Parliament: No fraud involved in National Gallery's $12.4m waivers and contract variations, says Grace Fu

No fraud was involved in the National Gallery Singapore's waiver of contractual provisions, said Culture, Community and Youth Minister Grace Fu in Parliament on Monday (Aug 5). These waivers largely related to penalties on the contractor for the extra time taken to complete the development project.

In all, the waivers and contract variations given to Takenaka-Singapore Piling Joint Venture totalled $12.4 million, which was flagged in the Auditor-General's Office (AGO) report last month.

This sum is not overpayment, Ms Fu said in her reply to Mr Png Eng Huat (Hougang), so there is "no need for any major recoveries" of monies.

These waivers and variation orders were to expected for such a massive project, she added.

On the specific claims and sums of money involved, Ms Fu said: "This part is still being finalised... We will still discuss, and in order not to compromise the position, I would not say how it would go one way or another."

The AGO had criticised the Gallery for lapses in approvals for 142 contract variations amounting to $12.4 million. Approval on these variations was sought only after construction work had begun or was done. The delay ranged from 30 days to almost four years.

In one case, approvals for seven contract variations, each exceeding $100,000, were obtained from the incorrect approving authority. A contractor was also overpaid by $150,300 because costs for work not done were not deducted.

In its report, the AGO had observed that "failure to properly assess and manage contract variations could result in MCCY not obtaining full value from the public funds spent".

Ms Fu explained that for greater efficiency and savings, the ministry gave the funds for the project to the Gallery to manage directly.

"NGS duly executed all contracts under its purview to deliver the project on time and below budget," she said. "During the course of the project, NGS addressed all findings from MCCY's progressive audits... MCCY will work with the Gallery to enhance its financial processes and procurement policies."

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She also said the Gallery's approval systems are being reviewed and her ministry was working with it to implement the changes. "Having gone through AGO's reports extensively and several times with NGS, we are satisfied that the claims and variation orders have good basis and there is no basis for us to believe that there is any need for major recoveries."

In an e-mail reply to The Straits Times, the Gallery said its management, audit committee and Board have completed a review of its policies covering such areas as its governance framework and processes on contract management, managing contractual waivers as well as approval and valuation of contract variations, including the assessment of star rates.

Star rates refer to rates used for valuation of variations that are not listed in the contract.

The Gallery is working with the ministry on its fifth and final audit of the project, to be completed by the end of this year.

"Follow-up actions to further tighten our processes and to rectify any lapses will be taken, if necessary," the Gallery's spokesman said.

This article was first published in The Straits Times. Permission required for reproduction.