for the Auditor-General’s Office to look into this matter and give its recommendations for improvement? This is what I see in the AGO’s website (http://app.sgdi.gov.sg/listing.asp?agency_subtype=dept&agency_id=0000000178):

Mission: To audit and report to the President and Parliament, in accordance with the law, on the proper accounting of public moneys and use of public resources so as to enhance public accountability.

Our objective should be to elicit clarity on the matter and ensure that lessons are learnt and mistakes not repeated in serving the public interest. Perhaps we can grow our tolerance for mistakes bit by bit – from zero tolerance to 1% tolerance, 5% tolerance … – SO LONG AS LESSONS ARE LEARNT AND MISTAKES ARE NOT REPEATED.
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Jo Li

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[h=2]Town Councils’ software statement ‘full of holes’[/h]

January 4th, 2013 |

Author: Contributions

I refer to the report No basis to suggest AIM transaction improper to town councils, says Teo Ho Pin.
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 deficiencies.
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

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