Navigating the Singapore Government Tender System for Small Businesses

In my previous blog post, I received a lot of feedback from both friends who have experienced the system firsthand and from people working in civil service who face less-than-ideal outcomes due to the current procurement rules.

Today, I’d like to explore this topic in three parts:

1. Why We Have This System
2. Horror Stories from Civil Servants
3. How Small Business Owners Can Navigate It

Why We Have the Tender System
Government organizations can purchase up to $6,000 worth of goods or services from a single supplier without needing to run a competitive process. Beyond that, they must conduct some form of tender process, like an Invitation to Quote (ITQ) or Invitation to Tender (ITT). Honestly, the exact difference between these two is unclear to me, as the terms seem to be used interchangeably.

The tender process involves several steps:

• Staff submit budget approvals
• Write detailed specifications for the product or service
• Create an evaluation matrix
• Invite bids
• An internal team evaluates the submissions based on the matrix and awards the contract.

Though I’ve never worked in government, this is what I’ve learned from speaking with my customers in the public sector. The purpose of the tender system is to ensure transparency, fairness, and to prevent corruption. In many countries, such a system is seen as a safeguard—an institution more beneficial than harmful.

However, the system can become problematic when administrators prioritize expedience or convenience over taking calculated risks for the greater good. For instance, often, administrators are pressured to select the lowest bid for fear of scrutiny from auditors. Despite knowing that the second or third bidder might deliver better quality, the emphasis on cost can lead to subpar outcomes. In many cases, paying a bit more upfront could lead to better long-term results.

This drive to select the lowest bid has resulted in a “race to the bottom,” where opportunistic, fly-by-night vendors thrive, while more established, long-term Singaporean companies struggle to gain traction through government contracts.

Horror Stories from Civil Servants
Due to confidentiality, I can’t name names, but I’ve heard countless horror stories from civil servants who’ve had to navigate this system. The process I’ve described above is one they have to endure regularly.

Civil servants are often forced to choose subpar contractors—ones who miss deadlines, deliver low-quality products, or fail to honor warranties. These mistakes fall back on the civil servants to manage, creating a cycle of frustration. To make matters worse, auditors frequently scrutinize their decisions, especially if they didn’t select the lowest bidder, resulting in a more intense review process.

How to Improve the Process
Here are a few ways I believe the tender process could be improved:

• Auditors should adopt a more flexible approach, offering general guidelines rather than combative, rigid rules. This would allow for more leeway, especially when it comes to pricing.
• Civil servants should obtain preliminary quotes with detailed, industry-accepted specifications before issuing tenders. This would ensure that the tender process leads to better outcomes, rather than favoring one company over another.
• Set clear lead times and impose financial penalties for vendors who consistently fail to meet delivery deadlines. If a company is regularly late or subpar quality, they should face debarment.
• Require that all tendering companies have ready stock in Singapore or provide samples during the submission process. If the delivered product doesn’t match the sample, reject the order.
• Track record should weigh more heavily in the evaluation process. Past performance should be a key consideration, as it’s a better indicator of future reliability than just offering the lowest price.

How Small Business Owners Can Navigate This System
As a small business owner, understanding how the system works and how to collaborate with civil servants can give you a competitive edge. Here’s how you can help improve the process:

• Act as a subject matter expert by educating your clients on how to define quality in tender specifications. Help them differentiate between good and bad options.
• Don’t be afraid to ask questions during the tender process. If you find any unclear points or discrepancies, reach out to the staff so they can issue a corrigendum (an update or clarification). This ensures fairness for all parties.
• Report any irregularities you notice in tender documents that appear biased or designed to favor a particular company, such as proprietary specifications. You can report this to the Ministry of Finance (MOF) or the Auditor-General’s Office (AGO).
• Evaluate past tenders you’ve participated in to identify areas for improvement. Each tender is an opportunity to learn and refine your approach for future submissions.
• Build a strong track record with private-sector clients. A solid reputation in the private sector will help you stand out when bidding for government contracts.
• Guard your reputation and honor. Always deliver on your promises and deal with all customers in a principled manner. Integrity is key to building long-term relationships and a successful business.